16th Jun 2020 09:49
(Alliance News) - Circassia Group PLC on Tuesday said its loss widened in 2019 with research and development costs ten times what they were the year before due to an impairment charge on licences.
The pharmaceutical company posted a GBP59.1 million pretax loss for 2019, widened from GBP55.8 million the prior year.
This was the result of R&D costs, which multiplied to GBP109.5 million from only GBP10.8 million, including a GBP90.4 million impairment charge for Tudorza, Duaklir and LungFit licences. All three drugs form part of Circassia's chronic obstructive pulmonary disease business.
More positively, Circassia's revenue from contracts with customers rose 29% to GBP62.4 million from GBP48.3 million and the firm swung to other net gains of GBP94.0 million from a GBP3.7 million loss.
In April, Circassia announced its intention to terminate its development and commercialisation agreement with AstraZeneca PLC and instead transfer Tudorza and Duaklir US commercial rights to Astra in exchange for the settlement of debt.
Alongside its COPD business, CIrcassia also has an asthma diagnostics and management business selling its NIOX platform.
Executive Chair Ian Johnson said: "While NIOX continued to advance, progress in the company's COPD portfolio was more nuanced. Tudorza revenues increased significantly during 2019, reflecting the move to report full in-market sales as well as increased pricing and lower rebates in the second half. However, prescription numbers declined and Duaklir's launch proved challenging in a field dominated by major pharmaceutical groups. Consequently, the COPD business continued to make major losses, making the significant debt owed to AstraZeneca in relation to these two products unsustainable. As a result, on 27 May 2020 the company transferred the products back to AstraZeneca and set off the debt in its entirety.
"With this transformational transaction now complete, Circassia is well placed to become a self-sustaining, cash generative business once the effects of the Covid-19 pandemic pass over. During the ongoing pandemic, the company's focus is firmly on maintaining its world-leading NIOX business, serving its customers around the world as they support their patients with respiratory diseases. As restrictions lift, Circassia intends to return NIOX to growth as quickly as possible, and with a strong underlying business and robust debt-free balance sheet the company looks beyond the current period of disruption with great optimism."
Johnson noted that Cricassia has taken steps "to ensure access to liquidity" during the pandemic, and recently concluded an equity financing facility granting access to up to GBP6 million until November 30 at a price of 24.6 pence per share.
"This provides the company with access to additional funding should this be required in the coming months," said Johnson.
Shares in Circassia were down 2.3% at 25.10p in London in morning trading.
By Anna Farley; [email protected]
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