Sunday share tips: Amryt Pharma, RA International
By Josh White
Date: Sunday 15 Jul 2018
(Sharecast News) - In the Sunday Times' 'Inside the City' column this week, Sabah Meddings was focussing on pharmaceutical minnow Amryt Pharma, amid what she saw as a step-change in the industry.
Meddings noted that in years gone by, the easiest way to turn research into cash in the sector was to develop a marginally-improved heart disease or depression treatment.
Today, though, a fresh batch of small-time pharma players are apparently setting their sights on around 7,000 rare diseases for which there is often no cure, with the regulatory process for such drugs also said to be more rapid thanks to the drugmaking giants' ignorance of the field.
Meddings said Dublin-based, AIM-listed Amryt was launched by chief executive Joe Wiley to commercialise rare disease treatments that had already been developed by other firms, meaning it did not have the burden of early-stage development.
The company already had a product in pharmacist's drawers in a number of countries, and last week gained approval for Lojuxta - a treatment for a rare genetic cholesterol-raising disorder - which will be prescribed on the NHS.
Amryt bought the non-US rights to Lojuxta in late 2016, and has since grown sales to €12m from €7m, with a goal to hit €34m by 2023.
Analysts have said that Amryt's share price - currently around the 16p level - was solely based on Lojuxta at this stage, even though the firm had another product in development and was on the hunt for more.
Episalvan was currently in late-stage trials as a treatment for the incurable skin condition epidermolysis bullosa, with interim analysis expected towards the end of the year.
Meddings said those with the condition were often known as "butterfly children", as normal activities like putting on socks could cause "extreme" skin wounds.
Episalvan already had approval as a treatment for minor wounds in adults, but Amryt had its sights on a more lucrative market.
Sabah Meddings said a sensible investor would be cautious when investing in drug firms who had "a long way to fall" should their products fail at the trial stage.
She did note, however, that shares in Amryt had underperformed since the firm floated.
"Amryt has ambitious plans for Lojuxta, which it is expanding into other markets.
"Also, the company has the expertise of Harry Stratford, founder of biotech giant Shire, who is the chairman.
"If it continues to deliver on its promises and wins approval for Episalvan, Amryt should be an attractive long-term investment. Buy."
Over in the Mail on Sunday, Joanne Hart was focussed on construction services provider RA International, which provides facilities and services to UN agencies, Western governments and large multinationals in war zones and other "challenging" environments.
It floated on AIM two weeks ago, with the shares currently around 69.5p.
Hart said RA provides buildings, surrounding infrastructure, catering, cleaning, maintenance and repairs, with much of its work involving peacekeeping and humanitarian projects in countries such as South Sudan and Mozambique.
Its commercial clients have included a mining firm, which has a camp 16 hours by road from the closest large city.
RA services the camp, Hart explained, ensuring it has enough food and water for two months in case flooding made the location inaccessible.
She said its main priority was to ensure its sites "work", so the customer could focus on their missions or business without worrying about site issues.
That often involved "significant research", Hart said, adding that founder Soraya Narfeldt had become known for her thorough questions, like whether the customer knew the location was subject to serious, frequent flooding, or that the local port would be closed for Ramadan.
The company's attention to detail had earned it a reputation for "diligence and efficiency", she explained, as well as one that is highly profitable thanks to Narfeldt's propensity to carefully vet all clients.
Revenues reached £53m in 2017, a 44% improvement year-on-year, with profits more than doubling to £13.6m from £5m.
Looking ahead, Hart said more solid growth was anticipated, with RA's backlog of projects worth £91m, and the board intending to pay a progressive dividend.
"RA International has grown consistently since it was founded 14 years ago," Hart said.
"Customers are loyal, the business is expanding and much of the work is highly beneficial to African communities and local economies.
"At 69½p, the shares offer good, long-term potential and the chance to invest in a business with an ethical dimension, too."
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