IXICO PLC

London, the United Kingdom-based IXICO PLC (LON: IXI) is an AIM-listed and fast-growing data analytics company, which helps biotech and pharmaceutical customers to get more from their clinical development programmes. The company provides neuroscience expertise and international operations to deliver digital and imaging biomarker analytical services for clinical development, contained by a framework of regulatory compliance. Since 2004, the company has been working to help advance therapies for neurological diseases.

Recent News
On 23^rd December 2019, the company announced the expansion of the study programmes for a total consideration of 2.4 million pounds, with two large pharma client contracts. First client contract is of 1.8 million pounds for the expansion to a Phase III study in HD (Huntington's Disease). The Second contract is of 0.6 million pounds for the expansion to a study programme in PSP (Progressive Supranuclear Palsy).

Financial Highlights (for the year ended 30 September 2019, £million)

(Source: Annual Report, Company Website)

For the current period, the company’s revenue increased by 40% or £2.2 million to £7.6 millionas compared with the corresponding period of the last year, due to a widening of neurological therapeutic areas being serviced, an increasing portfolio of clinical trial projects, and the impact of a Phase III clinical trial accelerating enrolment in the second half of 2019. The gross margin for the year ended 30 September 2019 increased by 660 bps to 65.4% against the 58.8% in FY18. From 2016, the company has reported a loss, but in 2019, IXICO Plc has reported profits. On 30^th September 2019, the order book decreased by £3.4 million to £15.9 millionas compared to £19.3 million at 30 September 2018. The company had a closing cash balance at 30 September 2019 of £7.3 million (2018: £7.9 million).

Share Price Performance

Daily Chart as at December-30-19, before the market closed (Source: Thomson Reuters)

On 30th December 2019, IXICO PLC shares were trading at GBX 94 at the time of writing before the market close (at 8:15 AM GMT), up by 0.53% against the previous day closing price. Stock's 52 weeks High and Low are GBX 98/GBX 21. The company's stock beta stood at 0.33, reflecting the lower volatility as compared to the benchmark index.

Conclusion
In the current period, the company has shown a pivotal year in strengthening as a trusted technology partner in clinical development. The group reported a decent order book of £15.9 million and new contracts were signed.
Currently, PSP and HD are devastating neurological conditions, with no cure. The services will empower them to gauge the effect of trialled drugs with unlocking new insights into disease progression.

Following the expansion of these work programmes for two large pharma clients is additional evidence of the value that the company provide through the proprietary AI (Artificial Intelligence) data analytics and the ability to scale the operations to meet increasing size and complexity of clinical trials as the group progress through clinical development.

Some key operational and financial risks are failure of IT infrastructure, resource constraints which impact operational delivery, early termination of a client’s clinical trial, loss of a key commercial relationship with a client, liquidity risk, credit risk, and currency risk.

Presently, the company is trading near the 52-week high, raising doubts at its upside potential at the current price level. The company has also witnessed geopolitical tensions which have resulted in the economic slowdown in the multiple geographies globally.

Based on the headwinds faced by the group, we have given a "WATCH" recommendation at the current price of GBX 94 (as on 30th December 2019, before the market close), while we look for any upcoming catalysts in the near term.

Electra Private Equity PLC

Electra Private Equity PLC (LON: ELTA) is the London Stock Exchange (LSE) listed investment trust concentrated on private equity investments. On 30^th September 2019, the company had a net asset value per share of 548 pence and net assets of £210 million.

Recent News
On 16^th December 2019, the company has changed its registered office to 17 Old Park Lane, London, W1K 1QT.

Financial Highlights (for the full year ended 30 September 2019)
On 30^th September 2019, the company’s net asset value stood at £210 million(548.4 pence per share), a decrease from the corresponding period of the last year. Valuation of the 4th largest controlled investments surged by 30.6 per cent to £186.6 million against the previous year, including 88.9 per cent of NAV. The two smaller investments and SPC (Special Product Company) realised post-year-end at a one million pounds uplift to NAV with cash received of £12 million. Remaining fully controlled assets (TGI Fridays, Sentinel, and Hotter Shoes Performance Solutions) have combined last twelve months maintainable EBITDA of 35.5 million pounds with a £55.3 million of net debt (comprising cash held centrally). From January 2020, the cash operating costs expected to decrease to less than 3 million pounds per annum. First special dividend per share of the financial year 2020 of 31 pence declared and will be paid on 24th January 2020 to investors.

Share Price Performance

Daily Chart as at December-30-19, before the market closed (Source: Thomson Reuters)

On 30th December 2019, Electra Private Equity PLC shares were trading at GBX 388.32 at the time of writing before the market close (at 8:50 AM GMT), down by 4.12% against the previous day closing price. Stock's 52 weeks High and Low are GBX 405/GBX 267.09. The company's stock beta stood at 0.94, reflecting the lower volatility as compared to the benchmark index.

Conclusion
The group is going through an existential crisis as its lead investment manager was ousted from the company. It is also under intense regulatory oversight, which might lead to punitive measures in the future. The general market sentiments do not help either due to the Brexit uncertainties. The company’s operations are impacted by multiple risks and uncertainties, such as the impact of volatility of commodity prices, currency fluctuations, environmental risks, government regulation, etc.

The development made by some of the company’s higher unquoted holdings has resulted, in the decrease in NAV per share (net asset value) during the current period (30th September 2019) of 548.43 pence.The company operates in an industry with low barriers to entry and exit for new competitors, which can disrupt the market locally.

Currently, the stock is trading near the 52-week high, suggesting that the upside potential might be limited, and the company can face stiff resistance at the current level.

Therefore, considering the ongoing challenges in the UK’s market and uncertainties in near-term, we have given a “Watch” recommendation at the closing price of GBX 405 (as on December 27, 2019), while we look for any upcoming catalysts in the near term.

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