Two recent acquisition announcements, Ergomed and Instem, highlight a growing trend: private equity firms are targeting undervalued British life sciences companies that cannot meet their growth aspirations through AIM’s limited capital funds.
For sector scholars, the transactions are part of a broader pattern that has seen a number of small British innovators picked up in recent years for relatively modest sums. On the list are names like BTG, UDG, Clinigen and Amryt Pharma.
The speculation is that the latest two PE conquests will eventually “make an Arm Holdings.”
In other words, they will appear several years later on the Nasdaq with a much higher value than before they were privatized.
In the life sciences sector, westward migration has been occurring for at least a decade.
Acquisitions: London-listed life sciences companies Ergomed and Instem recently agreed to be acquired by private equity firms
“Investors in the US understand the US healthcare market better than those in the UK (they live the system every day),” said Max Hermann, healthcare analyst at US investment bank Stifel.
Looking at the broader market, the AIM All-Share has fallen 0.7 percent to 735.96 over the last five trading days. This meant it marginally underperformed the FTSE 100, which traded sideways over the same period.
The rebound in back-to-school activity didn’t properly occur until Wednesday, when news flow at least returned to more normal levels, even if stock trading volumes remained low.
Indian Infrastructure was the star performer of the week with shares rising 130 percent thanks to the sale of its main asset, a logistics operation in the subcontinent, in a deal valued at $10 million in cash, plus shares.
An early morning that had a strong rise on Friday was Atlantic Lithium, which rose 20 per cent to 24.86p on the day and 27 per cent for the week. This followed news that the Ghana Minerals Income Investment Fund will invest around £26 million to support the company’s flagship project.
Another of the best results in the sector was Tertiary minerals (up to 30 per cent at 1.2p). The Swedish government has asked the country’s Mining Inspectorate to take a fresh look at why it blocked the Storuman Fluorspar Project.
The cost of raising new capital in the small-cap segment of the market was highlighted by the battery group’s efforts. AMTE Energy and his advisors.
It hopes to attract just over £2m of new investment. But in doing so, he found himself discounting shares to 1.7p as part of the process.
This caused an almost precipitous price drop of 7.35p, or almost 80 per cent, to 1.9p.
Continuing with the falleros, supplier of capital goods Group 600 took a beating when the stock fell 46 per cent to 2.55p.
He seems to face a litany of problems. His audit will not be complete before the annual meeting later this month, shares will be suspended in October, while trading conditions remain difficult.
China Non-Ferrous Gold (CNG)owner of a gold project in Tajikistan, is in a difficult situation.
He said a $65 million loan that must be renewed will not be extended. According to the company’s latest update, it has just under $5 million in cash and $316 million in loans, of which $242.65 million is due in the next 12 months.
Reflecting its sorry financial situation, the stock was down 55 per cent to 0.8p on Friday.
On the contrary, the problems faced by AAdvanced Medical Solutions Group It would seem much more benign: growing pains, if anything.
However, the small cap market would seem, to break a cliché, to be a relentless lover.
The stock fell 26 per cent to 185 pence after the company cut its profit estimates amid a lack of clarity over certain US royalty payments.
In an update, AMS said there were concerns about reimbursement for a diabetic foot ulcer treatment licensed to a company called Organogenesis.
It is at this point in the report that we take a look at a stock that may not be on everyone’s radar. This week is ANGLE. Now, this company has been around for some time, but it has made significant strides lately.
Led by founder Andrew Newland, ANGLE has developed an FDA-cleared liquid biopsy system that detects the telltale signs of cancer, which can then assist with more effective cancer treatment.
It’s unique because Newland and the team not only created the technology, but have now taken it to the cusp of commercialization.
Research from investment banks Berenberg and Jefferies highlights ANGLE’s promising growth and revenue momentum in the second half of the fiscal year.
According to Berenberg, ANGLE is making “encouraging progress in both content and clinical data development,” supporting increased revenue momentum going forward. Recognizing this, the shares ended the week up 40 per cent at 16.01p.
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