The Times - UK (2020-07-21)

38 2GM Tuesday July 21 2020 | the times

Business

April 27

after As

£1.3m

Value of management

and founders’ stake

on Friday*

£6.8m

Value of management

and founders’ stake

yesterday

130p

Float price in

October 2004

35p

Placing in

March 2020

How Synairgen

has prospered

2006 2008 2010 20

April 27

after As

October 2004 Synairgen, a

University of Southampton

spin-out, raises £10.5m at 130p

per share and floats on Aim

June 12, 2014 Strik

Astrazeneca worth

giving the FTSE 10

rights to its experim

treatment for viral

severe asthmatics

*among the top ten shareholders

while the trial data was encouraging,

there were “hoops” that the company

needed to jump through before it was in

a position to sell the drug successfully.

“We will do follow-on clinical trials,

but don’t know what the agencies will

want yet,” he said. “They might ask us to

generate safety data in certain popula-

tions. They might just want another

200 patients in the trial.”

Finncap, Synairgen’s adviser, said

that “valuing the Covid-19 opportunity

is nigh-on impossible”. It upgraded its

target price to 360p, but said that it

recognised “that this could go substan-

tially higher, based on upcoming dis-

cussions with regulators, which should

clarify the route to market and the

potential for buying SNG001 ahead of

the winter 2020 flu season and the pos-

sibility of a second wave of Covid-19”.

Astrazeneca boosted by news

Shares in Astrazeneca hit fresh

record highs yesterday, boosted by

encouraging early clinical trial data

for a coronavirus vaccine that the

drugs company is developing

alongside the University of Oxford

(Alex Ralph writes).

The Cambridge-based Astra rose

as much as 8.5 per cent to £99.64

ahead of publication of interim data

from the phase one study of 1,077

healthy adults in The Lancet, the

healthcare journal, which showed it

produced an immune response.

The shares later fell back to close

up 133p, or 1.4 per cent, at £93.20.

They have surged by 22.5 per cent

1

Building companies face a ban

on selling leasehold homes

after the government’s legal

advisers called for radical reforms

to stop freeholders exploiting

owners of flats. Page 4

2

Ministers have been warned

that European Union leaders

are not ready to sign off on a

Brexit trade deal compromise in

advance of the latest rounds of

talks that get under way in

London today. Page 8

3

A British drug has been found

to reduce dramatically the

chances of coronavirus

patients needing intensive care,

according to the preliminary

results of a small randomised trial

of the drug made by Synairgen.

Page 11

4

Royal Bank of Scotland, one

of Britain’s biggest employers,

has told more than 50,000

staff to work from home until next

year. RBS has informed its

employees in a memo that the

majority will continue to work

remotely until 2021. Page 37

5

The economy has recovered

half of the output lost during

lockdown, according to the

Bank of England’s chief economist.

Andy Haldane told the Treasury

select committee that the

economy had enjoyed a bounce-

back since output plummeted by a

quarter after social distancing

measures were introduced in late

March. Pages 37, 40

6

Marks & Spencer, the retail

chain, is planning to cut 950

roles as it accelerates an

overhaul of the business bolstered

by the belief that shopping habits

“have been changed forever” by

the pandemic. Almost 70,000 jobs

have been lost and 9,000 stores

have closed since the start of

lockdown, according to the Centre

for Retail Research. Page 37

7

Insurance companies have

been criticised by lawyers for

the Financial Conduct

Authority for comparing the

government’s lockdown advice

during the Covid-19 crisis to

guidance on smoking, drinking

alcohol and eating vegetables,

during the first day of a High

Court test case brought by the

City regulator. Page 40

8

Amigo Holdings, Britain’s

biggest guarantor lender, says

that there is “material

uncertainty” over its ability to

continue as a going concern after

it was hit by a rise in customer

complaints, a regulatory

investigation and the Covid-19

pandemic. Page 42

9

Property investors have

suffered a £1.5 billion shortfall

in rental income that was due

for the second quarter of the year.

Almost a fifth of rent that was due

at the March quarter payday had

not been collected 90 days later,

according to Remit Consulting.

Page 43

10

Ant Group, China’s largest

digital payments company,

which is the financial

technology offshoot of Alibaba,

the giant Chinese internet

commerce group, has lit the touch

paper on one of the most keenly

anticipated stock market floats of

recent years. Page 45

Need to know

Drug maker’s

shares boom

after Covid

breakthrough

Alex Ralph, Tom Howard

Shares in an Aim-quoted respiratory

drugs company spun off from the

University of Southampton leapt by

more than 400 per cent yesterday after

it announced positive initial trial results

for a treatment for Covid-19 patients

who are in hospital.

Synairgen shares surged by 153½p, or

420.6 per cent, to 190p on the London

Stock Exchange’s junior market after

the company said that preliminary

results from a study of about 100

coronavirus patients had found that the

inhaled drug reduced the chances of

them needing intensive care.

For those who inhaled a protein

designed to stimulate the immune

system the odds of developing severe

disease, such as needing ventilation, fell

by 79 per cent compared with patients

on a placebo, Synairgen said.

Richard Marsden, chief executive,

said that it “could signal a major break-

through in the treatment of hospital-

ised Covid-19 patients” and the com-

pany was contacting regulators, such as

the European Medicines Agency and

the US Federal Drugs Administration,

and potential third-party manufac-

turers and commercial partners to

progress it “as rapidly as possible”.

He said that the share price reaction

was appropriate because Synairgen was

seeking to combat a “massive problem”

and if it went on to “reduce the need for

ventilators and intensive care” for

patients that would be “very valuable”.

Synairgen raised £10.5 million at 130p

per share when it was listed on the

Alternative Investment Market in

October 2004. Yesterday’s sharp jump

in its shares has left two of its University

of Southampton academic co-founders

— Stephen Holgate, professor of

immunopharmacology, and Ratko

Djukanovic, professor of medicine —

holding 0.6 per cent stakes that are

worth about £1.7 million, according to

Refinitiv data.

Synairgen’s management are also

among the largest shareholders in a

wide investor register, with Simon

Shaw, its chairman since the company

was created in 2003 and chief financial

officer of Savills, holding about 1 per

cent, and Mr Marsden, its chief execu-

tive since 2009, 0.3 per cent.

Synairgen’s largest shareholder is

Lansdowne Partners, the British-based

asset management company, with

11.7 per cent.

Neil Woodford, the former star fund

manager, was also a long-term backer

of Synairgen, holding a stake of more

than a fifth. However, Mr Woodford’s

shares were held in his main Woodford

Equity Income Fund, which is being

liquidated after the demise of his

investment firm. Link Fund Solutions,

administrator of the Woodford fund,

sold the Synairgen stake last month to

Acacia Research, an American inves-

tor, which in turn has reduced its stake

from 14 per cent to 6.9 per cent, accord-

ing to filings.

Adrian Lowcock, head of personal

investing at Willis Owen, a retail

investment platform, said yesterday

that Woodford shareholders had

missed out again. “They’ve had a tough

time and this rubs their noses in it a bit,”

he said.

The drug, SNG001, is an interferon

beta, a naturally occurring antiviral

protein, and Synairgen has been study-

ing it as a lung viral defence in patients

with asthma and chronic obstructive

pulmonary disease.

It had struck a deal worth up to

$232 million in 2014 with Astrazeneca

to give the FTSE 100 company rights to

it as an experimental treatment for viral

infections in severe asthmatics. How-

ever, a trial was stopped in October

2016 after Synairgen said that cold

infections did not affect patients’

asthma in the study as much as pre-

dicted, cutting the commercial appeal,

but adding that it had turned on the

lungs’ antiviral defences and thus bene-

fited lung function.

The following year Astrazeneca

discontinued development of the drug

licence, which triggered a slump in

Synairgen’s share price.

Mr Marsden said yesterday that

Employees place great stock in AO World’s price

More than 3,000 staff at AO World

could be in line for a bumper payday

after the online retailer proposed a new

incentive scheme.

The white goods company has put

forward a new “value creation” plan to

investors, in which staff will share a

£240 million pot if its share price rises

eightfold over the next five years.

Share-based incentive schemes have

come in for criticism from investors,

who fear that it encourages companies

to make short-term decisions to inflate

a share price and reward management.

AO World is trying to ease such con-

cerns by handing 80 per cent of the

award to its employees. The scheme

will start paying out if the company’s

share price increases by almost 250 per

cent over the next five years to above

523p. Employees will share £140 million

if it reaches 941p by 2025 and

£240 million if it reaches £12.55.

John Roberts, 46, the

company’s founder and chief

executive, and Mark Higgins,

42, its finance chief, will be in

line to receive a maximum

£20 million bonus each if the

share price rises above £9.41, but

the company has justified this by saying

investors would have benefited from a

minimum £3.83 billion increase in

market value.

AO World floated in 2014 in a £1.5 bil-

lion listing that valued its shares at

285p. Since then a string of profit

warnings on the back of a botched

international expansion have

dragged its shares down to 164¾p,

although they rose by more than

3 per cent yesterday.

Mr Roberts, who owns 23 per

cent of the business, said

that the scheme en-

sured that “everyone

shares in the success

of AO World”. He

said that the remuneration committee

had already canvassed investors and

had “broad support” for the plan.

“Isn’t it better for a chief executive to

be focused on the long term than one

that’s there for three years, fills their

pockets and p***** off,” he said. He has

already committed to donating all of his

award to Onside Youth Zones, a charity

focused on improving social mobility

for young people.

Last week AO World reported a pre-

tax profit of £1.5 million, compared with

a £20 million loss last year, after shut-

ting loss-making Dutch operations and

eliminating £30 million of cash burn.

Sales jumped by 15.9 per cent to £1 bil-

lion for the year to the end of March.

Ashley Armstrong Retail Editor

John Roberts said

he was focused on

long-term success