Small Cap Feast

Small Cap Feast – 12th May 2022

Dish of the Day:

No Joiners Today

Off the Menu:

No Leavers Today

What’s Cooking in the IPO Kitchen?

Trade journal, the drinks business, reports that two drinks companies of vastly different sizes are planning to offer shares on the London Stock Exchange in the near future through initial public offerings (IPO), having turned down private equity buy-out offers. BrewDog, the idiosyncratic craft brewer based at Ellon, north of Aberdeen, is expected to be valued at more than £2bn while the Kent-based iPro sports drink company will be worth a mere fraction of that. Brew Dog, which has been rocked by allegations of a “toxic” work culture, is rewarding salaried employees through a staff share issue and a profit share in its bars. The vastly smaller iPro is said to be looking to raise £100m from a share issue after turning down bids by three private equity companies to sell a majority stake.
EnSilica, intends to join AIM. EnSilica is a designer and supplier of mixed signal Application Specific Integrated Circuits (ASICs). ASICs are integrated circuits or semiconductor chips developed for a particular use or product rather than for general purpose usage. ASICs help differentiate products through optimised hardware thereby making products smaller, faster, lower power and more secure and can provide novel functionality, improve supply chain security and protect products from being copied. The Company has expertise in designing complex mixed signal ASICs, which combine digital and analogue functions onto a single chip. Mkt Cap TBC. Due late May 2022.
GS Chain, a company established with the purpose of undertaking acquisitions of an interest in an operating company or business in the technology sector, intends to list on the Main Market (Standard). Timing TBC.
Altona Rare Earths, the AQSE listed mining exploration company focused on the evaluation, acquisition and development of Rare Earth Elements mining projects in Africa, intends to join the Main Market. Admission to trading of the Company’s Ordinary Shares on the AQSE Growth Market will be cancelled simultaneously with Admission. It is also proposed that on Admission, the Company will change its EPIC from AQSE:ANR to REE. The Company also seeks to raise funds to finance its current and future rare earths mining projects in Southern and Eastern Africa. Due May 2022.

Breakfast Buffet

Destiny Pharma 47.5p £34.8m (DEST.L)

Destiny Pharma, a clinical stage innovative biotechnology company focused on the development of novel medicines that can prevent life-threatening infections, today announces that data generated from a recent C. difficile infection (CDI) model study, on the ability of non-toxigenic C. difficile strain M3 (NTCD-M3) to successfully colonise the gut following administration of antibiotics, has been accepted for presentation at the prestigious Anaerobe 2022 Conference in Seattle, 30th July 2022. As previously reported, a Phase 2 clinical trial in patients suffering CDI demonstrated that administration of NTCD-M3 shortly after the use of antibiotics to treat the initial infection successfully reduced recurrence from 30% in placebo to 5% in treated patients. Patients received either vancomycin or metronidazole to treat the initial toxic C. difficile infection before receiving NTCD-M3 treatment. Since the end of this trial, a new antibiotic, fidaxomicin, has been added to US clinical guidelines for treating CDI. It is known that fidaxomicin3 resides for a longer period within the gut potentially inhibiting the colonisation by bacteria such as NTCD-M3. In summary, this study conducted in the lab of the authors at the Edward Hines, Jr. VA Hospital, clearly demonstrated that NTCD-M3 was able to effectively colonise the gut following fidaxomicin administration indicating that NTCD-M3 would be effective in patients receiving this antibiotic as well as older antibiotics such as vancomycin and metronidazole.

Mercia Asset Management 31.5p £138.6m (MERC.L)

The proactive, regionally focused specialist asset manager with c.£948m of assets under management notes that its first Knowledge-Intensive and annual Enterprise Investment Scheme (EIS) funds have raised a combined total of c.£20m in new capital during the last year. The specialist fund will invest in high-growth businesses that generate a positive impact, as outlined by the United Nations’ sustainable development goals. As one of the UK’s leading providers of both EIS and Venture Capital Trust investment capital, these successful fund raises, together with the £40m recently raised by the Northern VCTs, means that Mercia has raised over £60m in new funds from individual investors during the last year.

Michelmersh Brick 116.5p £111.6m (MBH.L)

The specialist brick manufacturer, announces at its Annual General Meeting: “The strong and well-balanced order book and positive order intake momentum reported in our FY21 results in March has continued to date, with stable demand from our loyal customer and distributor relationships in all of our end markets, whilst production volumes have continued in line with expectations. We continue to operate in a more challenging environment due to such factors as the ongoing elevated inflation rate. To protect our margins, we remain focused on mitigating risks to our input costs as well as maintaining appropriate portfolio pricing. As such, as announced in our FY21 results in March, in collaboration with our customers we will introduce our standard timetabled price increase in July 2022. At the same time, to mitigate the ongoing energy price risk, we have secured over 90% of the Group’s energy requirement for 2022 with further contracts into both 2023 and 2024. Despite the current macroeconomic uncertainty, the Board is confident that the ongoing quality fundamentals in our business and the wider sector provide resilience to our outlook. The Group has made an encouraging start to 2022, and combined with our strong forward order book, we remain on track to meet full year expectations.” Pending approval by shareholders at the AGM, the dividend in respect of the year ended 31 December 2021 of 2.50 pence per ordinary share will be paid on 13 July 2022 to members on the register on 6 June 2022.

Plant Health Care 12.1p £36.8m (PHC.L)

The provider of novel patent-protected biological products to global agriculture markets, announced the appointment of a new Chief Executive Officer and consequent changes to the Board. Jeff Tweedy, currently the Company’s Chief Operating Officer, will be appointed Chief Executive Officer (CEO) with effect from the Annual General Meeting on June 22nd, 2022 At the same time, Chris Richards, currently CEO, will be appointed Non-Executive Chairman of the Board and Richard Webb, currently Non-Executive Chairman, will step down from the Board. Chris Richards stepped in as CEO in November 2017, having previously been Chairman since August 2012. By appointing Chris to the role of Non-Executive Chairman, the Company continues to benefit from his deep experience. At the same time, Richard Webb, currently Non-Executive Chairman, will step down from the Board to pursue other interests.

Poolbeg Pharma 5.45p £27.25m (POLB.L)

The clinical stage infectious disease pharmaceutical company with a unique capital light clinical model, announces an update on its lead asset, POLB 001, a small molecule immunomodulator which aims to address a significant unmet need in severe influenza. The Company has signed a contract for GMP manufacturing, ensuring ample supply of GMP grade POLB 001 for use in its upcoming LPS human challenge clinical trial, due to commence in June 2022, and for use in investigating POLB 001 as a treatment for other disease indications. POLB 001 has potential therapeutic applications beyond severe influenza, due to its mode of action of reducing hyperinflammation which is linked with many diseases. Following receipt of the results from the upcoming bacterial lipopolysaccharide (LPS) human challenge trial, the Company aims to rapidly monetise POLB 001 by partnering or out licensing the product to pharma / biotech for further development and commercialisation. The GMP manufacturing of the product began in late 2021 to ensure that sufficient grade and quantities of the product is available for use in the forthcoming human challenge trial which is due to commence in June 2022, with first results expected before the end of the year.

Proteome Sciences 4.2p £12.3m (PRM.L)

The Company has secured a contract from a major US academic group to evaluate changes on the proteome and phospho-proteome of tissue and blood samples taken from persons with and without a neurodegenerative disease. The contract value is in excess of £0.5m and PRM expects the study to be completed this year. Commenting on the contract, Richard Dennis, Chief Commercial Officer of Proteome Sciences said: “We are pleased that the SysQuant workflows that we offer has been selected by our client to quantitate the proteomic/phosphoproteomic changes in these research samples. By using the TTMpro ™ reagents we are able to analyse 17 samples and one reference in one mass spectrometry experiment, so are able to deliver data from this large sample set in a timely manner and still be able to better quantitate smaller proteomic differences.”

Serabi Gold 37.5p £28.4m (SRB.L)

The Brazilian-focused gold mining and development company updated on its production at the Palito Complex, development on its wholly owned Coringa project and initial drilling at the Matilda prospect in the Tapajos region of Para State, Northern Brazil. Production from the Palito Complex showed a continued improvement with 2,919 ounces of gold produced for April, the highest monthly level so far in 2022.

Silver Bullet 155p £20.8m (SBDS.L)

The provider of digital transformation services and products has entered into a Joint Venture Agreement with Making Science Group, S.A. which will see the two companies combining their respective products, services, and talent to deliver solutions for the privacy-first, post-cookie era. Making Science is an international digital acceleration company with presence in 13 global markets: Spain, Portugal, Mexico, Colombia, France, Italy, Germany, the UK, Ireland, Sweden, Denmark, Georgia, and the US. In 2021, the Company achieved revenue of over EUR100m in its core digital business with a growth of 76% over 2020. Making Science has 777 global clients and supports its clients in digital advertising, data analytics, e-commerce, and cloud-based solutions, whilst also acting as a Google Marketing Platform Reselling Partner. The Agreement will expand the services and products of both companies, from first party data strategy design and deployment, technical implementations and integration across AdTech and MarTech platforms, data and analytics, and post-cookie solutions. It will lead to an attractive Google offering, including expert knowledge and the opportunity of being a Google Marketing Platform Reselling Partner. In addition, it will offer advanced 4D contextual video solutions across YouTube, as well as leverage established partnerships with Salesforce Marketing Cloud and leading CDPs such as Treasure Data, a Softbank-owned platform.

Verici DX 30p £51.1m (VRCI.L)

The developer of advanced clinical diagnostics for organ transplant announces the successful outcomes from its blinded, international, multi-centre validation study for Tuteva™, the Company’s post-transplant blood test focused on acute rejection, including sub-clinical rejection. The results of the validation study show that the test, a next-generation RNA sequencing assay, is demonstrating strong performance in the detection of acute rejection, following a kidney transplant. The finalised data, to be presented at the American Transplant Congress in June 2022, demonstrates a significantly higher Positive Predictive Value (PPV) for Tuteva™ than currently available kidney transplant blood tests, without enhancement from clinical features, in a broad validation population. This successfully addresses the unmet need for actionable, novel (immune-pathway) biomarker data in this field which should assist clinicians in improving patient outcomes.

Water Intelligence 705p £137m (WATR.L)

The multinational provider of precision, minimally-invasive leak detection and remediation solutions for both potable and non-potable has advanced its 2022 growth plan with the reacquisition of its franchise in central Texas within the Group’s American Leak Detection (ALD) subsidiary. The Acquisition builds upon the acquisition of its large Fort Worth, Texas franchise in January and the greenfield launch of a new corporate location in Wichita Falls in March. The purchase price of $0.75m in cash includes all assets required to conduct operations, including trucks and equipment. The purchase price is based on the franchise’s 2021 Statement of Income of $0.65m in revenue and $0.21m in profit before tax. The transaction is accretive to Water Intelligence shareholders.

Head Chef:

Derren Nathan
0203 764 2344
derren.nathan@hybridan.com

*A corporate client of Hybridan LLP

Disclaimer

This document, which does not constitute research, has been issued by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to any such action. This document has no regard for the specific investment objectives, financial situation or needs of any specific person or entity and is not a personal recommendation to any such person or entity. Recipients should reach an individual investment decision, based upon their respective financial objectives and financial resources and, if any doubt, should seek advice from an investment advisor.

The information contained in this document is based on materials and sources that are believed to be reliable; however, such information has not been independently verified and therefore it is not possible to confirm such information as being accurate. This document is not intended to be a complete statement or summary of any securities, markets, reports or developments referred to herein. No representation or warranty, either express or implied, is made or accepted by Hybridan LLP, its members, officers, employees, agents or associated undertakings in relation to the accuracy, completeness or reliability of the information contained in this document, nor should it be relied upon as such.

The content of this document includes market commentary and other information which we have prepared in relation to the company referred to in this document, which is our broking client. The provision of this document to you constitutes a minor non-monetary benefit which is capable of enhancing the quality of service provided by Hybridan LLP and which is of a scale and nature which could not be judged to impair the duty of Hybridan LLP to act in the best interest of its client falling within article 24(7)(b) of Regulation 600/2014/EU (MIFID II Regulation).

Any and all opinions expressed are current as of the date appearing on this face of this document only. Any and all opinions expressed are subject to change without notice and Hybridan LLP is under no obligation to update the information contained herein. To the fullest extent permitted by law, none of Hybridan LLP, its members, officers, employees, agents or associated undertakings shall have any liability whatsoever for any direct or indirect or consequential loss or damage (including lost profits) arising in any way from use of all or any part of the information in this document.

This document should not be relied upon as being an independent or impartial view of the subject matter and, for the avoidance of doubt, constitutes non-independent research (as such term is defined in the Financial Conduct Authority’s Conduct of Business Sourcebook to reflect the requirements of the MIFID II Regulation and Directive 2014/65/EU (known as MIFID II)). The individuals who prepared this document may be interested in shares in the company concerned and/or other companies within its sector, may be involved in providing other financial services to the company or companies referenced in this document or to other companies who might be said to be competitors of the company or companies referenced in this document. As a result both Hybridan LLP and the individual members, officers and/or employees who prepared this document may have responsibilities that conflict with the interests of the persons who receive this document. Hybridan LLP and/or connected persons may, from time to time, have positions in, make a market in and/or effect transactions in any investment or related investment mentioned herein and may provide financial services to the issuers of such investments.

In the United Kingdom, this document is directed at and is for distribution only to persons who (i) fall within article 19(5) (persons who have professional experience in matters relating to investments) or article 49(2) (a) to (d) (high net worth companies, unincorporated associations, etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529) (as amended) or (ii) persons who are each a professional client or eligible counterparty (as those terms are defined in the Financial Conduct Authority’s Conduct of Business Sourcebook) of Hybridan LLP (all such persons referred to in (i) and (ii) together being referred to as relevant persons). This document must not be acted on or relied up on by persons who are not relevant persons. For the purposes of clarity, this document is not intended for and should not be relied upon by any person who would be classified as a retail client under the Financial Conduct Authority’s Conduct of Business Sourcebook.

Neither this document, nor any copy of part thereof may be distributed in any other jurisdictions where its distribution may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Distribution of this report in any such other jurisdictions may constitute a violation of territorial and/or extra-territorial securities laws, whether in the United Kingdom, the United States or any other jurisdiction in any part of the world.

Where possible this document is made available to all relevant recipients at the same time. Dissemination of research by Hybridan LLP is monitored to ensure that it is only provided to relevant persons. Research prepared by Hybridan LLP is not intended to be received and/or used by any person who is a retail client.

Hybridan LLP and/or its associated undertakings may from time-to-time provide investment advice or other services to, or solicit such business from, any of the companies referred to in this document. Accordingly, information may be available to Hybridan LLP that is not reflected in this material and Hybridan LLP may have acted upon or used the information prior to or immediately following its publication. In addition, Hybridan LLP, the members, officers and/or employees thereof and/or any connected persons may have an interest in the securities, warrants, futures, options, derivatives or other financial instrument of any of the companies referred to in this document and may from time-to-time add or dispose of such interests.

This document may not be copied, redistributed, resent, forwarded, disclosed or duplicated in any form or by any means, whether in whole or in part other than with the prior written consent of Hybridan LLP.

MIFID II status of Hybridan LLP research
The cost of production of our corporate research is met by retainers from our corporate broking clients. In addition, from time to time we issue further communications as market commentary (such as our daily newsletter, Small Cap Breakfast), which we consider to constitute a minor non-monetary benefit which is capable of enhancing the quality of service provided by Hybridan LLP and which is of a scale and nature which could not be judged to impair the duty of Hybridan LLP to act in the best interest of its client falling within article 24(7)(b) of the MIFID II Regulation.

Hybridan LLP is a limited liability partnership registered in England and Wales, registered number OC325178, and is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX.

If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”.