As global efforts to tackle the coronavirus (COVID-19) pandemic intensify, so the spotlight has finally shifted to focus on the potential of small pharma players.
According to Ivan Sedgwick, a director at corporate finance firm LGB & Co, the poor share price performance of major healthcare names has demoralised investors, forcing them in their quest for value into unfamiliar territory such as AIM.
“Investors have moved from a focus on balance sheet and funding risk and are back looking at the upside potential that some of these companies exhibit,” Sedgwick noted.
Among his top picks are Scancell Holdings PLC (LON:SCLP), part of a coronavirus vaccine programme; university spin-out investor Frontier IP Group PLC (LON:FIPP); and Open Orphan PLC (LON:ORPH), which is testing an antiviral.
In fact, a flurry of fundraises has underlined a growing confidence among small-cap innovators. In the three weeks to the Easter weekend, £500mln was raised on AIM, with just under third going to healthcare companies.
This past week has been another strong one for the sector. Genedrive PLC (LON:GDR) rocketed 52% higher on Friday to 126p after reporting that its COVID-19 testing kit, designed to deliver faster results, is to receive a CE mark in three weeks.
Verona Pharma was the exception. It tumbled 26% to 40p after admitting the struggle to raise enough capital for the final phase of trials for nebulised ensifentrine, a candidate for respiratory diseases, which may be delayed.
Turning to the wider market, the AIM All-Share index rose 2%, touching the 800-mark for the first time since the crisis started, while the FTSE 100 was flat at 5,772 after a rollercoaster week.
Staying in the mining sector, Asiamet Resources Ltd (LON:ARS) jumped 24% higher to 2p after receiving approval from the Indonesian authorities for the further exploration permit on its KSK Contract of Work in central Kalimantan.
Peer Empire Metals Limited (LON:EEE) ascended 24% to 1p after it agreed to acquire an interest in the Munni Munni palladium project in Western Australia.
Fellow gold digger Condor Gold PLC (LON:CNR) flew 20% to 30p after receiving an environmental permit for the development and exploitation of gold in the high-grade Mestiza open pit project in Nicaragua.
Changing sector, TV automation firm Pebble Beach Systems Group PLC (LON:PEB) jumped 28% to 11p after reassuring investors the pandemic will not hit trading too severely as people turn to media to entertain themselves during isolation.
Similarly, convenience store and petrol station services provider Universe Group PLC (LON:UNG) gained 26% to 3p after noting that all of its customers are retailers of vital supplies, being food, drink and/or fuel.
Unrelated to the pandemic, Baron Oil Plc (LON:BOIL) shares gushed 21% higher to 0.07p on a work-sharing agreement with its joint venture partners for the P2478 licence in the North Sea, while also revealing that its pre-tax losses for 2019 halved to £1.6mln compared to the year before.
Meanwhile, business expenditure monitoring specialist Proactis Holdings PLC (LON:PHD) bobbed 20% higher to 26p after revealing a reset of its banking facilities is to provide an extra £3mln in the short-term.
Elsewhere, education firm Malvern International slumped 31% to 0.1p after admitting “considerable uncertainty” around its prospects as its learning centres in the UK and its school in Singapore remained closed due to lockdown measures.
Intellectual property investment group Tekcapital slipped 17% to 12p after raising £925,000 by placing shares at a 13% discount to support its firms during the crisis.
Finally, detection technology specialist Kromek Group dropped 12% to 17p after revealing that revenue growth for the year to April 30 will be flat due to market disruption.