Pharmaceutical group BTG has dropped more than 6% on disappointment about its varicose veins treatment.
The company’s shares are down 51p at 732p, making it the biggest faller in the FTSE 250 mid-cap index, after it said full year profits were down 20% at £26.7m, partly due to increased investment.
The varicose veins treatment, called Varithena, is one of the key products for the company, and sales of just £1m in the seven months since it was launched in August left investors underwhelmed. Chief executive Louise Makin told Reuters that Varithena was on track to become a $500m plus global business. She said:
We always said it would take two years and it’s going to take two years.
But Stifel issued a sell note on the shares, with analyst Max Herrmann sai:
BTG has announced a strong set of results for the year ended 31 March 2015. However, with so much of the expectations for the company riding on the future performance of the varicose vein treatment Varithena, sales of the product of only £1m are disappointing, in our view. We continue to believe that BTG is a high quality business but that trading on a 2016 estimated PE of 38.1 times, the valuation is overstretched. Reiterate sell.
At Investec, analyst Nicholas Keher kept his buy rating but said:
The 2015 full year results should not surprise given that BTG guided on group revenues (and Varithena specifically).
However, profitability is slightly weaker than we anticipated and, now in print, the Varithena number will raise questions on anticipated growth rates. Offsetting this, the RePneu Revolens trial [for patients with emphysema] met its primary end point, which is supportive for its roll out. We think investor patience will be tested over the next 3-6 months and, whilst we may see some further share price weakness until the next catalyst, we are holding our nerve.
