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Mayne Pharma share price lower after posting $280.8 million loss in FY 2019

On Friday the Mayne Pharma Group Ltd (ASX: MYX) share price has dropped to within a whisker of a multi-year low following the release of its full year results.

At the time of writing the pharmaceutical company’s shares are down 2% to 46.5 cents.

Why is the Mayne Pharma share price sinking lower?

During the 12 months ended June 30, Mayne Pharma reported a 1% decline in revenue to $525.2 million and a 4% drop in reported EBITDA to $111.6 million.

On the bottom line, the company recorded a reported net loss after tax of $280.8 million due to a non-cash (pre-tax) charge of $351.7 million relating largely to its intangible generic assets.

Management advised that this impairment resets its balance sheet, improves reported profit in future periods, and is in line with US generic peers who have also undertaken sizeable impairments of their generic intangible assets in recent years.

How did its segments perform?

The key Generic Products Division (GPD) segment reported a 17% decline in sales to $320.8 million and a 7% drop in gross profit to $164.5 million during FY 2019. This was the result of a number of one-off items that impacted the results in the second half including failure-to-supply penalties and shelf stock adjustments from pricing changes.

In light of weakness in the GPD segment, Mayne Pharma has streamlined its generic development activities. This has seen the company abandon non-viable projects and focused its portfolio selection and product development expertise on opportunities that align with core therapeutic channels.

The Specialty Brands Division (SBD) segment was on form in FY 2019. It reported a 105% lift in sales to $91.6 million and a 113% jump in gross profit to $79.8 million. Management advised that this was driven by its improved sales force effectiveness and new product launches. FABIOR sales were up 54%, SORILUX sales grew 26%, and the DORYX family of products saw sales increase 153% on the prior corresponding period in U.S. dollars.

The Metrics Contract Services (MCS) segment reported a 14% lift in sales to $72.2 million and a 6% increase in gross profit to $35.5 million. During FY 2019, the MCS segment added three commercial manufacturing clients, up from just one in the prior period.

Finally, the Mayne Pharma International (MPI) segment delivered a 10% lift in revenue to $40.7 million and a 25% lift in gross profit to $10 million. The MPI segment benefited from growing sales of SUBA-itraconazole and KAPANOL globally, new third-party contract development revenues, and milestone payments from the out-licensing of key specialty products globally.

Outlook.

In FY 2020 management expects stronger results driven by the specialty brand launches of TOLSURA and LEXETTE in the US, growth of the generic and proprietary dermatology and women’s health portfolios, and accelerated growth of Metrics Contract Services.

The company is targeting eight new product launches by the end of calendar year 2020, which have a market value of US$1.4 billion according to IQVIA. Two of these eight products have already been approved.

Elsewhere in the industry today, the CSL Limited (ASX: CSL) share price has edged lower and the Telix Pharmaceuticals Ltd (ASX: TLX) share price is trading flat.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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