Fool's Eye View

[ June 12, 2000 ]

Results from PowderJect

By Rob Davies (TMFEssex)

Colchester, Essex -- PowderJect Pharmaceutical (LSE: PJP) is a company I come across from time to time and think I really ought to do more research on it because it looks interesting. Annual results today are exactly such an opportunity, but one look at the statement and I come over all queasy. Why are these drug companies so complicated?

The basic idea of PowderJect, using gas to inject drugs into bodies, I can understand. And the financials look straightforward too. But all these complicated alliances and so on are all a bit much.

Let's look at the numbers first. It has net cash of £62.1m, but it got through £22m in cash last year, £20m on research and development. Not surprisingly for this kind of company it makes a loss; last year that was £18.3m on turnover of £2.7m. But it is still early days yet. With 73m shares outstanding, trading at close to £4, there is clearly a lot of optimism built into this company's share price already -- although there is less than there was when the shares were trading at £10 recently.

But the real story in these drug companies is the news on all their new developments. And this company has them by the yard.

The big news today seemed to be three things:

• Lidocaine, a local anaesthetic, is being prepared for Phase III trials
  
  
• The company has strengthened the infrastructure and supply chain required to commercialise the new delivery technique.
  
  
• It has taken steps to extend its strategy of making medicines work better, by discovering and patenting innovative DNA-based medicines that perform well in the PowderJect system.

There was loads of other stuff as well. But, quite frankly there was only one that I could vaguely begin to understand and that was something called Alprostadil, a treatment for male erectile dysfunction that achieves a pharmacological response in patients at the upper end of the dose range tested.

Anyway, all this good news has persuaded PA Consulting Group to take an equity stake in the company to share its experience in industrialising drug delivery services. The main skill of this group is taking good ideas and transforming them into a business proposition. That sounds very encouraging to me.

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