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Northland Capital Partners View on the City MotifBio, DJI Holdings and Botswana Diamonds

Last updated: 09:20 15 Apr 2015 BST, First published: 08:20 15 Apr 2015 BST

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Motif Bio plc (LON:MTFB) – CORP: FDA agreement to enter phase 3 trials

Market Cap: £19m; Current Price: 30p 

  • FDA agrees to proposed Phase 3 clinical development programme
  • Motif Bio announced today that the U.S. Food and Drug Administration (FDA) has agreed to the proposed Phase 3 clinical development programme for the Company's lead product candidate, iclaprim. 
  • The Phase 3 programme is designed to obtain marketing approval for an intravenous formulation of iclaprim in the treatment of acute bacterial skin and skin structure infections (ABSSSI) and hospital acquired bacterial pneumonia (HABP) caused by Gram positive pathogens, including resistant strains such as MRSA (methicillin-resistant Staphylococcus aureus) and MDRSP (multi-drug resistant Streptococcus pneumoniae). 
  • The FDA confirmed that two ABSSSI trials or one ABSSSI trial plus one HABP trial meeting their pre-specified primary endpoints are required for approval of iclaprim.  
  • Motif is working to determine the costs and timeline of these options. Assuming that funds can be raised or a partnership can be entered into, the first Phase 3 trial for ABSSSI is expected to commence in the second half of 2015.

 

DJI Holdings (LON:DJI): Trading statement

Market Cap: £76m; Current Price: 58p 

  • 4Q14 EBITDA materially lower 
  • Despite strong YoY revenue growth DJI expects EBITDA for the 4Q14 to be materially lower than anticipated on the back of delays in fee and bonus revenues in turn a result of the Chinese government’s temporary suspension of online lottery sales. Higher than anticipated commissions paid also had an impact on results and the result of all of this is that the company expects results for FY14 will be materially below market expectations.     
  • Subject to final audit but based on internal financial information, gross sales for FY14 were £642m compared to £22m in the prior year, revenue was £13.6m compared to £1.1m in the prior year and gross margin £7.2m compared to £1m in FY13 which shows significant improvement. Although the company expects to show a loss at EBITDA level for FY14, an improvement in the loss of between £5m and £5.5m is expected as a result of a profitable second half. 
  • Final results are due during early part of May 2015.  

NORTHLAND CAPITAL PARTNERS VIEW: The company has demonstrated significant improvement in sales and trading during FY14 unfortunately the temporary suspension has had a negative impact on progress. The share price has halved in the last 3 months mainly as a result of the news regarding the suspension. A lifting of the suspension in our view would be a significant positive catalyst for the share price especially given the progress the company showed in growing sales during FY14, despite an implied multiple of c. 5x FY14 revenue at the current price.   

 

Botswana Diamonds (LON:BOD): New licences

Market Cap: £2.2m; Current Price: 1.1p 

  • New licences in Central Botswana
  • Botswana Diamonds and joint venture partner Alrosa have been awarded thee licences (PL135/2015, PL136/2015, PL137/2015) through the subsidiary company Sunland Minerals.
  • The licences PL135/2015 and PL136/2015 were selected to verify magnetic and gravity anomalies and follow up if justified.
  • PL137/2015 contains Kimberlitic Indicator Minerals (KIMs) that suggest they have not travelled far from their source, justifying follow up exploration on this small licence area.
  • The partners plan to immediately undertake detailed geophysics and acquire mineral chemistry data with the aim of making rapid decisions regarding potential drilling.

NORTHLAND CAPITAL PARTNERS VIEW: Positive news for Botswana Diamonds as it and its joint venture partner, mining major Alrosa, increase their exploration footprint in Botswana. These licences appear to contain promising targets that the partners will rapidly investigate.

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