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Woodford vote spurs e-Therapeutics

RESULTS: Shares in drug discovery company e-Therapeutics have rebounded as it has emerged that Neil Woodford will carry the stock into his new fund's portfolio.
May 13, 2014

Shares in drug discovery company e-Therapeutics (ETX) have bounced back after a second vote of confidence by Neil Woodford. Having left Invesco Perpetual last month, the top fund manager is not due to launch his new fund for another month. But e-Therapeutics' chief executive Malcolm Young told us that Mr Woodford - who held the shares while at Invesco - had already pledged to maintain his support. That has helped buoy the share price back to its 2013 high in anticipation.

IC TIP: Buy at 36p

After last year's supply issues and subsequent delays, the group is still plugging away at pushing its two main compounds through clinical trials. As a result, primary compound ETS2101 - targeting brain cancer - will not enter secondary phase trials until the second half of 2015, despite encouraging initial results. Alternative compound ETS6103, which targets the treatment of severe depression, could sign a licensing deal as early as next year. But this product is expected to be the less lucrative of the two.

The company banked £40m from an equity fundraising in March 2013, and claims clinical work is now fully funded through to 2019. But until revenues and payments from licensing partners exceed spending on research and development, there is no hope of imminent earnings.

E-THERAPEUTICS (ETX)

ORD PRICE:36pMARKET VALUE:£95m
TOUCH:34-37p12-MONTH HIGH:36pLOW: 20p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:17pNET CASH:£6.9m

Year to 31 JanTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2010nil-2.3-3.0nil
2011nil-2.7-3.5nil
2012nil-3.9-2.5nil
2013nil-5.0-3.0nil
2014nil-6.1-2.0nil
% change----

Ex-div: na

Payment: na