Adherium's (AX:ADR) FY16 sales of A$2.6m were 7% below expectations, likely due to a pause in commercial supply to AstraZeneca (AZN) in H216 as the pharma used inventory purchased in CY15 for initial market testing. The net loss of A$7.9m included A$1.4m of one-off costs. We have amended near-term forecasts to allow for a slower initial roll-out by AZN, but leave peak uptake assumptions unchanged given the large addressable market. We have also trimmed forecast profit margin by 20% for second-generation embedded devices following a potential 2020 launch. This reduces our valuation to A$171m or A$1.01/share (from A$188m or A$1.31/share).
Smartinhaler roll-out still at an early stage
Adherium’s Smartinhaler platform provides reminders and feedback that improve medication adherence in asthma and COPD patients. It entered a 10-year Master Supply and Development Agreement with AZN in July 2015. Commercial supply under the agreement saw 48,000 devices sold in the nine months to December 2015 at an average price of US$25. However, device sales in H216 totalled 8,000 devices at a much higher average of US$96 per device. It appears that AZN purchased sufficient devices in H116 for initial market testing, with the majority of sales in H216 being higher-priced devices for use in clinical trials.
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