Small-cap and Aim pharma developers can come unstuck through any number of variables, but valuations rest on assumptions linked to the addressable market for their products, the perceived chance of clinical success, and the likely capital allocation needed to achieve it.
So, even though 4D Pharma (DDDD) can point to an upcoming Phase II trial for Blautix, its treatment for irritable bowel syndrome, the completion of the Phase I study of Thetanix, a clinical programme in paediatric Crohn’s Disease, together with completion of the first clinical trial of the MicroDx diagnostic platform, the shares have still lost 62 per cent of their value over the past 12 months. The market isn’t anticipating near-term commercial success.
In fairness, the biotherapeutics specialist makes no secret of the scale of its task, noting that it is not only trying to launch a novel drug, but a completely new method of treating illness. Considering US regulators approve an average of just 31 drugs every year, 4D's chance of success is currently not high.
4D PHARMA (DDDD) | ||||
ORD PRICE: | 128p | MARKET VALUE: | £84m | |
TOUCH: | 125-131p | 12-MONTH HIGH: | 467p | LOW: 114p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 107p* | NET CASH: | £50m |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2013 | nil | -1.1 | na | na |
2014 | nil | -2.4 | -4.8 | nil |
2015 | nil | 10.1 | -12.6 | nil |
2016 | nil | -11.7 | -15.2 | nil |
2017 | nil | -24.0 | -31.4 | nil |
% change | - | - | - | - |
Ex-div: | na | |||
Payment: | na | |||
*Includes intangible assets of £14.7m, or 22p a share |