Sinclair Pharma has reached an at least £5m settlement agreement with Alliance Pharma for compensation linked to the material reduction of business in dermocosmetic cream Kelo-strech.
News of the settlment came as Sinclair posted a reduced FY pretax loss of £11.6m, from £29.6m, on improved revenue of £37.8m, from £24.9m.
Kelo-stretch was a dermocosmetic cream for the prevention and treatment of stretch marks. It was acquired from Sinclair in December 2015 as part of the company's acquisition of Sinclair's Healthcare Products Business.
The terms of the settlement were £4m cash to be paid to Alliance by Sinclair on or before 30 April 2017, plus £1m cash to be paid to the company by Sinclair on or before 30 June 2018.
Moreover, Sinclair would relinquish any and all rights to Flammacerium (US) with immediate effect and transfer them to Alliance.
"The cash element of the compensation will be used by the Company to reduce its current bank loans," said Alliance in a statement.
Looking to 2017, Sinclair said it expected revenue growth to remain strong and to receive an additional tailwind from Sterling weakness.
"The board's objective is to deliver a positive adjusted EBITDA for 2017 through a combination of strong sales growth and high marginal profitability. Trading in the current quarter is in line with management expectations."
At 9:39am: (LON:SPH) Sinclair IS Pharma PLC share price was -3p at 32p