Although it has yet to generate revenues and losses are widening, investors haven't been deterred from backing 4D Pharma (DDDD), a company whose shares have seen a 10-fold increase since it started trading on Aim in 2014. For many, a rise of this magnitude for a loss-making entity might seem absurd, but star investor Neil Woodford has described the company as "undervalued", based on its commercial potential.
4D Pharma specialises in a novel scientific discipline: biotherapeutics. This involves developing therapies for a range of diseases through the utilisation of live bacteria, as opposed to chemicals or DNA technology. The group has developed a platform, known as MicroRx, to select bacteria that could have a positive therapeutic effect. Last year, the system produced some exciting results and 4D now has 15 projects in its pipeline covering cancer, autoimmune and central nervous system diseases.
In the period, the group commenced its first human trial in patients with irritable bowel syndrome and gained approval to start another trial in paediatric Crohns disease. This led to a 280 per cent increase in research and development expenses, but having raised £64.8m in the year through two placings, 4D remains in a healthy cash position.
4D PHARMA (DDDD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,000p | MARKET VALUE: | £648m | |
| TOUCH: | 1,000-1,015p | 12-MONTH HIGH / LOW: | 1,045p | 570p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 143p* | NET CASH | £85.4m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 55.0 | neg | na | na |
| 2012 | 20.0 | neg | na | na |
| 2013 | nil | -1.1 | na | na |
| 2014† | nil | -2.4 | -4.8 | nil |
| 2015 | nil | -10.1 | -12.6 | nil |
| % change | - | - | - | - |
*Includes intangible assets of £6.17m, or 9.5p. †Period from 10 January 2014 | ||||
