IVF test promises new life for Angle
SIGNS of life are appearing at Angle, the backer of young technology companies which has been an underperformer since first tipped here 13 months ago at 126½p.
The prospects of its Novocellus offshoot, which aims to improve the success rate of fertility treatment, look enticing, and have the potential to reverse the decline in Angle's shares, which have drifted to 83½p.
This spotlights the potential of the Angle portfolio,which also includes Geomerics, whose technology could enhance computer games graphics.
Novocellus is working on in-vitro fertilisation (IVF) the technique on which many childless couples spend thousands of pounds. There is huge demand for IVF treatment, but success rates can be low.
Based on the work of a professor at the University of York, Novocellus has developed a test which, on first indications, may improve success rates by up to one-third.
Basically, IVF fertilises several eggs outside the womb and selects one or two to reinsert. Selecting the strongest is crucial but tricky. Novocellus analyses the amino acids around the embryo, which signal how healthy it is.
The results of a first test on 53 women gave a 34% improvement. A bigger study of 400 is under way in the Midlands.
It is early days, but if this confirms the findings of the first study, the test can be submitted for EU approval. If all goes well, it could be on the market in 2007.
This is where the sums get exciting. IVF is expensive - a successful birth can take up to five attempts, costing as much as £10,000. Cutting this to four would save £2,000.
It remains to be seen what Novocellus could charge for its test, but £200 to £250 looks feasible. At £250, the potential global market would be worth £140m a year. If it won 10% of this, its revenues would be £14m, with pretax profits, assuming a 25% margin, of £3.5m. Valuing this at 16 times earnings would price Novocellus at £40m and Angle's 63% at £27m.
This is nearly double Angle's present stock market value of £14m - though the need to finance its development programme means that a further share issue is on the cards.
Many things could go wrong. The current study may prove disappointing. Bringing such diagnostic tests to market can be slow. Competition could arrive - though at present Novocellus seems to be ahead.
Angle boss Andrew Newland has several other projects in his pipeline. Neurotargets is seeking relief for chronic nerve pain. Acolyte Biomedica aims to cut diagnosis times to speed up the effectiveness of antibiotics.
Provexis has its Sirco healthy fruit juice on sale in supermarkets. Its shares have been a slow burner, but Angle's 25% is worth £6.5m.
Angle's consultants earn a regular flow of fee income, which keep it funded while it nurtures its portfolio of hopefuls. One big winner could change the picture. Its backers are now crossing their fingers that Novocellus will be the one.
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