the times | Tuesday July 21 2020 2GM 39Business
7, 2017 Loses almost half of its market value
strazeneca drops development partnership012 2014 2016 2018 2020
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7 , 2 0017 Losesalmost halfofits market value
straazeneca drops development partnershipes a deal with
h up to $232m
0 company
mental
infections in
March 18, 2020 Receives
fast-track approval from the
Medicines and Healthcare
products Regulatory Agency to
launch a trial of its drug in
patients suffering from Covid-19July 20, 2020 Shares soar more
than 400% after it reports
preliminary trial data showing
the drug helped reduce the risk
of developing severe diseases in
hospitalised Covid-19 patientsMarch 26, 2020 Raises
£14m in a placing of 40
million shares at 35p eachA study of about 100 coronavirus
patients found Synairgen's drug
reduced the chances of them
needing intensive careCompanies have raised £13.8 billion
from equity-raisings related to Covid-
19, with directors sometimes profiting
while ordinary shareholders’ stakes
were reduced.
Peel Hunt, the City broker and
adviser, said that there had been 92
such fundraisings since the onset of the
pandemic in Britain in mid-March,
with companies enjoying an average of
16 per cent increase on the “pre-raise”
share price.
Of these, 51 were by main market
companies, with 41 listed on Aim,
London’s junior market. The average
offer price had been at a 10 per cent dis-More breathtaking
news for investors
I
f only people had placed more
faith in the biotech genius of
Neil Woodford. It was only a
year ago that the fallen star of a
stockpicker was the proud
owner of 22.2 per cent of Aim-listed
Synairgen. And look what’s just
happened to that — up 421 per cent
in a day to 190p on a corona trial
that’s thankfully left investors far
more breathless than the patients.
Yes, even now, the respiratory
drug discovery group is valued at
only £284 million, so it hardly makes
up for all of Mr Woodford’s duds.
Still, it shows what can happen with
biotechs, even if once again the
Woodford investors have lost out.
Cash-strapped Woodford had
already top-sliced to 19 per cent
before his funds’ administrator Link
Fund Solutions sold off more in
March: the preamble to flogging the
remaining 14 per cent to Acacia
Research in June. So is that US
investor happily quids in? Not
entirely. Only last week it cut its
Synairgen holding to 6.87 per cent.
So, a trio of investors missing out
on its big day. Even so, who yet
knows if the Synairgen euphoria is
misplaced. The trial from the group
spun out of Southampton University
in 2003 numbered only 101 patients:
small enough to throw up statistical
quirks. It’s also yet to be peer-
reviewed. But it’s no surprise that
chief executive Richard Marsden is
so “delighted”.
The drug, SNG001, is an inhaled
formulation of interferon beta: a
protein used by the immune system
to trigger a response that scientists
believe is suppressed by coronavirus.
Early signs are that it may restore
the lungs’ fighting clout. Synairgen
found that the “odds of developing
severe disease”, requiring ventilation
and possible death, fell by 79 per
cent vs patients on a placebo. They
were also twice as likely to recover
swiftly, while breathlessness was
“markedly reduced”. No one taking
the drug died; three did with the
placebo.
In short, encouraging stuff when a
successful treatment could be the
quickest virus game-changer,
whatever the progress with a
vaccine. And Mr Marsden thought
the share price reaction
“appropriate”, given the drug is
aimed at a “massive problem” —
even at a company that’s lost
£8.9 million over the past two years
and is forecast to lose £13.2 million
more this year. House broker
Finncap has a share price target of
360p.
But there is a long way to go. The
data “is less than a few days old”,
though so price-sensitive that a
small company had to announce it.
Mr Marsden has only just started
talking to European and US drugs
regulators, which are bound to want
safety checks and bigger trials.
Synairgen is struggling to find 120
patients to trial the drug at home.
It’s yet to be tested on patients on
ventilators. And since 2016, when
Astrazeneca backed out of a mooted
$232 million deal and scrapped an
asthma trial with the same drug, the
shares had dropped to 6p.
Getting the drug to market would
also require a lot more than the
£14 million raised in March at 35p.
Still, shareholders who stumped upthen will be as “delighted” as Mr
Marsden. Other words spring to
mind for Woodford investors.Winning at a cost
G
et-rich-quick schemes are not
something you associate with
this crisis. So credit to Peel
Hunt analysts for spotting one:
corona equity-raisings. They’ve
counted 92 since mid-March, with
companies raising £13.8 billion.
They’ve seen an average 16 per cent
jump on the “pre-raise price”. Sixty
have seen some sort of bounce.
The problem? That many of these
cash-calls trampled all over
shareholder pre-emption rights, so
investors who participated — not
least the directors — have lucked
out at others’ expense. Yes,
institutions demand that bosses
cough up, ensuring they have skin
in the game. But the outcome in
some companies looks unseemly.
And nowhere more so than
fashion outfit Asos. True, April’s
£247 million placing at £15.60 was at
a half-penny premium to the closing
share price. And it was only a
fortnight into lockdown, when risks
were particularly tricky to quantify.
But the shares since then? Up to
£34.08. Chairman Adam Crozier
bought 12,820 at the placing, so is
now sitting on a £237,000 profit.
Chief executive Nick Beighton is
more than £118,000 up on his
purchase of 6,410 shares. How do
they justify that to retail investors
diluted by 18.8 per cent?
They’re not alone. Plenty of
directors have coined it: those at
Safestyle, up two thirds, and of
course Synairgen’s. And Mr Crozier
did ensure that the bigger company
he chairs, Whitbread, raised its
extra £1 billion via an all-inclusive
rights issue. But his Asos winnings
do look a bit awkward.Bank to work
W
hat a triumph for back-to-
work Boris. He can’t even
cajole Royal Bank of
Scotland to bring its workers back to
the office — and the taxpayer owns
62 per cent of the business. True, it
says something for its independence
from government. And its 50,000
staffers do need to time to adjust to
the new reality. From tomorrow,
they’ll be toiling for a bank that’s
neither royal nor Scottish: the result
of a name change to Natwest
Group. But fancy telling them they
should keep working from home
“into 2021”. You wonder if some will
ever go back. Or is that the point?Smart casual
H
ow activist investing works:
buy a 3.37 per cent stake,
declare there’s as much as
“500 per cent upside” and watch the
shares rise 6 per cent to 118p. It’s
Gatemore’s opening shot at
Superdry. It thinks it’ll “benefit from
the trend towards casualwear”, sped
up by the virus. That’s right. We’ll all
be sporting Japanese-logo’d hoodies.[email protected]business commentary Alistair Osborne
GSK agrees
£900m deal
for research
into vaccines
Alex RalphGlaxosmithkline has struck a part-
nership worth up to about £900 million
with a German biotechnology com-
pany whose vaccine research was said
to have been sought by President
Trump.
The FTSE 100 group has signed a
strategic collaboration agreement with
Curevac for the research, development,
manufacturing and commercialisation
of up to five vaccines and monoclonal
antibodies targeting infectious dis-
eases.
Glaxo will take a near-10 per cent
stake in Curevac for £130 million and
will make an upfront cash payment of
£104 million. Curevac is also eligible to
receive development and regulatory
milestone payments of up to £277 mil-
lion, commercial milestone payments
of up to £329 million and royalties on
product sales.
The collaboration focuses on the
development of messenger RNA-based
vaccines, a technology in which
proteins, or antigens, can be produced
by the body’s own cells, enabling the
immune system to prevent or fight dis-
ease. It has the potential to expand the
range of diseases that can be prevented
or treated.
Glaxo, based in west London, was
formed through the merger in 2000 of
Glaxo Wellcome and Smithkline Bee-
cham. The company employs about
95,000 people and is valued at about
£83 billion. It operates three divisions
— pharmaceuticals, consumer health-
care and vaccines — and is the biggest
player in the $35 billion global vaccines
market.
Both companies are involved in the
race to develop coronavirus vaccines
and the tie-up excludes Curevac’s
existing Covid-19 mRNA vaccine
research programme. Last month the
German government outlined plans to
invest €300 million for a 23 per cent
holding in the biotech company to
support the development of its corona-
virus vaccine.
Curevac was reported in June to be
preparing an initial public offering in
the United States and in the spring it
emerged that Berlin was trying to stop
America from persuading Curevac to
move its coronavirus vaccine research
across the Atlantic. The episode
prompted a dispute, with German poli-
ticians insisting that no country should
have a monopoly on any future corona-
virus vaccine.
Shares in Glaxo closed down 11¾p, or
0.7 per cent, at £16.48½ last night.Directors cash in from rush to market
count to the closing share price, while
the average raised was £150 million.
Such fundraisings can be contentious
when they override shareholders’ so-
called pre-emption rights, meaning
that investors’ stakes, including those of
ordinary retail shareholders, are auto-
matically diluted because they are not
given the chance to take part in the
share placings.
Asos, the online fashion retailer,
raised £247 million from a £15.60 plac-
ing at a ½p premium to the closing share
price. The shares have since risen to
£34.08. Adam Crozier, the company’s
chairman, bought 12,820 shares at the
placing, meaning that he made a profit
of £237,000, while Nick Beighton, chiefexecutive, made £118,000. Retail inves-
tors were diluted by 18.8 per cent.
Other directors who have enjoyed
profits from placings include those of
Safestyle, an Aim-listed window and
door company, and Synairgen, which
raised funds to develop a coronavirus
treatment. Sixty of the 92 companies
enjoyed an increase in their share
prices after the placings: Avacta, a life
sciences company developing Covid-19
tests, drew the strongest reaction, with
a 560 per cent increase, followed by
Asos, up 124 per cent. The highest
number of pandemic-related equity-
raisings was in the travel and leisure
sector, with 17, followed by industrials,
healthcare and construction.James Hurleyfrom trials of treatment developed with Oxford University
this year to make Astra the most
valuable company in the FTSE 100
index. The rally has been driven by its
non-coronavirus drugs and its role in
one of the most advanced vaccine
candidates. The study found that the
vaccine did not prompt any serious
side-effects and elicited antibody and
T-cell immune responses. The
strongest response was in people who
received two doses.
Pascal Soriot, 61, Astrazeneca’s chief
executive, said: “We need two doses.
Other vaccines will need two doses. So
if we want to vaccinate loads of people
we will need several vaccines.”
Sir Mene Pangalos, head ofbiopharmaceuticals research and
development, said the data showed
the vaccine was capable of generating
a “rapid antibody and T-cell response”,
but further data was needed.
Larger late-stage trials are under
way in Britain, Brazil and South Africa
and are due to start in America.
Astrazeneca will distribute the
vaccine from September, if successful.
It has signed agreements to produce
and supply more than two billion
doses, including 100 million for the UK.
It will not seek to profit from the
vaccine during the pandemic, but
analysts at Jefferies, said “there may
be a future commercial opportunity”.