Sinclair Pharma sales progress as company repatriates product rights

Aesthetics company Sinclair Pharma announced an unaudited trading update for the six months ended 30 June on Thursday, reporting that unaudited sales for the period were £21.3m, or £21.6m at constant currency, up from £20.1m a year earlier.

The AIM-traded firm said performance of its ex-US business had been “encouraging”, with sales of £20.5m in the first six months, representing actual growth of 16.5% and 18.0% on a constant currency basis.

It said sales of its ‘Silhouette Soft’ product reached £7.9m in the period, for reported growth of 8.2% and a constant currency growth rate of 12.0%.

Growth was said to have been “strong” in a number of regions, in particular South Korea, South East Asia and the UK, which was now benefitting from restructuring undertaken in 2017.

Increasing adoption of new techniques involving more sutures per procedure was driving sales growth in many of the company’s markets, with that trend expected to continue as Sinclair's Practice Development Programme was rolled out to physicians and clinics.

On its ‘Silhouette Instalift’ product, Sinclair said that in April it announced the creation its own direct sales operation in the US following the termination of the distribution agreement with ThermiGen.

It said that, while it was still “early days”, there were encouraging signs with sales between April and the end of June reaching £0.8m, which was ahead of management expectations.

“This performance reaffirms our belief that the US is a major market opportunity for Silhouette Instalift, and that the product's reputation remains highly positive among both using physicians and patients,” the company’s board said in its statement.

Sinclair said its initial launch strategy had focused on connecting with existing customers and reconnecting with physicians already trained but poorly followed-up by the previous commercial team.

In addition, there had been “considerable” US congress activity through its established KOL network.

“Our ambition to grow the salesforce steadily is on track with 10 reps now directly employed, and we expect to build to 15 reps by the end of the year.

“The board reiterates its £3.0 million US sales guidance on a constant currency basis for the financial year.”

Sinclair’s ‘Ellansé’ product delivered revenues of £5.0m in the period, compared to £4.2m during the same period last year, with growth remaining “broad based” across the firm’s direct operations as well as distributor markets.

That was reportedly most notable in Brazil, where the product had performed strongly following launch in March, and provided a “key growth opportunity” for the second half and beyond.

“The fast uptake by doctors and evident enthusiasm for the product is highly encouraging and we are well placed to take advantage with our largest sales force based in this market.

“Elsewhere, UK growth was notably strong, while in South Korea the market is now largely free from our ex distributor's inventory which we expect will lead to a much stronger performance in the second half.”

Revenues for its ‘Perfectha’ product increased 7.1% to £4.5m.

Growth was said to have driven by the brand's re-launch in Brazil, as well as “notably strong” partner performances in South Korea and Mexico.

Finally, revenues for ‘Sculptra’ were £3.1m in the period, compared with £2m in the prior year, with the pickup in demand seen in the second half of 2017 continuing into the first half of 2018.

Sinclair’s board said net debt at 30 June was £14.8m, including the £3.6m EW Healthcare convertible loan announced in February, and in line with the board's expectations.

In addition to anticipated operating cash outflows in the first six months, cash outflows in the period included a number of largely non-recurring costs totalling £8.5m, including the payments made in connection with the termination of the ThermiGen distribution agreement, final settlement of the Alliance Pharma warranty claim, payment of Silhouette and Perfectha deferred considerations, financing fees and planned capital expenditure.

The group said it had drawn an initial €17m under the Hayfin debt facility, which was put in place during the period, and had access to a further €6m of undrawn facilities.

As it had previously indicated, the board expected sales to be second-half weighted to a similar degree as in 2017.

A “significantly lower” level of non-operating cash outflows was also expected in the second half of the current financial year.

“Our first half performance clearly shows that the year is progressing well,” said Sinclair chief executive officer Chris Spooner.

“Momentum in our ex-US business remains strong with 18% constant currency growth leaving Sinclair well placed to deliver at least mid-teens growth at constant currency for 2018, being the guidance we provided at the time of our full year results.

“In the US, I am pleased with the early progress of our new sales team and am optimistic that they will deliver excellent results.”

Spooner said feedback from US physicians remained “very positive”, and the board was confident that the Silhouette InstaLift brand in the eyes of both physicians and patients remained strong in that market.

He added that the company was continuing to expand its direct operations in countries where it saw strong growth potential, confirming that Sinclair would start a direct operation in Mexico later in July.

“As in 2017 we expect to see sales weighted to the second half of the year, in particular due to the issues experienced with Silhouette InstaLift in the US, the Brazilian launch of Ellansé in March, repatriation of Ellansé rights in Korea during the first half, and the imminent launch of the Mexican operation.

“We remain very optimistic that we will see strong and broad based growth over the second half of 2018. “

Sinclair said it expected to publish interim results for the six month period ended 30 June in September.