This long into a pandemic, you would have thought that Clinigen might have seen Covid-related disruption to cancer treatments and clinical trials coming. But on June 9 the AIM-listed provider of medicines issued a shock profit warning after Covid kept cancer patients away from hospitals. The announcement sent the shares down by 25 per cent.
Historically, Clinigen’s communications with investors could have been better. In May last year, it announced that JP Morgan would become its nominated adviser and joint broker — replacing Numis. Seven months later, JP Morgan was out and Numis back in.
Since listing on AIM in 2012, Clinigen has grown via acquisitions, including of Idis in 2015 for £225 million and Link Healthcare in the same year for £100 million. In 2018, it spent up to $240 million on CSM, a specialist in packaging, labelling, warehousing and distribution.
As well as providing customers with drugs that may not have been approved in a particular market, or where there might be a local shortage, Clinigen sells its own portfolio of speciality medicines bought from bigger rivals such as Novartis.
In February, it reported a 6 per cent increase in half-year sales to £258.1 million. Pre-tax profits fell 8 per cent to £22.7 million. Net debt rose 9 per cent to £351.5 million.
It was the profit warning in June, though, that spooked investors. The company, led by chief executive Shaun Chiltern, said that while revenues were still expected to be in line with its guidance, adjusted core earnings for this year were expected to be between £114 million and £117 million, compared with previous estimates of about £130 million.
Part of the problem was that demand for Proleukin, a drug for kidney cancer, was weaker than expected, even while other businesses were reporting demand picking up. What surprised the City was Clinigen’s apparent failure to see this coming. Long-time backer Jupiter immediately dumped many of its shares.
Those shares have fallen 20.6 per cent over the past 12 months, closing on Friday at 619.5p, giving it a valuation of £824.1 million.
Clinigen will post a trading update on Tuesday ahead of full-year results in September. Analysts at Liberum think the company is the most vulnerable among its peers to a bid from private equity.
There was bid speculation around Clinigen in June last year, when private equity firm Advent International ran the rule over the company.
A challenge now will be whether to take a bet on a bidder emerging. Hold.
