Drug delivery systems developer BioProgress has upset many investors during its turbulent two years on AIM, but the acquisition of a French drug maker could spark a revival.
This year alone the shares have vacillated between 27.5p and 87p, collapsing after chief executive Graham Hind resigned in April. During his tenure he presided over a doubling of operating losses in the first half of this year to £6.2m. At this rate the group looked like running out of money by the middle of next year, since only £9m remained in the bank at the end of June.
However, the new management seems to be bringing things under control. Annualised costs have now been reduced to below £2m, giving the group considerable breathing space. And today’s €12.5m (£8.5m) acquisition of profitable French drugs manufacturer Dexo gives the group significant revenues, of £4.4m, for the first time. If things progress as planned, the group could break even next year.
Dexo specialises in bringing innovative medicines, primarily to treat gastric and nasal passage problems, to market. The business is headed by Jean-Francois Sfarti, formerly chief executive of major French pharma Sanofi. BioProgress can now test its non-gelatine and other delivery technologies on Dexo’s established products. The French market is known to be open to novel techniques of taking drugs and this alliance promises some intriguing developments.
The deal is funded in part by cash of £5.4m, raised from fresh institutional investors at 47p a share. Dexo will accept shares as payment for the remainder. The market has applauded the deal – the shares rose 5% – and with some major players in the drug world currently evaluating BioProgress’ technologies, the shares are worth a speculation.
Christopher Spink
Market cap: £70.8m
PE Forecast: n/a
Share price: 57.75p
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