A significant disconnect has opened between the value of Arix Bioscience PLC’s portfolio companies (LON:ARIX) and its share price, according to HC Wainwright.
The company's investments have delivered strong increases in underlying net asset value, but this has not translated over to the share price, says the US broker.
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Shares are currently trading below the initial IPO price when the company only had five group business investments, now it has 13.
Newsflow over the next 18 months should help correct this, suggests the broker.
Arix’s portfolio companies are involved in 15 clinical trials with data expected from ten, including Phase III studies.
Twelve other clinical programmes are scheduled to start during the period.
On that note, the broker highlights AIM-listed Verona Pharma PLC’s (LON:VRP) announcement yesterday about a new study of its RPL554 treatment.
Arix has a 2.5% stake in Verona, which will carry out a Phase II trial to asses the drug as an add-on treatment to help the breathing in moderate to severe COPD.
The trial data will also frame a Phase III triple therapy trial for RPL554 as a bronchodilator for COPD sufferers.
“Overall, we reiterate our initial view that Arix provides investors with a publicly traded vehicle to take part in venture capital initiatives and potential benefits,” said Wainwright.
Key to this is the experience of Arix’s management, which includes: academic life science research; creation of life science start-up companies; venture capital; and management positions in large pharmaceutical companies.
Wainwright has a 'buy' rating and a 314p price target.
Arix shares today were trading at 173.5p.