Intention to float by Gemfields Group. No Capital Raise. Currently listed on JSE. (GML:JNB) at circa £122m. The Group's key producing assets, the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world), are both expected to have long mine-lives with potential for expansion. Also owns the Faberge brand. Due Valentines Day 2020.
Companies: DEMG TMG RGM APH ORR VANL PPH TRX PEBB SUMO
The Hardman & Co Healthcare Index (HHI) has been running since 2009. Its main function is to highlight the attractions of life sciences investments over the long term. 2018 was a difficult year; however, the index still outperformed its comparative London indices, falling 10.0% to 393.2, compared with -13.0% and - 18.2% for the Allshare index and the AIM index, respectively. Furthermore, several (17) companies in our index increased their capital base – 15 of our 50 constituents raised new funds, two issued shares as part consideration for acquisitions, and two had share buybacks – all factors that influence the performance of the index. Even allowing for both capital increases and share buybacks, the 12.5% fall in the index still represented a modest outperformance compared with the decline in the Allshare index. With active industry consolidation, shareholder returns remain attractive.
Companies: OPM AVO AGY APH ARBB AVCT BUR CLIG DNL DPP GTLY GDR HAYD KOOV MCL MUR NSF OXB PCA PHP REDX SCE SIXH TRX TON VAL VTA
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Alliance Pharma (APH) is a profitable, cash-generative, specialty pharma business. The proportion of sales generated from higher margin international star brands is rising rapidly, and will be boosted by the recent acquisition of Nizoral in APAC, and UK approval and launch of Xonvea for nausea and vomiting in pregnancy, where conservative management has failed. Investment behind these brands together with compliance with new regulatory directives will limit short term growth but positions the company well for the medium term. APH is cash-generative allowing it to pay down debt at a fast rate. Meanwhile, it offers a dividend yield of 2.0%.
Companies: Alliance Pharma
In addition to Hardman’s monthly analysis of client stocks, the thorny issue of market disruption – a popular theme currently - is also addressed. In a wide-ranging article, Hardman’s utilities analyst, Nigel Hawkins, assesses the impact that market disruption has already made. In some sectors, notably telecoms and aviation, market disruption has been apparent for many years, as the rise of Vodafone, Ryanair and easyJet demonstrates. However, in some sectors, such as oil and housebuilding, structural changes have been modest – the dominance of the big players endures. For investors, there is real interest in those sectors where changes are underway. The UK groceries market, which may shortly become a duopoly, is a case in point. And, intriguingly, who knows if there is a company currently languishing in AIM, which will attain a £50bn market valuation within the next decade?
Companies: OPM AVO AGY APH ARBB AVCT DISH BNO BUR CMH CLIG CSH DNL DPP GTLY GDR HAYD KOOV MCL MUR NSF OXB PHP RE/ REDX SCE SIXH TON VAL VTA W7L
PetroTal (TAL.TO) - The exploration and production company focused on oil assets in Peru is seeking a secondary AIM quoting before the end of 2018.
Path Investments— First acquisition of a 50 per cent. participating interest in the producing Alfeld-Elze II gas field located 22 kilometres south of Hannover in Germany. Seeking £10m raise. Due early Oct
Green Man Gaming—pure play e-commerce and technology company in the digital video games industry. revenue CAGR growth of 26.7% in the last three years to £47.5m. Due Mid October 2018. EBITDA Profitable. Offer TBA
Crossword Cybersecurity PLC* (NEX:CCS)—the technology commercialisation company focusing exclusively on the cyber security sector is exploring its options in relation to a potential move to the AIM market of the London Stock Exchange which, if it were to proceed, would likely take place over the next few months.
Companies: PEN PCA IHC APH SRE WBI ALS ATM INFA ITX
September’s Hardman Monthly features an article from guest contributor, Tim Ward. Tim is the Chief Executive of the Quoted Companies Alliance (QCA), an organisation that champions the interests of small to mid-size quoted companies.
Companies: OPM AVO AGY APH ARBB AVCT BNO CMH DNL EVG GDR INL KOOV MCL MUR NSF OXB PHP RE/ REDX SCLP SCE SIXH TRX TON VAL W7L
Hardman & Co’s analysts have direct experience of uncovering accounting frauds. In this article, Steve Clapham outlines why we might see a surge in them over the next few years. He is engaged by institutions to teach their fund managers and analysts how to identify risks brought about by such frauds. Hardman & Co is pleased to offer this service to private investors.
Companies: OPM AVO AGY APH ARBB AVCT BUR CMH CLIG COS DNL EVG GDR INL KOOV MCL MUR NSF PHP RE/ REDX SCLP SCE SIXH TRX TON VAL W7L OXB
Alliance Pharma (APH) is continuing with its buy-and-build strategy, having evolved through 35 acquisitions over a period of 20 years into a profitable, cashgenerative, specialty pharma business. The company has a mix of international growth brands – Kelo-cote, MacuShield, Vamousse – and a bedrock of solid, local, low-growth products. A fourth international growth brand in the portfolio, Nizoral, was acquired from J&J on 21 June 2018 in the APAC region. The cash consideration of £60m was funded by a Placing and an increased debt facility. Adding also to growth prospects, Diclectin (now registered as Xonvea®) was approved in the UK in July.
Ovoca Gold (to be renamed Ovoca Bio PLC) - RTO of IVIX, a Russian company developing a drug candidate for the treatment of female sexual dysfunctions. No monies to be raised, market cap of £8.5m, due 30 July
Nucleus Financial—independent wrap platform provider . FYDec17 revs £40.36m and PBT of £5.1m. Offer TBA. Due late July. Kropz PLC-Intention to float by the emerging plant nutrient producer with an advanced stage phosphate mining project in
South Africa and exploration assets in West Africa
Immotion Group - aims to become the market leader in "out of home" Immersive Entertainment Experiences. Offer TBA. Due 12 July
Companies: HUR BCA APH EQLS VAST RRL IPX OCI FAN BBSN
Hardman & Co recently welcomed Milan Radia to our roster of established, industry expert analysts. Milan has 25 years of equity market experience at major investment banks and in asset management, and has worked on many high-profile successful IPOs. In 2017, he was ranked the No.1 earnings estimator in the UK for his sector in the Thomson Starmine Awards. Milan has also been techMARK Analyst of the Year and achieved top three Institutional Investor sector rankings for his coverage of the software and telecoms sectors. In our lead article this month he gives an insight into his thinking on some key themes in the sector.
Companies: OPM ABZA AVO AGY APH ARBB AVCT BNO BUR CMH CLIG COS DNL EVG GTLY GDR INL KOOV MCL MUR NSF YGEN PHP RE/ REDX SCLP SCE SIXH TRX TON VAL OXB
Research Tree provides access to ongoing research coverage, media content and regulatory news on Alliance Pharma.
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Kromek has received a material order from DARPA to further develop a biopathogen detector totalling $5.2m. This is an incremental market opportunity for the company and the majority of the contracted value is likely to be recognised in the company’s new fiscal period to April 2021.
Companies: Kromek Group
Many of the world’s best and most important products (eg Space exploration, nuclear medicine/power & the internet) were originally invented by the military. It’s happened again – but this time to combat airborne pathogens like Ebola, SARS/MERS and all manner of other biological nasties doing the rounds. You see on 10th December 2018, Kromek was awarded a $2.0m contract by DARPA (research arm of US Dept. of Defense) to develop a vehicle-mounted bio-threat detector. The idea being that this should be able to rapidly identify (within 1 hour) any dangerous germ that might have been released into the environment, say by terrorist groups, organised criminals &/or rogue states.
Open Orphan, a niche Contract Research Organisation (CRO) and world leader in testing the efficacy of vaccines and antivirals, raised £12.6m (gross) to fund development of the world’s first COVID-19 challenge model. Compared with traditional trials, challenge studies can fast-track testing of vaccines and antivirals, with reduced costs and fewer volunteers. The company is in active discussions with 12 global vaccine manufacturers with regards such a challenge model. Given the paucity of lab testing capability in the UK, Open Orphan is exploiting its in-house virology lab to offer third-party services and commercialise a lab-based COVID-19 antibody test, for which it has UK exclusivity from Quotient. We initiate coverage with a target price of 19p, based on a sum-of-the parts analysis.
Companies: Open Orphan
FY results showed an adjusted net loss of £3.8m, with year-end cash of £2.5m – in line with the trading update at the time of the recent £14m placing. Near-term focus remains on the outcome of study SG016, and although the enrolment rate into the COVID-19 trial has slowed in recent weeks, with 98 out of the targeted 100 patients having been enrolled, top-line data is expected to be presented in July. The company also confirmed that the trial of SNG001 in COVID-19 patients within the home setting and to be conducted virtually has commenced. Additionally, MHRA gave approval to run an interim analysis (109 out of targeted 120 patients) without compromising the integrity of the COPD Phase II trial, with data expected to be presented in the summer: a busy summer, with two potential value inflection points. We reiterate a target price of 120p, of which c.80p relates to the use of SNG001 in COVID-19 disease, with the prospect of this being increased on successful Phase II outcomes for both COPD and COVID-19.
The potential of cell therapies is starting to become clear, and MaxCyte’s technology lies at the heart of many of these next-generation treatments. The pivotal role its platform plays is shown by ten major partnership agreements formed with leading cell therapy players over the past 18 months. These can earn pre-commercialisation milestones in excess of $800m, transforming MaxCyte’s medium- and longer-term revenues as the underlying programmes advance through clinical development. CARMA, MaxCyte’s proprietary cell therapy platform, is nearing a key inflection point, with Phase I data from its lead asset due in 2020. Management is targeting CARMA to be self-financing by 2021. We raise our valuation to £260m (340p/share), from £195m and 341p, with the core business alone valued at £158m (206p/share).
Avacta is leveraging the antibody-like properties of Affimers for Therapeutic and Diagnostic applications across multi-billion dollar markets, including testing and treatment for COVID-19, building a differentiated pipeline and global partnerships. The near-term key is the roll out of its SARS COV-2 antigen tests, including potentially one of the first Point-of-Care tests to-market, offering game-changing commercial scope, sufficient to significantly accelerate the clinical development of its Therapeutic pipeline.
Companies: Avacta Group
Synairgen (SNG.L): Preliminary 2019 results | Yourgene Health (YGEN.L): COVID-19 testing service launch and business update
Companies: Synairgen Yourgene Health
4D pharma has announced its FY’19 results for the period ending 31 December 2019. Results are in-line with our expectations, although the reported cash position of £3.8m does not reflect the Group’s current position because since period-end 4D pharma has completed a £22m equity fundraising. Cash runaway is now indicated until the end of Q4 2020 on current activity levels. This takes them through key potentially value-adding readouts expected in 2020, including full results from the Phase II programme of Blautix in IBS in Q3 2020, and additional oncology data for MRx0518 from the now completed Part A of the Phase I/II study in Q3 2020 and two ongoing Phase I biomarker studies in H2 2020. Management also flagged that the ongoing recruitment into the Phase I/II asthma trial has been impacted due to Covid-19, although this is somewhat offset by the initiation of the Phase II trial in hospitalised Covid-19 patients. 4D pharma continues to seek a partner for this Covid-19 programme and recently published a presentation supporting the scientific rationale for MRx-4DP0004’s use in Covid-19 hospitalised patients. The MSD collaboration continues to progress well and management are actively pursuing additional research collaborations that could create additional value for shareholders. Year-to-date the Group has made excellent progress progressing its clinical pipeline, and we look forward to these key potentially value-creating readouts later in 2020.
Companies: 4D Pharma
We are initiating coverage on specialist pharmaceutical services provider Ergomed. We believe it should prove relatively resilient during the COVID-19 crisis and has the fundamentals in place to execute its growth strategy. Ergomed announced impressive audited numbers for FY19, with revenue up 26% to £68.3m and EBITDA up 5.5x to £12.5m. The FY19 announcement is effectively Ergomed’s fourth profit upgrade for FY19 and a small beat on recently reset FY19 expectations. Ergomed trades at a discounted EV/EBITDA of 10.1x vs the contract research outsourcing (CRO) sector average of 11.5x (FY20). We value Ergomed at £186m or 399p/share. Ergomed’s strong organic growth is benefiting from a clear strategic focus on high growth pharma sectors, margin control and order book growth (up 15% to £125m in FY19, giving 90% visibility to 2020).
Following on from the Primestore MTM orders announced in April, EKF has received further orders worth $9.4m to be fulfilled between now and the end of July. This results in further upgrades to our already upgraded estimates, by 34% at the PBT/EPS level in FY20, with scope for further upgrades as and when additional orders are received. The Primestore device is proving its worth during the current Covid-19 pandemic. It deactivates viruses, bacteria, fungi and mycobacterium tuberculosis allowing safe sample handling and transport, greatly reducing risk of infection and enables samples to be transported at ambient temperatures, simplifying the significant logistical burden involved in transporting millions of samples. It is also worth reiterating that the sample collection device is agnostic as to which test is carried out on the patient sample, making this something of a picks and shovels play on the current environment. In addition to these US orders, EKF has now commissioned its facility in Wales and shipped its first product into the UK market this week. It has also begun the process to start manufacturing in Germany and will bring additional capacity on stream in the US in the near future. All of this is yet to be factored into estimates and represents additional potential sources of upgrades in due course. We continue to believe EKF is exceptionally well positioned in the current environment and is forming a crucial part of the supply chain required to significantly increase diagnostic testing capacity globally. EKF remains one of our Best Ideas for 2020, supported by a positive short and medium term outlook, strong fundamentals and a track record of meeting and beating expectations.
Companies: EKF Diagnostics Holding
Physiomics, the oncology consultancy using mathematical models and its Virtual Tumour™ technology to support the development of cancer treatment regimens and personalised medicine solutions, has today announced the completion of an £0.83m over-subscribed fundraise at 3.5p. This includes Director participation and the arrival of the Company’s first small-cap institutional fund onto the register.
Surgical Innovations has provided some useful context to the current trading environment. Whilst revenues are significantly down in Q2 so far, they are perhaps not down to the levels initially expected and there are some encouraging if tentative signs of life as hospitals prepare to recommence elective surgeries. The group’s cash position has increased to £1.65m (from £1.28m at the Y/E) and, with an undrawn £0.5m RCF and a new £1.5m CBILS facility, the group has £3.65m of available liquidity. This should be sufficient to cover its operational requirements for several months and to fund working capital as and when activity begins to pick up. Prior to the Covid-19 shutdown, momentum had been building in terms of market share gains, with new account wins in the UK and new distributor markets opening up globally. The company’s resposable model is ideally suited to the increased focus on sustainability, particularly reducing the use of single use plastics. With a number of new products expected to launch progressively over the next few years, we believe the company has bright prospects, once the short term challenge around Covid-19 has been navigated.
Companies: Surgical Innovations Group
Genedrive (GDR.L): SARS-CoV-2 test receives CE mark
Accelerating the COVID-19 Opportunity
Oncimmune has signed a new cornerstone agreement with Roche, having successfully delivered on an initial contract, using its SeroTag® biomarker platform to deliver insights into patient data collected during cancer immunotherapy trials. This is clear validation of Oncimmune’s approach and recognition from a frontrunner in cancer immunotherapy and diagnostics. It also demonstrates the potential of its expertise to advance the hugely promising field of Precision Medicine which can build on the remarkable advances already achieved in immune-oncology.