Amphion Innovation (LON:AMP) has been boosted significantly by the successful Motif Bio (LON:MFTB) stock market float.
Motif Bio is among the ‘partner companies’ in Amphion’s portfolio, and it has gone from strength to strength since its April 2015 initial public offering (IPO).
The biotech group subsequently secured approval from the US Food and Drug Administration (FDA) to carry out a clinical development programme for iclaprim, an antibiotic designed to be effective against MRSA and multi-drug resistant bacteria.
Motif Bio shares have seen a three-fold increase in value since April’s 20p per share IPO and today trade at 64.25p.
Amphion, a technology and research commercialisation firm, retains a 44% share holding in Motif Bio which (at 60p) is worth £25mln - almost twice Amphion’s own market capitalisation of £13mln.
Richard Morgan, Amphion chief executive, says there is now an opportunity to advance one or two more partner companies.
Investing in early stage companies naturally comes with risk, and Motif Bio’s rapid success (in stock market terms) does represent something of a rarity.
Kromek (LON:KMK), an IPO from 2013, for example, accounted for almost all of a drop in Amphion's’s net asset valuation for the 2014 financial year.
During the twelve months ending December 31 Kromek’s share price dropped to 34p from 75.5p and in turn the value of Amphion’s share holding reduced to US$6.6mln from US$15.5mln.
Amphion, which also operates intellectual property (IP) licensing group DataTern, had revenues of US$484,700, down from US$1mln in the prior year and it reported a US$3mln operating loss for the year.
The drop in revenue was due in part to an absence of licensing revenue from DataTern, which is progressing through an ongoing legal dispute; a number of partner companies were also unable to pay certain management fees to Amphion.
General overheads were tightly controlled during the year at US$1.7mln, Amphion said. At the same time though legal costs relating to DataTern increased mainly due to the hiring of certain experts.
DataTern’s legal battle, about intellectual property, is with a number of parties including Microsoft and during the year it received a number of rulings which Amphion’s legal team consider favourable.
Amphion believes the realisable value of the intellectual property assets held by DataTern is substantially in excess of their current value and if the unit was able to successfully conclude licensing agreements with what it calls the ‘various infringing parties’ at levels that meet its expectations, Amphion’s asset value would be significantly higher.
“We look forward to the future with renewed confidence and to being able to report further progress with Motif, DataTern and other partner companies in due course," Morgan said.
He added: "Our ability to develop the Intellectual Property (IP) portfolios in each of our partner companies is a critical success factor but our goal in every case is to build a good company that will be a commercial success.
“The evolution of the business plan and business model of every company needs continuous attention and Amphion is committed to providing that to each of our partner companies.
“Despite our cautious approach to valuation over the last few years, we continue to see opportunity to build and extract value from each of them, in addition to the IP licensing programme being pursued directly by DataTern.”