Edison increases valuation of Vernalis due to US commercial potential of Tuzistra XR

UK pharma company Vernalis (LSE: VER) is preparing for the US launch of its extended-release, codeine-based cough cold treatment, leading investment research company Edison to increase its valuation from £323 million ($507 million) to £406 million.

Tuzistra XR received approval from the US Food and Drug Administration in April, and has greater commercial potential than previously anticipated with an addressable market of up to £1.8 billion. It is the only approved codeine-based, long-release liquid treatment. The codeine plus antihistamines segment has an estimated value of £510 million at current net brand pricing, although Tuzistra XR has potential in other market segments.

Vernalis is planning a staged launch of Tuzistra XR with price discounting in year one to gain market traction, with gradual acceleration of sales, leading Edison to forecast maiden cough cold revenues in financial year 2016. It has increased estimated 2015 sales from £18.4 million to £18.9 million, adding in a £500,000 research collaboration milestone payment from Asahi Kasei Pharma announced in March. Edison has also lowered its 2016 sales estimate from £18.3 million to £17.7 million.