PuriCore flogs off supermarket business, posts wider loss

Specialty biopharmaceutical company PuriCore announced its interim financial results for the six months to 30 June on Tuesday - a period in which the group confirmed its strategic focus to develop novel, prescription treatments for inflammatory diseases including dermatology, ophthalmology and potentially rare diseases.

The AIM-traded firm’s first Investigational New Drug applications are planned for Q1 2017.

In a separate release on Tuesday, PuriCore confirmed it has entered into an agreement to sell the supermarket retail business to Chemstar Corporation for $13.5m gross proceeds, subject to a working capital adjustment and contingent on shareholder approval and other customary requirements.

In light of the proposed sale, the supermarket retail business was not included in its continuing operations for the interim results.

Of those continuing operations, health sciences revenue increased to $0.4m - from $0.3m - and primarily represented royalty income from the company's distribution arrangement for its wound care product.

Operating expenses increased to $3.1m from $2.5m, which the board said was primarily driven by increased investment in research, development, pre-clinical and regulatory activities in drug development and lower sales and marketing costs for the wound care business.

It made an EBITDA loss of $2.5m, widening from $1.7m, and had net cash and cash equivalents of $12.8m at period end, compared with $15.5m at the start of the period.

Revenue in its supermarket retail business, being held for sale, increased 28.3% to $10.8m, primarily due to an increase in both capital equipment and concentrate sales.

Gross margin increased to 41.2%, from 19.5%, and operating expenses decreased 20.4% to $3.5m, driven by reduced sales, marketing and corporate costs.

EBITDA for the division reached $1.5m, swinging from a $2.2m loss, with the board citing higher gross profit and lower operating expenses.

“We have made significant progress during the period in our transition to a specialty biopharmaceutical company and in our efforts to leverage our proprietary immunomodulatory platform to develop potential therapeutics in areas with high unmet medical needs,” said CEO Alex Martin.

“We are on track to submit two INDs in Q1 2017.

“We have a clear path forward from the FDA for our atopic dermatitis programme and we now have a date with the agency to discuss our allergic conjunctivitis programme later this year.”

Martin said the board believes that the focus on drug development should lead to the creation of significant shareholder value over the longer term.

“The supermarket retail business delivered significantly improved results as compared to the first half of 2015; however investment is still required to grow and optimize the business.

“The announcement today that we have reached a conditional agreement with Chemstar to acquire the supermarket retail business is an important milestone in the execution of our strategy that will enable us to focus on leveraging our proprietary technology to develop medicines,” Martin explained.