Slimmed-down Innovata inhales a healthy profit for the first time

Innovata moved into the black for the first time in its 10-year history yesterday as the inhaler developer announced that a new anti-scarring treatment would get regulatory approval by September.

The turnaround was masterminded by the chief executive, Kieran Murphy, and chairman, Ian Kent, who last spring secured shareholder support to oust the management of what was then called ML Laboratories. They merged with Quadrant Technologies, cut the workforce from 160 to 95 and slashed the company's sites from eight to one.

Mr Murphy said: "We portrayed ourselves as the guys who could turn around this business, and today is the proof."

Innovata posted a pre-tax profit of £4.6m in the half year to March, compared with a loss of £3.8m a year ago. Revenues more than doubled to £18.5m. The group is on track for its first annual profit, and a healthy mix of revenues - from royalties, product sales and development fees - should ensure Innovata remains profitable, Mr Murphy said.

The company got another fillip yesterday in the form of an approvable letter from the US Food and Drug Administration for Adept, a drug that helps prevent abdominal scarring and infertility following child birth. That means the product will be approved before September, which will trigger a milestone payment of about £5m from Innovata's partner Baxter International, the US healthcare giant.

Innovata has several products on the market in Europe, including Clickhaler and Duohaler for asthma which it plans to bring on to the US market. It is developing an insulin inhaler to rival Exubera, the first inhalable version of insulin, which is about to be launched by the US pharmaceutical giant Pfizer. The market is estimated to be worth $4bn by 2010 when Innovata's insulin inhaler could be launched. Innovata's shares closed 0.75p up at 22.5p valuing the group at £110m.