QuickView: Clinigen

Clinigen (CLIN.L) has acquired Cardioxane, a specialised oncology support product, from Novartis for $33m (£22m) in cash. Cardioxane becomes Clinigen’s third product, joining the established Foscavir and recently licensed VIBATIV. These products, coupled with the organic growth opportunities, underpin what deserves to be a premium valuation.

Cardioxane broadens specialty product portfolio
Clinigen’s acquisition of Cardioxane (dexrazoxane) expands Clingen SP’s embryonic proprietary portfolio to three products. The SP business commercialises niche hospital-only drugs, often those that are at the end of their normal lifecycle. The success of Foscavir, an anti-viral acquired from AstraZeneca that posted FY12 sales of £21.7m, highlights both Clinigen SP’s value-adding potential and serves to validate the approach employed. Cardioxane is Clinigen’s first own oncology product and also fits in nicely with related products sold through the GAP business.

Well suited to Clinigen SP’s targeted distribution
Cardioxane is being acquired from Novartis for $33m (£22m) in cash, payable in two tranches. It is currently used to prevent the chronic cumulative cardiotoxicity of anthracycline chemotherapy (doxorubicin or epirubicin) for patients with advanced and/or metastatic breast cancer. Cardioxane posted 2012 annual sales of $11-12m, with a significant part generated in Latin America. Clinigen believes this strong Latin American presence may improve help access for existing products.

Complements recent VIBATIV licensing-in for EU
Clinigen SP gained commercialisation rights for VIBATIV from Theravance for Europe earlier this month (11 March) for a $5m upfront fee and royalties on net sales (tiered from 20% to 30%). VIBATIV (telavancin) is a lipoglycopeptide antibiotic indicated for hospital-acquired MRSA infections (including ventilator-associated pneumonia) when other alternatives are not suitable. The deal lasts for at least 15 years (patents expire 2026), with Clinigen having an option to extend beyond this.

Valuation: Quality deserves a premium
The shares have performed well and the historic earnings multiples suggest they are well valued. However, Clinigen’s organic growth prospects, coupled with the potential of judicious product acquisitions, support such ratings. Equally importantly, Clinigen’s specialised nature and unique position means a premium is justified.

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