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Sunday share tips: Oxford BioMedica, Avast, Savannah Resources
Newspaper share tips from the Sunday Times on Oxford BioMedica, Sunday Telegraph on Avast and Mail on Sunday on Savannah Resources.
Oxford BioMedica shares have more than doubled this year but are still worth buying, said the Sunday Times' Inside the City column. Share price progress has come on the back of money-spinning deals with big pharma companies, such as a licensing agreement with US-based Axovant last week for the London-listed outfit's potential Parkinson's treatment. The deal for the OXB-102 gene therapy, since renamed AXO-Lenti-PD, reaped an upfront $30m for Oxford Biomedica and could be worth up to around £623m, plus at least 7% in royalty payments for net sales that some estimates could peak at around £1bn.
As boss John Dawson said alongside the announcement of the deal, it demonstration of Oxford BioMedica's strategy to "externalise" product development via cash-rich partners once products emerge from the pre-clinical phase. At the end of last week the shares valued the company at just under £600m, which mainly rests, not on the Parkinson's treatment, but on the LentivVctor lentiviral vector gene delivery platform, which is used to introduce DNA treatments into the cells of the patient and can be used in many therapy areas.
One partnership is with Novartis over two potential ophthalmological products, plus there are royalty-bearings products being developed using the LentiVector IP by Novartis in oncology and by GlaxoSmithKline in an undisclosed area. The Novartis treatment for childhood leukaemia was approved by regulators in May and costs $475,000 per treatment. March's results showed EBITDA losses last year were cut to £1.9m from £7.1m on £37.6m of revenues. A £19.3m fund-raising alongside results to fund the expansion of its bioprocessing facilities.
Lithium developer Savannah Resources was recommended as a "buy for the adventurous investor" by Midas in the Mail on Sunday. Lithium, for those who have been hiding under a rock, is a key component for batteries used in electric cars. With 125,000 electric vehicles on the road in Europe last year, by 2022 that number is predicted to have risen up through the gears to 1m or higher. AI-listed Savannah, with shares ending last week at 8.3p, is developing a 1,300-acre site in Northern Portugal, said to be the largest lithium deposit in Western Europe.
The Mina do Barroso site, which Savannah snapped up last May, is targeted for mining to begin in late 2019. Last month the estimated amount of lithium-bearing ore was around 14m tons, with less than half the area drilled for tests so far. A scoping study, to work out the potential costs and economics of a mine, is expected before the end of June. Should Savannah, which already has a full mining lease for the site, decide to develop this lithium project, the company would need £60-110m of project financing to fund its 75% share of the capital cost of development.
As an early-stage miner, this is "not a stock for the risk averse". Savannah also has two other projects, an early-stage mineral sands joint venture with FTSE 100 colossus Rio Tinto in Mozambique and a copper mine in Oman, which has been held up by licensing delays.
Questor in the Sunday Telegraph said to avoid software firm Avast. The cyber security firm "appears to have been quarantined by the City" since its flotation last month despite being trumpeted as Europe's largest technology flotation of 2018. Prior to the float it was reported the firm also hoped to raise enough funds to bring the firm's valuation to £3bn if successful, which would have made it the largest ever UK tech IPO.
The company, which six years ago pulled out of an IPO on the Nasdaq, initially priced its offer at between 250p to 320p and when it came to the crunch the shares priced right at the bottom of the range. This gave it a valuation of £2.4bn, with £690m funds raised from selling a 40% stake to new shareholders, of which roughly £200m was due to the company and planned to pay down some of its debt.