Synairgen Plc (LON: SNG)

Business Overview
United Kingdom-based Synairgen Plc is a holding company. The group is involved in the drug development and discovery of therapies for respiratory diseases, mainly in the areas, including chronic obstructive pulmonary disease (COPD), idiopathic pulmonary fibrosis (IPF), and severe asthma. The group utilizes its human biology BioBank platform to develop and discover therapies for respiratory disease. The group's subsidiary consists of Synairgen Research Ltd. Currently, the company is a member of the FTSE AIM All-Share index.

Financial Highlights - H1 Financial Year 2019 (30^th June, GBP, thousand)

(Source: Interim Report, Company Website)

For the six months ended 30 June 2019, the company’s loss from operations stood at £2.21 million, an increase from the previous year (six months ended 30 June 2018: loss of £1.86 million, the year ended 31 December 2018: loss of £4.13 million). Research and development expenditure surged to £1.69 million for the six months ended 30 June 2019 from £1.38 million in the six months ended 30 June 2018. For the current period, the other administrative costs of £0.52 million were in line with the corresponding period of the last year. The loss after tax stood at £1.77 million in H1 FY2019, an increase of 16.8% from the same period in 2018. The basic loss per share stood at 1.62 pence against the loss per share of 1.66 pence in H1 FY18.

On 30th June 2019, net assets stood at £4.30 million versus £5.09 million in H1 FY18, including net funds (comprising cash balances and bank deposits) of £3.52 million (30 June 2018: £5.31 million, 31 December 2018: £5.33 million).

Share Price Performance  

Daily Chart as on 14^thFebruary 2020, before the market closed (Source: Thomson Reuters)

On February 14^th, 2020, Synairgen Plc shares were trading at GBX 17.80 at the time of writing before the market close (at 8:10 AM GMT), up by 9.54 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 17.8/GBX 5.5. The stock price has given4.09 per cent returns during the previous year. In the last three months, the stock price has given 118.4 per cent returns and now some correction in stock price is expected.

Conclusion
During the first half of the fiscal year 2019, the company has focused on the IFN-beta, which is an antiviral candidate. This drug could treat the viral chest infections. The Group expects this drug to be commercially attractive and could potentially be a game changer for the company. Synairgen has expected to complete the trial of this candidate in early 2020 and its results on the company’s financial performance could be seen in the second quarter of the fiscal year 2020. The company has been preparing for a busy winter and is well poised to complete its Phase II clinical trial. The company’s revenue from contracts with consumers for the six months ended 30 June 2019 remained nil. The profitability margins have remained stagnant or declined. The company’s bottom-line performance has remained in the negative zone for the current period. The company operates in a challenging environment which requires continuous investments, sometimes at the cost of profitability, to stay ahead of the competition. The company’s P/E, EV/EBITDA and P/CF multiples are in negative zone as compared to the industry multiples.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the current price of GBX 17.80 (as on 14th February 2020 before the market close at 8:10 AM GMT), with support from trail of IFN-beta candidate needs to be evaluated at a later stage. 

E-Therapeutics Plc (LON: ETX)

Business Overview
AIM-listed E-Therapeutics Plcis a biotechnology and pharmaceutical company. They have a unique computer-based platform, and a revolutionary network is a driven drug discovery (NDD) system, which enables them to discover novel and better drugs faster. As on November 28, 2007, its shares got listed on the Alternative Investment Market of the LSE for trading. The outstanding market capitalisation of the company ranks it among the small-cap companies listed on the LSE.  INVESCO Asset Management Limited, Lombard Odier Asset Management (Europe) Ltd, and Octopus Investments Limited are the major institutional investors in the group.

Recent News
On 11^th February 2020, the company announced that Iain Ross has stepped down as Non-Executive Chairman of the company. Ali Mortazavi would replace him as an Executive Chairman with immediate effect.

The Company has placed 53,302,355 new ordinary shares of 0.1p each at a price of 3.0 pence per share to raise funds of GBP 1.6 million. This fund would be used for general working capital purposes.

Financial Highlights - H1 Financial Year 2020 (31^st July 2019, GBP, thousand)

(Source: Interim Report, Company Website)

In the first half of the fiscal year 2020, the company’s revenue was GBP 188 thousand due to the ongoing Novo Nordisk collaboration. Gross profit during the period was GBP 188 thousand. Operating loss of the Group was GBP 1.6 million in H1 FY2020 as compared to loss of GBP 2.8 million in H1 FY2019. Loss for the period during the H1 FY2020 was GBP 1.29 million as compared to loss of GBP 2.18 million in H1 FY2019. Loss per share has reduced to 0.48p in H1 FY2020 as compared to loss per share of 0.81p in the first half of the fiscal year 2019.

Share Price Performance  

Daily Chart as on 14^thFebruary 2020, before the market closed (Source: Thomson Reuters)

On February 14^th, 2020, E-Therapeutics Plc shares were trading at GBX 6.1 at the time of writing before the market close (at 9:04 AM GMT), down by 11.8 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 8.25/GBX 1.25. The stock price has given16.19 per cent returns during the previous year. In the last three months, the stock price has given 92.43 per cent returns and now some correction in stock price is expected.

Conclusion
The company is making progress in business development. The company has focussed on the potential revenue and cash generating partnerships which would benefit its growth and improve its financial performance. The Group is actively exploring all organic and non-organic opportunities that have the potential to create value for the company. The company is expecting more reduction in its operating loss in the second half of the fiscal year 2020. The Group expected revenue generation from collaborations could enhance the growth rate of its business. However, there are certain principal risks and uncertainties which could affect the overall performance of the company. Failure to secure intellectual property rights could affect the revenue of the Group. Failure of drug candidates due to a lack of efficacy or potency could impact the operations and profitability of the company. Without adequate revenue, company would unable to fund its business and would unable to grow. Failure in cybersecurity and a critical data breach could affect the operations as well as the reputation of the Group.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the current price of GBX 6.985 (as on 14th February 2020 before the market close at 8:10 AM GMT), with support from collaborations and partnerships needs to be evaluated at a later stage.  

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