City round-up: C4X Discovery Holdings; James Halstead; OTAQ
C4X Discovery Holdings, the Manchester-based drugs discovery company, has agreed an asset purchase deal with Indivior, worth £15.95m.
It involves Indivior acquiring the proprietary rights to C4XD’s oral Orexin-1 receptor antagonist, C4X_3256 (INDV-2000) for substance use disorder.
C4X said the completion of the divestment is part of its evolution towards becoming an immuno-inflammatory therapeutics company.
The company believes it can deliver greater value for shareholders by progressing programmes in this field further and intends to advance one such programme towards the clinic and move two further immuno-inflammatory programmes into lead optimisation.
Under the terms of the agreement, the previous license agreement announced on March 29, 2018, will be terminated and Indivior will assume all rights related to the development and use of C4X_3256 (INDV-2000) and related compounds.
In 2019, Indivior received a $10.6m grant for the development of C4X_3256 (INDV-2000) from the National Institutes of Health (NIH) HEAL (Helping to End Addiction Long-term) Initiative, which aims to improve prevention and treatment strategies for opioid misuse and addiction.
Previously, C4X Discovery was eligible to receive potential milestone payments from Indivior that, in aggregate, could have reached a maximum of $284m over time if all clinical development, regulatory and commercial goals were achieved, as well as royalties on net sales of C4X_3256 (INDV-2000).
Christian Heidbreder, CSO of Indivior, said: “The acquisition of full rights to INDV-2000 is aligned with our goal to build a strong and balanced pipeline focused on addiction treatments. Importantly, we know the asset well, having worked closely with C4X Discovery for more than five years. We recognie its exciting potential and will continue to progress it as a novel approach to the treatment of Opioid Use Disorder, as well as more broadly in substance use disorders.”
Bhavna Hunjan, CBO of C4X Discovery, said: “Indivior has made excellent progress with our Orexin-1 candidate, and we are proud that they now wish to take this programme fully in-house.
“Their decision highlights the confidence they have in the programme and further underlines the power of our drug discovery expertise to produce valuable, commercially relevant, small-molecule drug candidates. The agreement also provides an opportunity for us to crystallise value for the programme early and underpins and accelerates our new strategy.
“This non-dilutive funding, alongside potential preclinical milestone payments from our licensing deals for C4XD immuno-inflammatory assets with Sanofi and AstraZeneca, will allow us to further advance our newly focused portfolio towards and into the clinic. With our internal portfolio progressing well and partnering on our MALT-1 programme initiated, we look to a strong future as an immuno-inflammation therapeutics company.”
Dr Julie Simmonds and Dr Mike Mitchell, analysts with investment bank Panmure Gordon, reiterated their Buy call on C4XD shares after today’s announcement.
They said: “C4XD has divested its Orexin 1 receptor antagonsist C4X_3256 (INDV-2000) to partner Indivior for £15.95m. The additional cash aids the strategy to focus on immuno-inflammatory therapeutics enabling C4XD to continue the development of the wholly owned a4ß7 programme towards the clinic and also move two further immuno-inflammatory programmes into lead optimisation.
“The shares are undervalued, we reiterate our BUY and 48p target price.”
Shares in C4XD were priced at 20.24p per share in early trading, valuing the business at £51.02m, having closed at 20.20p yesterday (July 31) and opening this morning at 22p per share.
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James Halstead flooring
James Halstead, the Manchester-based flooring specialist, said its full year results expectations remain unchanged, in a trading update for the year ended June 30, 2023 – and said it expects to benefit from a new overseas trade agreement struck by the Government.
It said 2023 was a year of contrast, with the earlier months of the financial year having faced escalating energy costs, severe difficulties as a result of the lack of timely availability of international shipping and increased transportation costs. However, the latter months of the year were much more positive with the easing of electricity costs and a great improvement in shipping and transportation costs.
Sales demand has, on the whole, proved positive with the UK, the Americas, Australia, New Zealand and Malaysia all reporting increased demand, although Central Europe sales were lower than last year. Also positive for the year, gross margins improved, for the reasons already explained, and were helped by a swing in the mix of sales to pure commercial ranges as opposed to light commercial/heavy domestic. The core focus of its flooring ranges in healthcare, education and retail infrastructure, rather than private residential, remains a key benefit to the business model.
In March 2023, the UK finalised an agreement to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The agreement sees the UK joining the CPTPP, whose membership consists of Australia, Canada, Japan, Mexico, New Zealand, Singapore, Brunei, Chile, Malaysia, Peru and Vietnam.
Following the agreement, the Government estimates that more than 99% of UK exports to the bloc will be eligible for zero tariffs. James Halstead exports various product lines to 10 of the 11 CPTPP member countries – the exception being Brunei – representing an estimated eight per cent of its global revenue, where import tariffs range between five per cent to 20%. The group said this is good news for the competiveness of its products in these markets.
Stock levels that were strategically raised last year are now at much lower levels and cash balances are robust and ahead of comparatives at June 30, 2022, and December 31, 2022, even though record levels of dividend and taxation have been paid out during the year.
The company expects to announce its results for the year ended June 30, 2023, on October 2.
The ‘Buy’ call on Halstead’s stock remains with investment bank, Panmure Gordon. Its analyst, Adrian Kearsey, said after today’s announcement: “James Halstead, the UK’s leading manufacturer of flooring for the commercial and public sectors, delivered a robust sales performance in the first half.
“Top line trends have largely remained. Meanwhile, whilst costs remain elevated, pressures have begun to ease and gross margins have benefited. Consequently, James Halstead confirmed that its FY23 performance was in-line with expectations.”
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OTAQ, the Lancaster-based marine technology group, said it is on course to achieve revenues of £4m in its current financial year.
Announcing its first half results, for the six months to June 30, 2023, it revealed turnover of £1.801m, which is down from £2.708m the previous year. However, the 2022 figures are restated to reflect the change of year end from March 31, to December 31.
Gross profit for 2023 was £883,000, compared with £1.191m in 2022, while the adjusted EBITDA was a negative £347,000, against a £454,000 surplus in 2022.
During the six month period OTAQ said record rental income was achieved by Offshore division’s core OceanSense product. Two new six figure orders were received for shrimp sonar devices from Minnowtech for delivery in the second half of the current fiscal year, whiel Live Plankton Analysis beta live systems are now deployed at customer sites in Scotland and Ireland.
Initial customer contracts have been signed for the Water Quality Monitoring product in Chile following contracts signed in Scotland in 2022, and Sealfence sales have been made to Scandinavian countries, with regulatory trials ongoing in other territories.
Post-period, OTAQ says it has a current order profile to support in excess of £4m of revenue. It expects significant further orders for shrimp sonar devices which, if achieved in this financial year, will substantially enhance revenue expectations.
Also, further Sealfence sales expected in the second half of the financial year, and the Offshore division is continuing to benefit from further strengthening market demand.
Chief executive, Phil Newby, said: “The board is satisfied with these results which are in line with our budget for the year.
“The group is now delivering on the strategic goals set for OTAQ to realise its full potential, significantly increase shareholder value and return the group to profitability.
“I am confident of achieving at least £4m revenue in the current year and we have the potential to substantially exceed this based around the order enquiries we are currently receiving. Shareholders will be updated accordingly with developments.”
