Strong results send Galen shares up 8%

Shares in Galen gained more than 8 per cent yesterday as the company announced strong third-quarter results and said sales of its hormone replacement therapies (HRT) had not been affected by recent safety concerns.

The Northern-Irish pharmaceutical company, whose shares fell sharply in July amid fears that HRT might have serious side effects, also said it was seeking approval to increase the number of shares it can buy back.

Galen's shares tumbled to four- and-a-half-year lows last month after a major clinical study showed that women taking Prempro, a hormone replacement treatment made by Wyeth, had increased risks of breast cancer, strokes and heart disease. Prempro's sales suffered as a consequence.

Reporting a 13 per cent rise in total revenues to £52.9 million sterling (€83.41 million), Galen said recent weekly prescriptions data indicated the study had had no meaningful impact on the use of its Estrace HRT product.

"From the weekly data, we can see the products that are badly hit and I am comfortable that we are in a fairly secure position," Galen chairman Dr John King said.

Meanwhile, Galen said it was seeking shareholder permission to raise the number of shares it can repurchase and cancel to 15 per cent from 5 per cent. Dr King said the move was prompted by the weakness of the share price.

"We have gone from strength to strength as the year has progressed but the shares have gone in the reverse direction," he said. "We believe that we could increase shareholder value by buying the shares back."

The move also puts Galen in a position to buy back the seven million shares, representing around 3 per cent of the company, held by troubled drug manufacturer Elan. Galen said it had contacted Elan with a view to buying the block of shares but was waiting to hear from Elan about when it would be in a position to dispose of it.

Galen, which sold off its clinical trials business during the quarter to concentrate on its pharmaceutical products, continues to examine ways to dispose of the remainder of its services business.

With £268 million of cash on the balance sheet, it remains keen to make acquisitions, particularly of dermatology products.

It also plans to keep on chipping away at its debt, which has fallen from $160 million (€164.54 million) to $48.4 million since last December.

The company said operating profits rose by 24 per cent to £17.5 million in the third quarter while earnings per share were 8.3 pence, up 38 per cent from a year ago and above analysts' forecasts of around seven pence.

Boosted by the results, Galen's shares gained 8.3 per cent in London to 365p sterling, while in Dublin they closed 44 cents, or 8.4 per cent, higher at €5.60.

Analysts said the shares, which are currently trading at a 22 per cent discount to the sector, had been oversold.

"The shares have more to go, especially if Galen can show us over the next quarter or two that it is meeting the expectations of the market," said Mr Jack Gorman, analyst with Davy Stockbrokers.