Two deals in recent days illustrate the problem with AIM as an incubator for fledgling drugs stocks.
While Abzena (LON: ABZA) has turned to the private equity industry for succour, the main body of SalvaRx’s (LON: SALV) business was being offloaded to a Canadian firm leaving UK investors with paper listed in the US.
British backers of the quoted life sciences businesses, particularly those focused on the junior bourse, are said to be so short-term they make goldfish look like memory experts.
Of course, that’s a tongue-in-cheek observation.
Cambridge cluster: Abzena is one of the many biotech companies based near the university
But then would the two transactions cited above occurred, if the capital markets this side of the pond were as effective as say the Amex and Nasdaq exchanges, where investors are exceptionally patient?
Abzena for its part has agreed to be taken over by the world’s largest healthcare-focused private equity house in a deal worth £34.4m.
WCAS, which since 1979 has invested US$9bn in 90 companies, is offering 16p a share – a 167% premium to Abzena’s closing price on Wednesday, the day before the bid was made public.
Investors speaking for around 76% of the company’s shares have said they are behind the deal, with the board claiming the WCAS deal will ‘better meet the needs of Abzena’s shareholders, customers and staff alike, and provide a platform for further growth in the coming years’.
Shares soared 142% to 15.2p.
Sale: Have UK investors been too impatient in realising a return from biotech?
Fellow drug developer SalvaRx Group was another of this week’s biggest movers, adding almost two-thirds to its value after striking a deal to sell off its core immuno-oncology assets for a hefty sum.
Canadian outfit Portage agreed to issue 757.9mln shares as payment for SalvaRx Limited, equivalent to around US$75.8mln based on Portage’s closing price on the OTC Markets exchange on Monday.
That figure represents a premium of over 250% to SalvaRx’s market valuation on the day before the offer was lodged, the company said.
SalvaRx bosses said the company’s share price performance on AIM has been ‘relatively disappointing’ and that the sale was the best way to ‘unlock and maximise value for shareholders’. Shares rose 64% to 73p.
Fusion Antibodies (LON: FAB), which trades under the ticker FAB, was far from that this week as a profit warning sparked a sharp sell-off in the antibody engineering services group.
The company said trading in its current financial year has been slower than expected due to a combination of factors, including increased competition, pricing pressures and delays in securing some large contracts.
All that means full-year results will be ‘significantly behind current market expectations’. Unsurprisingly, the share price took a kicking, diving 36% to 77.5p.
Green & Smart Holdings (LON: GSH)was another not looking too clever as it returned from suspension after finally publishing its results for the year to the end of September 2017.
The Malaysian renewable energy group threw in its half-year results for the period to the end of March for good measure as well.
Last month, Green & Smart launched an emergency fund-raising, raising roughly £3.2mln as it sold shares at 6.19p a pop.
On its return to trading, the stock fell 35% to 4.25p, having been suspended at 6.63p.
Those last two are a better reflection of the week for the junior market as a whole, with the AIM All Share continuing to fall away from last month’s all-time highs. This week it lost 0.7%, or 7.1 points, to 1,080.0.
That was still better than the blue-chips though, which have struggled as the problems in Turkey weigh on the markets. The FTSE 100 finished the week down 1.6%, or 125 points, to 7,535.9.
It’s been a quiet summer over at IndigoVision(LON: IND), but the CCTV cameras maker shares popped up on the radar on Wednesday after Swedish serial investor Peter Gyllenhammar took a stake in the firm.
New watchers: Star Swedish investor has led to a share price surge at IndigoVision
Gyllenhammar, who has pushed for changes at companies he has taken a stake in in the past, now owns 3% of the Indigo.
His arrival sparked some interest in the stock, which jumped by almost a third to 127p.
MediaZest (LON: MDZ) left a bitter taste in investors’ mouths as it reported a massive drop in earnings as a result of delays to three of its ‘substantial projects’.
The audio-visual company saw losses widen significantly in the year ended March 31 to £113,000, from just £2,000 a year earlier. Revenues were also lower, declining 6% to £2.8mln.
Despite the poor performance, all of the delayed projects have fallen into the first half of the current year, leaving MediaZest confident it can make ‘substantial progress in financial performance’ this time around.