Drug developer Vernalis (VER:AIM) is set to start selling its long-acting cough-cold treatments from August next year which should help it to turn a profit in 2017.

The company has already filed Tuzistra XR with US regulator the Food & Drug Administration (FDA), the final hurdle before it can sell the drug. The product, which has been developed by US outfit Tris Pharma, was filed with the regulator in June for approval and has the advantage over the existing, mainly generic rival treatments in that it is longer-acting.

Tuzistra XR is one of five treatments Vernalis has in its pipeline. Two of the others could be filed with the regulator for approval early next year, meaning that the company could have three such treatments on the market by early 2016. The two other drug candidates are in the lab under development.

If any of these drugs are approved they will be sold in a US market worth $2 billion a year, where some 30 million prescriptions are written each year. Analysts at Canaccord Genuity estimate that Tuzistra XR’s peak sales could be $75 million.

The Berkshire-based company has enough cash until it posts a profit with analysts at Canaccord Genuity forecasting it will have £64.8 million by this month.

Vernalis is an example of what could happen to a developer’s finances if it launches new products as expected. As the chart shows, Vernalis’ sales are forecast to improve by £2 million in the 18 month period to July 2015 (the company has changed its year-end).


The following year could see the launch of Tuzistra XR, if approved as expected, and the two other cough-cold treatments. This could help contribute some £3 million of revenues. The big change, however, comes in 2017, when all three treatments should have bedded in. Sales more than double to £46 million in this year, helping the company to a £700,000 pre-tax profit.

Vernalis has an impressive pipeline of treatments that offer a unique selling point in a lucrative market dominated by generic players. However, it pays to remember that this is a development-phase company until the first bottle is sold. If the US regulator says ‘no’, they may have to try tapping smaller markets.

The £218.8 million cap is not only looking at cough-cold treatments. Other early stage treatments it is putting under a microscope include those targeting cancer, neuropathic pain and attention deficit hyperactivity disorder (ADHD).

Issue Date: 05 Dec 2014