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#1

Interesting article in the Telegraph about how British Biotechs are undervalued by the market at the moment.

"Sir Christopher Evans, the biotech entrepreneur who chairs the venture capital group Merlin Biosciences, says most of the UK biotechs look cheap right now compared with their US counterparts.

This goes for Vectura, Ark, Renovo, Intercytex, BTG, ReNeuron, Protherics, Plethora, Neuropharm and York! If you don’t believe in the science or commercial strategy of these companies, then you wouldn’t care what price they were trading at, but if you take the trouble to analyse exactly what they have done and where they are heading in the next 12 months, then you’d realise they are all undervalued British assets and you’d take a cheap slice now."


#2

» Interesting article in the Telegraph about how British Biotechs are
» undervalued by the market at the moment.
»
» http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/02/cnbio102.xml&page=1
»
»
» “Sir Christopher Evans, the biotech entrepreneur who chairs the venture
» capital group Merlin Biosciences, says most of the UK biotechs look cheap
» right now compared with their US counterparts.
»
» This goes for Vectura, Ark, Renovo, Intercytex, BTG, ReNeuron, Protherics,
» Plethora, Neuropharm and York! If you don’t believe in the science or
» commercial strategy of these companies, then you wouldn’t care what price
» they were trading at, but if you take the trouble to analyse exactly what
» they have done and where they are heading in the next 12 months, then
» you’d realise they are all undervalued British assets and you’d take a
» cheap slice now.”


#3

Just read a story about the Alternative Investment Market (AIM) on a venture capital blog that said AIM is actually a poor capital growth vehicle for many companies. (I don’t think it was a tremendously bad idea for ICX, but it may not have helped them much either, in the short-term.)

Anyway, here’s the article:

Listing on AIM (the LSE’s Alternative Investment Market) Can Be Dangerous

Let me say before I start that I very much welcome the arrival of AIM on the London scene over the last few years. It offers liquidity and fundraising options to companies that simply weren’t available in this country (and to an extent Europe) before. That became even more important when NASDAQ was clobbered by Sarbanes Oxley.

BUT

I have long felt that it has been over-hyped as a home for small companies.

So I thought I’d share a statistic from the FT this morning:

In a typical month this year about 40 per cent of the market’s 1,789 stocks saw turnover equal to just 1 per cent or less of their market capitalisation.

40% with less than 1% turnover - that is huge, and I would expect this 40% of companies with low liquidity are overwhelmingly concentrated at the bottom end of the market in terms of market cap.

Without liquidity on a stock market you don’t have much, IMHO. Certainly you won’t have much share price movement. You may get some publicity simply from being public, but that is about it.

You will have extra costs though, and restricted flexibility in your future actions when compared with remaining private.

I obviously have a vested interest here, in that AIM can be a source of competition for us at DFJ Esprit, but at the small end - say below £50m market cap - my advice would be to think very carefully about the pros and cons of AIM as a financing strategy for your business. High valuations don’t mean much if there is no liquidity.

There have been a number of companies that have listed with low valuations and successfully traded up. I am generalising here and AIM can certainly work for some small companies, but for me there is a much larger number that are better off staying private.