US Edition Lipoxen
21¾p+14¾
Questor says AVOID
Your Questor editor’s first degree was in microbiology and microbial technology, which involved three years of genetically manipulating bacteria and viruses.
Recent events relating to swine flu have, therefore, been of great interest to the Questor team. However, when it comes to investing to profit from the current set of circumstances, Questor advises caution. Markets tend to overreact in a time of crisis – and this appears the case with Lipoxen.
Its shares soared 211pc yesterday after the company released data on one of its products – a collaboration with private group Cambridge Biostability.
The data suggest its ImuXen platform could be used to produce higher yields of annual and pandemic flu vaccines. Importantly, the delivery system means the vaccine can be stored at room temperature – eliminating the need for refrigeration.
ImuXen packages proven vaccine material into a nanoparticle which mimics a real virus. The data suggests that this system could increase vaccine production rates 10-fold and increase the effectiveness of the vaccine by 30 times.
The delivery system could also be used for a variety of viruses in the future.
This study has been under way for some time, so the timing of the release was fortuitous for the company, as the study fed into the current zeitgeist. This is the reason for the significant re-rating of the shares yesterday.
However, it is important to note that the platform is still in pre-clinical trials – it is not ready yet. The company argues that this could be accelerated because the components of the system have all previous been used in other vaccines, it’s just the combination of particular elements which is unique.
There is no doubt that the company has developed an interesting technology, which major players in the industry will be watching closely. However, should swine flu develop into a pandemic, there will not be a product on the shelves next week from Lipoxen to help with this crisis.
Although the technology is very interesting and Questor advises keeping an eye on this company, yesterday’s gains in this biotech tiddler are a reflection of current sentiment and concerns.
Questor therefore does not advise purchasing the shares right now, but believes that this is one player that you should continue to watch. For now, after the stunning one-day gains in the share price, the stance has to be avoid.
PuriCore
18¾p+7
Questor says AVOID
Shares in PuriCore jumped 60pc yesterday after the company released a statement reaffirming the fact that its Sterilox
sanitation technology works on swine flu. Basically, the product is effective as an antiviral spray.
The shares had been rising ahead of its recent results statement, which came out on Tuesday. The group posted an 80pc increase in revenues and said that the current year had started strongly. There was also good news on one of its wound-care products.
Questor believes that this is an interesting company that investors should keep an eye on. However, the shares have jumped from near its 12-month lows and gained around 200pc in a week – and this makes Questor nervous.
Questor believes that, despite the recent good news, investors should not put new money in the stock for now. Avoid.
Cranswick
605p-25
Questor says BUY
Pork products group Cranswick has seen its share price slide as fears over swine flu increase – they have now started to recover and are back above their 600p recommendation price.
On Monday, Cranswick put out a statement noting that the virus has characteristics associated with a number of influenza viruses found in other species such as birds and humans and that there were no reports of this mutated virus being found in pigs.
EU rules do not permit the importation of live pigs or pig meat from Mexico, but pig meat products can be imported from the US. Ultimately, Questor believes that the crisis should have limited impact on pork sales, especially products at the quality end of the market such as those produced by Cranswick.
If swine flu develops into a serious pandemic, then there could be further falls, which Questor would regard as a buying opportunity.
The shares remain a buy.
Big Pharma
Roche manufactures Tamiflu and GlaxoSmithKline make Relenza, so both groups are likely to benefit from the current set of circumstances. There will also be a positive impact on other vaccine makers such as Pfizer, Novartis and Sanofi-Aventis.
Dr Shawn Manning, a life sciences analyst at Singer Capital Markets, noted: “Both Tamiflu and Relenza have limited shelf lives – between five and seven years. Current events will remind holders of the vaccines to replace their stockpiles when they are out of date.”
But the benefit to pharma majors is marginal, as the companies generate such large revenues, gains in percentage terms will be small. However, the news is likely to be broadly supportive of any company that is looking at infectious diseases.