PowderJect shares fall 24% after recall

The vaccines company PowderJect Pharmaceuticals lost nearly a quarter of its market value yesterday after it warned profits would be dented after recalling its BCG jab.

Shares in the Oxford-based company, which announced plans to recall the tuberculosis injection after the stock market had closed on Friday, slumped 23.5 per cent, or 99.5p, to close at 324.5p – their lowest point for almost a year.

PowderJect, which was caught up in the cash for vaccines row over its founder's donation to the Labour Party, said it expected revenues for the current year to total at least £160m. But it warned that profits would be £5m beneath expectations of about a £25m profit due to the BCG jab recall.

The company said on Friday that it was voluntarily recalling the vaccine in the UK as a precautionary measure after routine tests revealed some batches had not met end-of-shelf-life specifications.

The company expects the vaccine, which makes up about £10m of PowderJect's sales a year, will not be relaunched in the current financial year.

City analysts were yesterday divided on their view of the company after the alert. Analysts at Goldman Sachs warned investors against buying the stock, even after the heavy fall in the share price. "It may be tempting to buy on any significant weakness, however, we would hold fire until the dust settles," they said.

Analysts at UBS Warburg, meanwhile, recommended the stock a 'strong buy'. "In our view, this is a setback for PowderJect as the vaccine's recall is negative for sentiment and adversely affects the company's cash flows."

PowderJect said on Friday that the regulators were satisfied that there were no related safety implications with regard to the BCG vaccine, although the batches were "potentially less potent" than normal.

It said, however, that it had consulted with independent experts who said the vaccine should still be effective because the potential reduced potency was "not of clini- cal relevance".