York Pharma pinning hopes on 2008


If it all goes to plan investors in York Pharma could be looking at a busy and potentially lucrative year during 2008.

Last week, the UK specialty dermatology group said it was expecting UK approval for Abasol, a treatment for skin fungal infections, by the end of the first quarter of 2008 and could also move into profitability during next year.

Terry Sadler, chief executive, predicts that the group’s near-term success will be tied to this lead product, which he believes will have significant sales. “It’s not something that will sell 10s of millions but 100s of millions,” he says.

Partners hold the key to success

Sales will be helped by the fact that York Pharma already has a means of distributing Abasol, both in the UK and parts of Europe, following the October acquisition of Derms Development, the Anglo-French company for £17.5m ($36m). York Pharma in-licensed worldwide rights to Abasol (abafungin) from Bayer in March 2004, by which stage the product was in phase III trials. 

But if it is to have any realistic chance of rocket blasting sales out of the 10s of million camp into the 100s of millions it must secure heavyweight partners in both the US and Japan.

Having never launched a product in the States, York Pharma will be relying on the guidance of a US partner to help it negotiate its way through the minefield that is the Food and Drug Administration approval procedure.

This process of finding partners in both regions is under way according to Mr Sadler, who is hoping to complete deals by the second half of 2008. He is also ambitiously pinning his hopes on US approval for Abasol two years after finding a partner.

Move into profitability

In the shorter-term, with UK approval for Abasol seemingly in the bag, the prospect of a US and Japanese licensing deal and the group set to start reaping the benefits of sales of two marketed drugs – both from its Derms acquisition – Mr Sadler is bullish about the group moving into profitability by 2008.

“We see 2008 as a tipping point where we can get the business to the stage where it is self financing,” this he says, includes being EBITDA positive. Last week, the group reported full-year pre-tax losses of £6.55m.

The chance of financial worries getting in the way of achieving long-term goals have been eased by a series of fund-raisings during the year, which have left the company with £6m in the bank.

Some of the money will be used to develop the group’s pipeline of 11 drugs, which has been significantly enhanced by the recent acquisitions of Derms and Rosanto Pharmaceuticals.

The pipeline now includes two valuable late-stage products that should fuel the growth that many had seen to be lacking in the existing business, they also helpfully de-risk the rest of the relatively immature pipeline.

Perhaps as importantly, the management teams that have come with the acquisitions will add experience of bringing drugs to market, a skill that most small pharmaceutical companies lack and one not to be underestimated.

Therefore, with a little luck, including no drug failures, York, whose shares have fallen by 11% to 92p since the beginning of the year and 32% in the last six months, could see significant upside during 2008 on the back of expected news flow.

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