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Shard Market Eye - Six to watch for rest of 2015

Challenger Acquisitions Limited (LON: CHAL.L) has had an exciting start to life on the London Stock Exchange (LSE). The shares began trading on 19th February on the LSE’s main market following a share subscription at 10p. The strategy is to acquire target companies or businesses in the entertainment and leisure sectors with particular focus on the “Attractions” sector..

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It is nearly a year since Shard published their last ‘Shares to Watch’ article. Today we highlight six further shares to watch in the second half of 2015.
 

Challenger Acquisitions Limited (LON: CHAL.L) has had an exciting start to life on the London Stock Exchange (LSE). The shares began trading on 19th February on the LSE’s main market following a share subscription at 10p. The strategy is to acquire target companies or businesses in the entertainment and leisure sectors with particular focus on the “Attractions” sector. All appears to be going to plan with funding in place enabling the company to announce on 26th May that it has been able to participate as an investor in the proposed New York Wheel project. Challenger also announced that it had signed a letter of intent for the acquisition of the principal operating business of Starneth. Starneth is an engineering company specialising in the design and construction of Giant Observation Wheels and Structures. Their team is made up of the people behind the design and construction of the London Eye. Having traded as high as 97p the shares were suspended at 38p with the above announcement constituting a reverse takeover. It appears that exciting times are ahead.
Another share blazing a trail following their IPO is Motif Bio PLC (LON: MTFB). Motif is a clinical stage biopharmaceutical company developing novel antibiotics designed to be effective against serious and life threatening infections caused by drug resistant bacteria. The company raised £2.8m at 20p and began trading on AIM on 2nd April. The company quickly announced that the US Food and Drug Administration (FDA) had agreed to the proposed Phase 3 clinical development programme for the company’s lead product candidate, iclaprim. Iclaprim is a broad-spectrum antibiotic designed to be effective against multi-drug resistant bacteria. News flow and share price movement has been positive since then. On the 1st June the company announced that they had signed Letters of Intent and interim agreements with a leading global Clinical Research Organisation (CRO). We look forward to hearing news on these trials and on potential future funding. The shares closed at 47.75p on 1st June.
 

Advanced Oncotherapy PLC (LON: AVO) has been on Shard’s radar for some time. In 2013 AVO acquired ADAM, a CERN spin out. ADAM designed and built the first linear accelerator for proton therapy. AVO are commercialising this technology to become a specialist developer of next generation proton beam therapy systems for use in cancer treatment. With ADAM’s technology AVO is now able to deliver a proton beam therapy system, called LIGHT (Linac for Image Guided Hadron Therapy) which is planned to be approximately a third of the size and price in comparison to machines which are currently on the market. This would enable it to fit into existing city centre hospitals. It will also have lower maintenance and operating costs compared to the competition. On the 25th March the company announced their first full commercial purchase order, for $40m, with Sinophi, a UK Healthcare consultancy hospital operator in China backed by Morgan Stanley. A £20m fundraise at 8p announced on the 1st May provided further encouraging news flow. The funds will be used to complete the development of their first LIGHT system and the directors expect that a Harley Street system will be installed by the end of 2016 with patient treatments starting in 2017. AVO find themselves is a position to capitalise on their early mover advantage within what could prove to be a highly lucrative space.

Another company that has raised money recently is Oxford Pharmascience Group PLC (LON: OXP). OXP re-develops approved drugs using proprietary formulation technologies to make them better, safer and easier to take. Current focus is on non-steroid anti-inflammatory drugs (NSAIDS) which are the main class of drugs to treat pain relief. The problem with NSAIDS is that they are acidic and cause injury along the entire gastrointestinal (GI) tract. Prolonged use can cause serious gastric side effects including ulcers, erosion and bleeding. ‘OXPzero’ technology addresses this. The company are re-developing NSAIDs making them significantly milder in the GI tract. Initial trials have proved successful, fuelling share price performance this year. Further trials are underway with results due later this year. There is also a blockbuster opportunity to replace the current formulation of aspirin, and significantly increase its usage in primary prevention of cardio-vascular disease, if a GI safe derivative can be developed. Management believe that the ‘OXPzero’ variants of these drugs offer significant opportunity for global brand owners to gain competitive advantage and to increase or defend market share, and a licensing deal with big pharma is the ultimate aim. On the 2nd June the company announced a conditional £20m placing at 10p which was supported by new and existing investors including Woodford Investment Management LLP (currently a 29.99% shareholder) who agreed to subscribe for a further 100 million shares. The company noted that it had been able to attract a level of funding which was significantly higher than originally planned and this will enable them to pursue a wider range of opportunities across its portfolio and accelerate the ‘OXPzero’ Aspirin programme.

A change of sector leads us to a company that featured in last years ‘Share to Watch’, Xtract Resources PLC (LON:XTR.). Xtract Resources’ focus is on precious and base metal projects with near flow cash flow potential. The company acquired the Chepica Gold and Copper mine in Chile in 2014 and they are implementing a simple plan expected to maximise returns from the mine. The company have raised funds at various levels since we highlighted them last year (0.2185p Jan 2014, 0.13p Nov 2014, 0.15p Mar 2015 and 0.25p May 2015). The shares closed at 0.45p on 1st June. Recent news flow has been positive. An update on 6th May suggested that their work plan is now having a major impact on gold concentrate grades, which increased 10 fold from 40 grams per tonne to 400 grams per tonne. Xtract also announced a further discovery on 13th May with a significant concentration of gold defined in the Salvadori prospect at the Chepica mine. The company are looking to diversify away from a single project to which end they announced on 23rd April that they had signed a heads of agreement with Shirley Hayes IPK (Pty) Ltd, a copper explorer in South Africa, to evaluate the Concordia project copper dumps. Shard hopes to hear more in the coming months.

 

The information above is published solely for information purposes and is not to be construed as a solicitation or an offer to buy or sell any securities, or related financial instruments. It does not constitute a personal recommendation as defined by the Financial Conduct Authority ("FCA”) or take into account the particular investment objectives, financial situations or needs of individual investors. The information above is obtained from public information and sources considered reliable. This is a marketing communication document and has not been prepared in accordance with legal requirements designed to promote independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Although Shard Capital Partners LLP is publishing the research, it is not restricted from dealing in the stocks. Please note risk warning section on our website with regards high risk AIM shares. If you are unsure of the suitability of share dealing specifically for you then you should contact an Independent Financial Adviser, authorised by the Financial Conduct Authority.

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