Welcome to our new product “Friday Takeaway”
This will delve a little deeper on individual companies and focus on non-house stocks under £200m market capitalisation to help raise awareness
| Index | Thurs | Weeks change % |
|---|---|---|
| FTSE 100 | 8,281 | +0.5% |
| FTSE Small Cap | 6,915 | -0.3% |
| AIM All Share | 742 | -0.8% |
GENI- Predictable Pipeline
ITIM- Retail Therapy
PRE- Final Attraction
STX- Ironed-up
A specialist in predictive genetics used in patient risk assessment focusing on cardiovascular disease, (CVD), and Ovarian Cancer. CVD includes stroke, heart failure, hypertension and is the leading cause of death and disability worldwide accounting for 1 in every 4 deaths in the US.
Its Interim to June 2024 reported revenue increasing 46% to £1.39m, helped by the first US commercial sales for its LIPID inCode test for the diagnosis of familial hypercholesterolemia and including increased sales of CARDIO inCode test for the genetic risk of coronary artery disease. The Adjusted EBITDA loss decreased to £2.16m from £3.37m, with administration expenses 24% lower to £2.2m, the operating loss declined 31% to £2.5m. Last year revenues increased 51% to £2.2m so the momentum is continuing, and gross profit margins are steady at 52%.
Management anticipates significant revenue growth and reduced losses for the December 2024 year-end with the commercial expansion of LIPID inCode and CARDIO inCode across the US market, as well as expansion of the NHS programme for LIPID inCode, and CARDIO inCode and further collaboration with pharmaceutical 'precision medicine' partners.
The last funding before the December 2023 Finals raised £4m at 5p. Shareholders include Octopus Investments with 17.6%, Maven Capital with 13.3%, the family office Santi-1990 SL 11.4% and Foresight Group hold 5.8%, with around 60% of the shares not in public hands. June’s cash reserves were £2.92m giving a circa six-month runway to convert the ‘solid’ pipeline of opportunities, then a further funding could see it to breakeven within 12-18months.
Comment: The bigger risk could be missing the predictable upside.
The shares reacted positively, after this SaaS retail technology company announced interims to June 2024. Revenue increased by 19% at £8.8m, due to new contract wins and higher levels of service income and its gross profit margin calculated at the interims came in at 38% versus 25% June 2023. The adjusted EBITDA increased to +£1.2m against a previous loss of £0.2m and the loss before tax fell sharply to £0.1m from £1.1m. The annual recurring revenue is running at a healthy £13.2m.
itim was established in 1993, initially consulting retailers on improving operations and by 2004 focused exclusively on digital technology with proprietary software. itim has grown organically and by a series of acquisitions of retail software systems which were redeveloped to create a fully integrated end to end Omni-channel platform.
As a result of new contract wins and the encouraging trading, the Board expect to beat the market forecast. There is strong cash generation and net cash balance increased to £3m from £1.9m.
Comment: EBITDA/EV, assuming a similar H2, is 5.5x, which is modest for a software company at break-even.
The shares improved after the U.S. International Development Finance Corporation (DFC) granted $3.4m of Technical Assistance to support feasibility studies. Pensana, owns one of the world's largest undeveloped rare earth mines and one of only three with a JORC Reserve >100,000 tonnes of Neodymium and Praseodymium (NdPr) which is a strategic mineral used to make strong magnets.
Once in full production Longonjo could produce ~5% of world production of NdPr in the form of an exported mixed rare earth carbonate used by EV automotive and offshore wind OEMs. This is subject to it completing a $200m debt/equity funding at the project level, which after some years seems nearer. The Board was recently restructured.
This relatively small US funding could have a high impact in being able financially to explore how the production capacity of the existing Longonjo mine can be increased. Work is to be done on studying the feasibility of an Angolan refinery for producing the magnets, which is extremely value adding. Finally, the funding is to be used for exploration work for the development of the Coola project orebodies, which could further increase the already world class NdPR reserves.
Comment: Once funded, the strategic importance of this world class rare-earth project could be worth significantly more.
*Jonathan (Jon) Levinson, an employee of Hybridan LLP, is a shareholder in Pensana plc.
This commercial stage pharmaceutical company specialising in iron deficiency, which is the world’s most common nutritional disorder, report good results from its Phase 3 paediatric clinical trial (FORTIS/ST10-01-305). These confirmed the efficacy, safety, and tolerability of the new oral liquid paediatric suspension in children with Iron Deficiency Anaemia (IDA). IDA causes weakness, shortness of breath, pale skin, dizziness and a tingling crawling feeling in legs.
The full data set, including pharmacokinetic (PK) sub-study parameters, will be submitted for peer-review for subsequent presentation/publication and commercialisation. The data will be used to support a filing with the US FDA and European EMA for a paediatric indication in children older than one month in H1 2025.
Shield is due to be paid EUR1m as development milestones from its European partner, Norgine BV. At the Interims in June, net cash of $8.1m was billed as sufficient funding for H2 2024 and beyond. AOP Health, with net sales of EU230m owns 39% of the Company.
Comments: Listed in 2016 at 150p with a £162m market capitalisation, it’s been a tough journey, but it should be funded to a key inflection point in H1 2025.
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