hVIVO PLC (LON:HVO) has been upgraded to Buy from Hold by broker Numis as it anticipated a return to revenue growth despite the resignation of the group’s chief executive.
In a note to clients, analysts for the broker said the AIM-listed biotech firm in its full-year results had indicated a more coherent strategy that reflected value despite recent weak share performance.
Numis said: “The business will refocus on driving revenue growth toward sustainable cash generation based on the core strengths in viral-challenge studies and recent advances in services addressing asthma and COPD exacerbations and drug target identification.
“hVIVO's capability of performing viral-challenge studies have been a key driver of revenues historically helping the company build a vast biobank of data around the transition from health to disease and back again. With Flu increasingly problematic around the world, we continue to see a strong market need for these services” they added.
The broker also cited potential in the group's pipeline assets, but was more cautious in this regard: “hVIVO's two key pipeline assets (PrEP-001 and Flu-v) have shown glimpses of efficacy, but having missed their respective primary endpoints we have now removed these assets from our valuation model and would expect any additional investment in these assets to be contingent on third party funding and validation.”
Numis added: “The reduction in symptoms with Flu-v is potentially valuable, although requires further prospective validation of the dosing and efficacy before larger field trials could be considered, in our view. Data on the mosquito vaccine is now expected in H2 2018, although we view this as a high-risk, high-reward opportunity.”
In its full-year results for 2017 released today, the company reported a pre-tax loss of £14.8mln, up from a £22.6mln loss in 2016, on revenues of £10.8mln, down from £19.8mln the year before.
The results also confirmed the company's cash position at £20.3mln, which it said was 'markedly ahead of expectations' in a statement on 10 April.
Additionally, the firm announced that its chief executive Kym Denny would be stepping down with immediate effect, with executive chairman Trevor Phillips taking over her responsibilities.
Shares in hVIVO were down 2.1% at 23p in mid-morning trading on Thursday.