Shares in Tiziana Life Sciences (LSE: TISL) have soared by a staggering 348% over the past 12 months. So what does it do?

It’s a small biotechnology company with a market cap of under £180m, but it’s working on something that has enormous potential — novel therapeutics for cancer, with a focus on late-stage metastasis. The firm’s first research goal is to develop a drug to treat metastatic breast cancer, which affects around 12,000 people a year in the UK alone.

Tiziana is still in the net investment phase, having raised £8.3m in the first half of 2015 through a share placing and the issuing of a convertible loan note, and of that there was approximately £7m in cash left at the halfway point in June.

If you invest now you’ll be taking a big gamble on a success coming through the firm’s pipeline, but any early signs of a breakthrough could turn Tiziana into a tasty takeover target.

Live biotherapeutics

My next pick is 4d Pharma (LSE: DDDD), whose shares are up 143% in the past year. Again it’s a pharmaceuticals/biotechnology firm, this time tackling things like Irritable Bowel Syndrome and Crohn’s disease using an approach based on live biotherapeutics (that’s living bacteria, rather than dead chemical stuff).

Promising research results have been behind the share price surge, though it has gone a little off the boil with a 24% drop since May’s peak — but with trading volumes being relatively small we should expect some volatility.

The firm’s first-half update again focused on cash generation, with a placing in February raising £34.3m — and at the halfway stage, the coffers contained £61.5m in cash and equivalents. Nobody knows when profits will arrive, so again you’d be gambling on it happening before the cash runs out.

Silicon recycling

My third for today, which takes technology in a different direction, is Pure Wafer (LSE: PUR). It’s the smallest of the three, with a market cap of just £51m, but its shares have stormed up 213% in 12 months. As its name suggests, the company bills itself as “one of the leading global providers of high quality silicon wafer reclaim services“, and counts a number of the world’s big semiconductor firms among its clientele.

The company suffered a “catastrophic” fire at its Swansea wafer reclaim facility last December, but by May this year the firm had reached a satisfactory agreement with its insurers in the shape of a cash settlement with the Swansea facility not to be rebuilt — it’s since been sold off for redevelopment, along with the firm’s 99 year lease on the land.

Forecasts can’t make much sense at the moment, but the firm says that demand for its wafer reclaim services in the US remain strong, and it’s a market that can only grow.

The post Is It Too Late To Buy 2015 Winners Tiziana Life Sciences PLC (+348%), 4d Pharma PLC (+143%) And Pure Wafer plc (+213%)? appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

The gain means that the firm’s share price has now risen by 263% so far in 2015. Ironically, the rise has been driven by the company’s decision not to rebuild its Swansea factory, which was damaged by fire in December. Instead, Pure will return the cash from the insurance settlement to shareholders instead.

Today, the firm said that it had reached an agreement to dispose of the 99-year lease on the Swansea site. As a result, the directors now expect to be able to return 140p-145p per share to shareholders. This is significantly more than previous guidance, which indicated the payout would be “unlikely to be more than 125p per share”.

Still a buy?

Pure Wafer’s board decided not to rebuild the Swansea factory because they believed that it might prove too difficult to attract a viable customer base and generate adequate returns.

The company’s last set of results before the fire suggest this decision was correct. Pure’s UK wafer business in Swansea reported an operating margin of 7.2%, less than half the 20% margin reported by its US operations.

Following the disposal of the Swansea site and the return of the insurance cash to shareholders, Pure will focus on its US business in Arizona, which the company says is trading in-line with management expectations.

I can’t find any broker forecasts for this business. However, today’s share price action suggests that the market is valuing Pure Wafer’s remaining business at around 15p per share, or £4.4m. How does this compare to the firm’s expected earnings? In the first half of the current financial year, Pure Wafer reported an underlying operating profit before exceptional costs of $1.2m, or around £775,000.

I can’t see any obvious reason to expect a seasonal bias to performance, so assuming that second-half performance is similar I’d expect underlying operating profit for the full year to be around £1.5m.

Based on these figures, I estimate that Pure Wafer’s underlying business could be trading on a P/E of 4, at today’s share price. That’s potentially cheap, as today’s update reports that the firm’s US operations are currently running “at record levels of productivity”.

Pure Wafer shares could be a buy, even at today’s price. However, as a general rule, I value small-cap firms like Pure Wafer with more caution than larger businesses. I’d certainly want to do some more research before buying shares in Pure after today’s gains.

I’d be particularly concerned about the competitive threats to Pure Wafer’s business, given that the firm was not confident it could regain a profitable customer base for its Swansea plant.

Investors need to ask whether Pure’s US business has any unique advantages with which it can protect its pricing power and scale.

The post Why Is Pure Wafer plc Up 25% Today? appeared first on The Twelfth Magpie.

More reading

• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.