Two AIM Listed Healthcare Stocks Trending on LSE: Genedrive PLC & Midatech Pharma PLC

Two AIM Listed Healthcare Stocks Trending on LSE: Genedrive PLC & Midatech Pharma PLC

Summary

  • As per the industry experts in the UK, 16 percent of British employers offered no increase in wages for the three months ended in June. However, the proportion was 15 percent up from three months ended May.
  • The UK government announced above-inflation pay rise to around 1 million public sector workers due to their vital contribution on the front-line.
  • Genedrive developed Genedrive 96 SARS-CoV-2 kit to detect active infection in Covid -19 patients.
  • Genedrive issued 7.1 million new shares after the Global Health Investment Fund exercised the rights to redeem convertible bonds worth USD 8.0 million.
  • Midatech Pharma raised gross proceeds of £4.3 million through the placement of ordinary shares in the UK and the issue of American Depositary Shares in the US.
  • Midatech Pharma appointed Noble Capital Markets, Inc to advise the Board and start formal sale process under the City Code on Takeovers and Mergers.

Given the above-market conditions, we would discuss two healthcare stocks - Genedrive PLC (LON: GDR) & Midatech Pharma PLC (LON: MTPH). As on 21 July 2020 (before the market close at 3.30 PM GMT+1), GDR and MTPH were up by 11.95 percent and 270.24 percent, respectively, against the previous day closing. Let's skim through their financial and operational updates to understand the stock better.

Genedrive PLC (LON: GDR) - Raised £7.0 million through the placement of 8.75 million new ordinary shares

Genedrive PLC is a UK based Pharmaceutical Company, which is engaged in the development and sales of molecular diagnostics platform for the diagnosis of infectious diseases. The Company targets Global Health and Developed Markets. Genedrive has HCV ID kit and Tuberculosis detection kit for the Global Health. In the Developed Market, the Pathogen detection range is for the US Department of Defense (DoD) and NHS hospitals. The Company is included in the FTSE AIM All-Share index.

12-month trading Update (ended 30 June 2020) as reported on 10 July 2020

The Company generated revenue of £1.0 million for the 12 months to 30 June 2020; the revenue was £2.4 million a year ago. The lower revenue was due to the impact of covid-19 on the existing business. As on 30 June 2020, the Company had a cash balance of £8.2 million. On 16 June 2020, the Global Health Investment Fund (GHIF) exercised the rights and converted bonds worth USD 8 million to new shares. The Company issued 7.1 million new shares post redemption of the convertible bonds in addition to an accrued interest payment of £685,000 to GHIF. On 5 May 2020, the Company placed 8,750,000 new shares at 80 pence per share to raise £7.0 million.

Development of Genedrive 96 SARS-CoV-2 Kit

The Company has developed Genedrive 96 SARS-CoV-2 kit. The equipment is designed to detect the active infection in the Covid-19 patient; the kit is a Polymerase chain reaction (PCR) assay. The kit received CE-IVD mark on 22 May 2020, and it has signed a contract with eleven countries for the supply of kit. The Company is focused on expanding the commercial footprint in India, Africa and the US and has applied for the regulatory approvals. The Company has received orders of £1.0 million, but it is awaiting regulatory approvals to ship the product.

H1 FY2020 Financial Summary

(Source: Company Website)

Share Price Performance Analysis

1-Year Chart as on July-21-2020, before the market close (Source: Refinitiv, Thomson Reuters)

Genedrive PLC's shares last traded at GBX 89.98 (as on 21 July 2020, before the market close at 3.20 PM GMT+1). Stock 52-week High and Low were GBX 302.60 and GBX 6.25, respectively. The Group had a market capitalization of £41.33 million.

Business Outlook

The Company is confident about the liquidity position that would be enough to fund the future product pipeline and new opportunities in coronavirus testing. The Company is optimistic over Genedrive 96-SARS-CoV-2 test kit, and it is in the process to attain regulatory approval in new markets to expand the portfolio. The Company has existing orders from the US Department of Defense (DoD) for the supply of pathogen detectors that would drive the revenue in the first half of next fiscal year. It is also in the process to secure a new contract from the US DoD in autumn 2020.

Midatech Pharma PLC (LON: MTPH) – Discontinued operations at Bilbao, Spain

Midatech Pharma PLC is a UK based Pharmaceutical Company focused on a technology platform to deliver therapeutic drugs. The Company has three drug delivery technologies, including Q-Sphera, MidaSolve and MidaCore. The Company has 120 granted patents, and 70 patents are in-process across 36 patent families. The Company is listed on NASDAQ and the FTSE AIM All-Share index.

FY2019 Annual results (ended 31 December 2019) as reported on 30 June 2020

The Company reported total gross revenue of £0.7 million that was below £1.9 million generated in FY18. The research and development cost was £7.8 million, that was 65 percent of the operating expenses in FY19. The loss from continuing operations narrowed to £9.1 million in FY19 from £10.4 million in FY18. The net cash inflow was £8.4 million in FY19. As on 31 December 2020, the Company had a cash deposit of £10.9 million. On 31 March 2020, the Company terminated the internal manufacturing of MTD201 and closed the operations in Bilbao, Spain.

Recent Events

  • On 21 July 2020, the Company entered into a research collaboration with a European affiliate of Global Pharma Company for the Q-Sphera platform.
  • On 21 May 2020, the Company issued 1,818,182 American Depositary Shares (ADS) at USD 1.65 per ADS. Each ADS of the Company represents five ordinary shares of Midatech Pharma. The net proceeds from the offering would be USD 2.6 million. The funds would be used for the development of MTX110, develop an internal pipeline of Q-Sphera formulation and working capital needs.
  • On 19 May 2020, the Company placed 6,666,666 new ordinary shares for the UK investors to raise gross proceeds of £1.8 million. The new shares were issued at £0.27 per share.

FY2019 Key Performance Indicators

(Source: Company Website)

Share Price Performance Analysis

 1-Year Chart as on July-21-2020, before the market close (Source: Refinitiv, Thomson Reuters)

Midatech Pharma PLC's shares last traded at GBX 77.00 (as on 21 July 2020, before the market close at 3.10 PM GMT+1). Stock 52-week High and Low were GBX 162.00 and GBX 15.00, respectively. The Group had a market capitalization of £8.24 million.

Business Outlook

The Company is concerned over the liquidity position, and it is uncertain over securing payments from licensee partners or raising additional funds from the market before it runs out of cash in early 2021. The near-term goal of the Company is to deploy registered drug delivery technologies. The Company has appointed Noble Capital Markets, Inc to suggest options to extract value from the technologies. Noble Capital would also advise in the formal sale process under the City Code on Takeovers and Mergers.

 


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