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Shard Market Eye: Motif Bio plc

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Shard Capital initiated coverage on Motif Bio Plc (LON:MTFB) when they floated on AIM in April 2015 at 20p. Motif is focused on antibiotics targeting areas of unmet medical need – acute bacterial skin and skin structure infections (ABSSSI) & hospital-acquired bacterial pneumonia (HABP). Management has a clear strategy to develop and commercialise its lead drug as quickly as possible for a $3.0bn opportunity.
Since IPO, a number of events have reduced the risk and defined a precise pathway by which iclaprim can get US regulatory approval. Even though the stock has performed well over this period, completion of trials and regulatory approval should provide valuation uplift.


Shard’s last Research Note on 3rd May 2016 highlighted the progress since the float. However whilst the share price remains over double that of the IPO price recent announcements do not appear to have been well received by investors.  Recent news has flagged a proposed US listing, funding requirements and higher-than-expected enrolment in the REVIVE trial. The later suggests over delivery on the management’s promises but it comes with a cost. Has this cost been over exaggerated? There is no hiding from the fact that cash is required but should the alarm bells be ringing as loudly as they are?
Shard Capital believe that Motif still has cash in the bank and whilst further funding is required Shard expects that not all of the liabilities relating to the patient trials are immediate cash calls. A portion of these liabilities will be future liabilities. Shard has been comfortable that Motif will be able to finance with partnership deals and/or utilise the capital markets and feel that the recent over delivery with regards patient enrolment is a positive and bodes well for early trial data.


As with any drug developer hurdles and risks must be considered alongside funding, not least the trial results. Motif is positioned in a market that urgently needs to address the problem of antibiotic resistance and Shard look forward to further news.

 

Disclaimer
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 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. However, the accuracy thereof cannot be guaranteed by us. 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.

The information contained in this document is solely for use of those persons to whom it is addressed and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purpose, at any time. Shard Capital Partners or its employees may have a position in the securities and derivatives of the companies researched and this may impair the objectivity of this report. Shard Capital Partners may act as principal in transactions in any relevant securities, or provide advisory or other service to any issuer of relevant securities or any company connected therewith.

None of Shard Capital Partners or any of its or their directions, officers, employees or agents accepts any responsibility or liability whatsoever for any loss however arising from any use of this document or its contents or otherwise arising in connection therewith. The value of the securities and the income from them may fluctuate. It should be remembered that past performance is not a guarantee of future performance. Investments may go down in value as well as up and you may not get back the full amount invested. The listing requirements for securities listed on AIM or ISDX are less demanding and trading in them may be less liquid than main markets. 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. By accepting this document, you agree to be bound by the disclaimer stated above. Further information on Shard Capital Partner’s policy regarding potential conflicts of interest in the context of investment research and Shard Capital Partner’s policy on disclosure and conflicts in general are available on request.

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