Rude health at Azur Pharma despite doubling of losses

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SÉAMUS MULLIGAN’s Azur Pharma appears to be in good health in spite of the fact that its losses more than doubled last year to $7.1 million.

Accounts provided to me this week show that the Dublin-based, privately owned pharmaceutical business increased its revenues to $66.7 million in 2009, from $56.8 million in the previous 12 months.

All of its earnings are generated in the United States from drugs that deal with the central nervous system, women’s health and orphan disease.

During the year, Azur doubled its spending on research and development to $8 million.

It also booked a $15 million amortisation charge relating to intangible assets. Azur has been growing steadily in recent times, acquiring six businesses in the past five years.

These factors impacted Azur’s bottom line and left it nursing retained losses of $12 million at the end of 2009.

But Azur boasted healthy cash balances of $43.3 million at the close of last year – up from $24.2 million in 2008 – and had net debt of just $2.5 million.

It ended 2009 with shareholders’ funds of $74 million. This is thanks largely to two substantial fundraising events since its launch in mid-2005 but before the global financial crash in 2008.

Mulligan is a former Elan executive and returned to his old employer in March of this year to acquire the worldwide rights (excluding Europe) for Prialt, a drug for chronic pain, for $5 million upfront and further payments down the line.

The deal was funded from its own cash.

This has injected more than $20 million into Azur’s revenues and helped to increase staff numbers to 180 from 126 previously.

Azur has so far raised $110 million from investors, including private clients of Irish stockbroker Davy.

It continues to be active on the acquisitions front and hopes to land a deal in 2011. If Azur achieves a certain scale and maintain its current progress, an IPO over the next two years could be on the cards.

Given the pain that Irish investors have taken in the past two years, it seems safe to assume that some form of liquidity event at Azur would come as welcome relief to its local backers.