Mayne Pharma records another loss ahead of restructure

Mayne Pharma’s string of poor financial results has continued with the company posting a net loss after tax of $263.3m in FY22, as it forecasts a “transitional year” amid the sale of its US manufacturing arm.

Aug 29, 2022, updated Aug 29, 2022
Mayne Pharma CEO Scott Richards. Photo: Tracey Nearmy/AAP

Mayne Pharma CEO Scott Richards. Photo: Tracey Nearmy/AAP

The Salisbury South drug manufacturer told the ASX on Friday the loss could be attributed to intangible asset impairments, deferred tax asset write downs and the continued poor performance of its generic retail drugs – a longstanding problem for the company.

Mayne Pharma also pointed to the significant investments it has made into the commercial launch of its oral contraceptive, NEXTSTELLS, in the United States. The pill is still viewed as the company’s “most significant commercial opportunity”.

Mayne Pharma’s $266.3m loss for FY22 comes after their net loss for FY21 reached $208m, on top of a $92.8m loss in FY20 and $280m loss in FY19.

The company earlier this month announced it was selling its US-based manufacturing arm Metrics Contract Services for $A679m in a bid to create a “leaner and more focused business”.

Outgoing Mayne Pharma CEO Scott Richards highlighted the company’s 6 per cent revenue growth from FY21 to FY22. Revenue reached $424.8m last financial year.

“At a group level, we reported annual revenue growth for the first time in five years,” he told the ASX.

“Excluding retail generics, the remaining businesses which represent more than 80 per cent of reported gross profit grew 27 per cent on the prior corresponding period.

“At the underlying EBITDA (earnings before income, tax depreciation and amortisation) line, our results have been impacted by the commercial investments made into the US launch of NEXTSTELLIS and continued erosion of the retail generics business.”

Mayne Pharma’s underlying EBITDA of $45.7m was down 28 per cent on FY21, but when excluding investments made into NEXTSTELLIS, underlying EBITDA reached $89.7m – 24 per cent higher than FY21.

NEXTSTELLIS, a short-acting oestrogen and progestin contraceptive pill, launched in the US in June 2021 and has approval from the Therapeutic Goods Administration for use in Australia.

The company is trying to increase consumer awareness of the drug in the US and hopes to achieve underlying demand for more than 350,000 units in FY23, although Richards said progress has been slow.

“Whilst we are behind where we expected to be with NEXTSTELLIS due to the longer time for physician and patient activation and COVID impacting the sales team and physician access, we saw solid growth in the key performance metrics across the second half of FY22,” he said.

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“We recently launched the direct-to-consumer campaign after achieving our targets in terms of the number of prescribers, insurance coverage and healthcare professional awareness.

“The key focus going forward is building consumer awareness, which is critical as patients play an active role in choosing their contraceptive method.”

Mayne Pharma also indicated it would continue to shift away from generic retail drugs, which have long been cited by the company as a reason for their net losses.

Chair Frank Condella flagged the company would be “aggressively rationalising” its portfolio of generic drugs to “focus on more sustainable products and channels”.

“Retail generics continues to be a challenge but represents a smaller portion of the business,” Condella told the ASX.

The company’s outlook for FY23 forecasts a “transitional year focused on resetting the business for future growth” while eyeing a broadening of its women’s health and dermatology portfolio.

A restructure of the business to “right-size its operations” also looms once the sale of Metric Contract Services is completed.

“Mayne Pharma’s success and performance will be heavily influenced by the effective execution of its strategic priorities and will depend on several factors,” the company said.

“[This includes] payer coverage and reimbursement across the US commercial portfolios, competitive intensity in key product families, and the impact of inflation and movements in the US dollar.

“The Company will maintain a conservatively structured balance sheet and pursue shareholder accretive business development opportunities while driving improved profitability and cash flow.”

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