Motif Bio plc (LON:MTFB) – BUY*: Guidance confirmed by EU regulators
Market Cap: £67m; Current Price: 62p; Target Price: 114p
Motif receives EU advice confirming iclaprim Phase 3 clinical development programme
- Motif announced that it has received written advice from a Scientific Advice Meeting with the Medicines Evaluation Board (MEB) (Utrecht, the Netherlands), held on 16 September 2015, in relation to its flagship Phase III Clinical Development Programme for iclaprim a novel antibiotic.
- The advice confirms that Motif’s two upcoming Phase III clinical trials on iclaprim—for the treatment of skin infections—are acceptable as pivotal registration studies for approval in the European Union through its centralised regulatory procedure.
NORTHLAND CAPITAL PARTNERS VIEW: This regulatory advice is yet another major milestone for Motif. It ensures that the group’s planned Phase 3 programme is on track to meet its regulatory goals and it paves the way for iclaprim to be licenced in Europe. We continue to believe that Motif is grossly undervalued. Our risk-adjusted DCF analysis indicates a fair value of 114p/share, indicating 70% upside to the current share price. Moreover, Motif’s closest peer, NASDAQ-listed Paratek, trades at a substantial premium to our target value for Motif. We estimate that iclaprim is set to fill a major market void. The drug’s safety and efficacy is well supported, having already been tested on over 500 patients. If approved, the treatment could achieve over $1bn/year in sales.
Connemara Mining (LON:CON) – CORP: Inishowen Gold Project
Market Cap: £0.8m; Current Price: 1.35p
Trenching programme results
- A trenching programme has been completed over the high grade gold soil samples obtained in July 2015 in an attempt to identify a subsurface source of the anomalous quartz rock found. Channel sampling returned 0.80m at 7.95g/t Au and 1.1m at 1.78g/t Au. This includes a 12cm vein at 30.1g/t Au, 10cm at 16.85g/t Au and 10cm at 10.45g/t Au.
- Veins are narrow (averaging 10cm to 12cm wide) but there is potential that these veins could swell. Management also believes that multiple veins could be found over the course of further exploration.
- Next step is a detailed mapping and prospecting over a 4-6 sq km area, expanding the sampling to see how the gold anomaly extends and further trenching. A shallow drill hole programme is being considered. The programme will start in early 2016.
NORTHLAND CAPITAL PARTNERS VIEW: Connemara Mining has now established that gold bearing veins are present within the Inishowen Licences and will follow up these positive initial results with an extended programme of mapping and prospecting early next year. While work on the exploration programme at the project is at an early stage, results to date are encouraging.
Uranium Resources (LON:URA) – CORP: FY15 results
Market Cap: £3m; Current Price: 0.4p
FY15 LBT remains in line with FY14
- LBT of US$0.4m in FY15 was in line with FY14.
- Net debt was up to US$1.7m in FY15 compared with US$1.3m in FY14.
- The US$1m and US$0.3m unsecured loans from Estes have been extended until 31/12/16.
NORTHLAND CAPITAL PARTNERS VIEW: Uranium Resources has continued to evaluate its exploration/development strategy, including corporate transactions in order to advance and realise value at Mtonya. The Board decided to delay drilling at Mtonya until the uranium market sufficiently improves enabling the potential of the project to be recognised by the market.
Stratex International (LON:STI) – BUY*: Öksüt Royalty Update
Market Cap: £8.5m; Current Price: 1.8p; Target Price: 7.8p
From Yesterday: EIA approval received
- Centerra Gold has received final approval of the environmental impact assessment (EIA) for the 1.2moz Öksüt Gold Project, where Stratex International has a 1% net smelter Royalty capped at US$20m.
- A recent drill programme identified additional oxide material located 1km away from the current mineral reserve and additional drilling is planned once the drill permits are approved.
- No change to forecasts, rating or price target.
NORTHLAND CAPITAL PARTNERS VIEW: Stratex International’s Öksüt Gold Project NSR currently makes up around 14% of our valuation of the Company and the advancement of the project towards cash flow will increase its importance to Stratex. Construction remains on target for Q216 with first gold production expected in Q217. Last week, Stratex completed the first gold pour at its 45%-owned Altintepe Gold Project, also located in Turkey, and with the EIA approval now received at the Öksüt Gold Project we can see a further near-term cash flow generation, at no cost to Stratex, from its 1% NSR.
Octagonal (LON:OCT) – BUY*: Board appointment
Market Cap: £5.5m; Current Price: 0.95p; Target Price: 2.8p
Appointment of Susan Esqulant as COO and to the Board
- Susan Esqulant, the Risk Control Manager at Octagonal’s GIS subsidiary, has been appointed as Chief Operating Officer with immediate effect.
- Esqulant has worked at GIS for the past two years and has been in the financial services industry for over 16 years working in both boutique and large corporate organisations including LCF Rothschilds, Barclays Capital and Bank of New York Mellon.
- No changes to forecasts, BUY rating or 2.8p price target.
NORTHLAND CAPITAL PARTNERS VIEW: Octagonal, through its subsidiary Global Investment Strategy (GIS), provides investors with access to the global settlements and custody market. GIS is a growing, profitable and cash generative provider of settlement and safe custody services to smaller institutions, family offices and high net worth individuals. Revenue growth is driven by the number of clients and trading volumes and GIS’s platform offers considerable scalability. As such, we anticipate the bulk of gross profit to drop through to the bottom line, driving up operating margins. A short working capital cycle and a business model that minimises balance sheet risk means that the bulk of profits is converted into cash. This will be used to expand its service offering and fund a progressive dividend policy. We maintain our BUY rating and 2.8p price target.
First Derivatives (LON:FDP): Interims
Market Cap: £341.8m; Current Price: 1453p
Interims: On track for FY
- Revenue +44% to £53.8m, EBITDA +73% to £10.8m and adj. PBT +69% to £7.6m resulting in adj. EPS +44% to 23.9p (tax charge increased 500bps to 25%). Interim DPS +52% to 5.0p but £1.4m increase in net debt to £10.5m reflecting the £7.1m initial consideration spent on the Affinity Systems and ActivateClients acquisitions.
- Software revenue growth of 87% to £18.3m (helping to boost EBITDA 340bps to 20%) with recurring revenue +153% and consulting revenue +28% to £35.5m. Some traction outside Financial Services and ongoing discussions with a number of potential customers and looking to build an indirect channel.
NORTHLAND CAPITAL PARTNERS VIEW: Very positive H1 performance at the top and bottom line with management reporting good demand in capital markets driven by complex and widespread regulatory change with pressure to introduce efficiencies and reduce costs. The company is also making progress in digital marketing and utilities, helped by the acquisitions of Prelytix and Affinity Systems. Strong performance and outlook for Big Fast Data is reflected in a consensus PER of 29x FY16 and 26x FY17.