Shares in specialist pharmaceutical products and services group Clinigen (CLIN:AIM) sank 10% to 629.5p on Thursday after the company downgraded its full year profit expectations for 2022.

Lower than anticipated sales of Clinigen’s acute lymphoblastic leukaemia drug Erwinase, a key driver of growth, has led management to downgrade next year’s EBITDA (earnings before interest, taxes, depreciation, and amortisation) growth forecast to between 5%-and-10% from double digit.

Today’s downgrade follows a profit warning on 9 June when the company lowered guidance for 2021 adjusted EBIDTA to be between £114 million-to-£117 million.

Full year results released today showed adjusted EBITDA coming in at £116.3 million, down 10% year-on-year and 5% on an organic basis, in line with the year-end trading update in July.

On an organic basis revenues to 30 June grew 13% to £458.6 million while the company reported strong cash generation with adjusted operating cash up 6% to £99.9 million.

REFINED STRATEGY

In response to strong demand in the services division, which secured new business wins and generated 15% growth in net revenues, management plans to accelerate focus ‘where we have growing and sustainable competitive advantage and, as we do so, continue to drive revenue and cost synergies.’

Meanwhile the products division, which has been impacted by Covid-19 which has reduced demand for cancer hospital-based cancer treatments, will be ‘streamlined’ and ‘simplified’ to strengthen the offering.

ACTIVIST STAKE BUILDING

Prior to today’s fall the shares had run up more than 11% on news that activist fund manager Elliot Associates had built a 5% stake via derivatives.

Pharma industry guru Adam Barker at Shore Capital commented: ‘ It is unclear what Elliott view as the right strategy moving forward for Clinigen, but we believe there is plenty of value to be unlocked from its platform if it can successfully execute on its ‘joining the dots’ strategy.’

READ MORE ABOUT CLINIGEN HERE

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Issue Date: 16 Sep 2021