Upbeat progress

ReNeuron’s update includes information regarding the outcome of a Phase II clinical trial for its CTX cell therapy candidate for stroke disability. It showed positive results, with three of the 21 patients reporting a two-point or more increase in a grasping and lift test at three months post-treatment.

This was ahead of the target of two patients achieving that goal. The company will now continue with an application in the US and Europe for a pivotal clinical trial in patients living with disability post-stroke.

This is a significant milestone for the company and shows that its treatment has the potential to meet at least some of the high demand for treatments for chronic stroke disability. Clearly, there’s still some way to go in this endeavour, but it’s moving in the right direction.

Furthermore, ReNeuron announced positive news regarding the Phase I/II clinical trial of its hRPC cell therapy candidate. Its therapeutic programmes remain well-funded and it’s on target to meet its medium-term milestones at the present time.

Future potential

Clearly, ReNeuron has a bright long-term future. However, it remains a relatively small business, which is reliant on a smaller number of potential treatments than a sector peer such as AstraZeneca. Its larger peer has a more diversified pipeline so that if a potential treatment disappoints at a clinical trial, the company’s long-term future isn’t staked on it. As a result of this, AstraZeneca offers a much lower risk profile than ReNeuron.

Furthermore, AstraZeneca is on the cusp of improved financial performance following a major acquisition programme. It has been able to leverage a sound balance sheet and strong cash flow to make multiple purchases in recent years. This will see the company eventually replace the former blockbuster drugs that are now under threat from generics due to a loss of patents.

So, while AstraZeneca is expected to record a fall in profitability over the next couple of years, its longer-term future is much brighter. And with it trading on a price-to-earnings (P/E) ratio of 12, it offers excellent value for money.

As such, it offers lower risk than ReNeuron, as well as the potential for high rewards in the long run. Certainly, ReNeuron may prove to be a sound buy for less risk-averse investors and its share price is likely to move higher following today’s positive update. But for risk-averse investors, AstraZeneca remains the more appealing choice.

The post Is ReNeuron Group plc a better buy than AstraZeneca plc? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of AstraZeneca. The Motley Fool UK has recommended AstraZeneca. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Clearly, this is excellent news for the company and has been warmly received by the market. However, the company’s shares are still down by 45% in the last year and with Filtronic being a loss-making entity in each of the last two years and remaining in the red in the first half of the current year, investor sentiment could come under a degree of pressure in the near term.

Despite this, Filtronic is progressing through a major restructuring and could return to profitability over the medium term. However, it may still be prudent to await further updates regarding its financial performance before buying a slice of it.

Also rising by more than 10% today are shares in Angle (LSE: AGL). The specialist medtech company has stated that the results of Barts Cancer Institute’s ongoing work with its Parsortix liquid biopsy system have provided evidence in support of the use of Parsortix in the detection and assessment of prostate cancer.

In fact, the Parsortic system may assess the aggressiveness of prostate cancer through a simple blood test, which is crucial since it means that men with low level disease could avoid unnecessary and potentially harmful solid biopsy and surgical intervention. Similarly, men with an aggressive form of the disease could be fast-tracked for further investigation and treatment.

Clearly, this is good news for Angle and opens the potential of another highly differentiated liquid biopsy application for Parsortix in a key area of medical need. As such, the company’s shares could continue to rise and while they remain relatively high risk, they may be of interest to less risk averse investors.

Meanwhile, shares in ReNeuron (LSE: RENE) are also among the top risers today. That’s despite there being no significant new flow having been released by the company, although the stem cell therapy company may still be benefitting from improving investor sentiment following its positive news flow of last week.

This was where the first patient had been treated with its cell therapy candidate for a disease which causes blindness called retinitis pigmentosa. It marks a significant milestone for the company, partly because it marks the commencement of clinical development activities in the US, which could become a major market for ReNeuron. And while the outcome of the trial is clearly a known unknown, there is the potential for ReNeuron to continue to deliver the share price gains of the last three months, where is has risen by around 20% due in part to gradually improving investor sentiment.

The post Are Today’s Double-Digit Rises Just The Start For Filtronic Plc, Angle plc And ReNeuron Group Plc? appeared first on The Twelfth Magpie.

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Peter Stephens 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.

A potential catalyst to enable this to take place is upbeat earnings prospects. Persimmon is expected to increase its bottom line by 28% in the current financial year, with further growth of 10% being forecast for next year. This puts Persimmon on a price to earnings growth (PEG) ratio of just 1.2, which indicates that its shares offer high growth at a very reasonable price.

Looking further ahead, the UK has a chronic shortage of houses. Part of the reason for this is strict planning laws which mean that, while demand for housing remains high, their supply is unlikely to be boosted significantly in the next few years. And, while higher interest rates and buy-to-let tax changes will inevitably dampen demand and curtail the pace of house price growth, volumes are likely to remain buoyant for Persimmon and its peers. This should enable double-digit earnings growth to continue over the medium to long term.

Similarly, Diageo (LSE: DGE) also has considerable total return potential, with the beverages company offering a discounted valuation versus a number of its global consumer peers. Certainly, Diageo’s P/E ratio of 21 is hardly cheap when compared to many of its index peers, but with SABMiller having traded on a higher rating and still having been the subject of a bid from AB InBev, it shows that there is the potential for an upward rerating to Diageo’s valuation in future.

A potential catalyst for this is Diageo’s exposure to emerging markets. While they are currently underperforming, countries such as China and India hold vast potential when it comes to increasing demand from middle income earners for premium alcoholic drinks brands. With Diageo having a stable of such beverages, it could return to the double-digit earnings growth rates last experienced in 2012. And, with the outlook for Europe and the US being relatively upbeat for next year, Diageo’s wide geographical spread entails a high degree of consistency, too.

Meanwhile, it has been a very challenging year for biotech company ReNeuron (LSE: RENE), with its shares falling by 16% since the turn of the year. Looking ahead, its £70m fundraising from July appears to be sufficient to see it through a number of key clinical milestones, with it significantly strengthening the company’s balance sheet. And, with 2016 expected to be an important year for ReNeuron, with several of its ongoing clinical trials due to report, its shares could remain volatile over the next year.

While the company’s losses widened in its most recent set of results, it remains a company which has significant long term potential. However, with losses set to increase over the next couple of years, investor sentiment could weaken and put the company’s valuation under even greater pressure. Therefore, it may be prudent to watch, rather than buy, ReNeuron at the present time.

The post Are Diageo plc, ReNeuron Group Plc & Persimmon plc On The Cusp Of Huge Returns? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Persimmon. 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.

Vodafone Group

With a much-awaited deal to solve Greece’s financial meltdown seemingly edging closer, shares in Vodafone (LSE: VOD) have understandably received a boost and the mobile operator was recently dealing 2.3% higher on the day. The firm’s reliance upon a strong eurozone is critical — Vodafone sources two-thirds of total EBITDA from Europe, so Athens’ newfound appetite to avert a continental crisis is great news.

The telecoms play has seen conditions improve steadily in Europe as consumer spending has picked up, while moves into the red-hot ‘quad play’ entertainment space have also turbocharged Vodafone’s sales outlook. When you factor in galloping data demand in developing markets — organic service revenues from the Africa, the Middle East and Asia Pacific region leapt 5.8% last year — in my opinion the London business emerges as a great growth pick.

Indeed, the City expects a 1% earnings uptick for the 12 months concluding March 2016 to advance to 15% in the following year. While it is true these figures produce hefty P/E multiples of 44.1 times and 36.8 times respectively, I believe Vodafone’s generous dividend policy more than offsets these expensive values — a prospective payment of 11.7p through to the end of 2017 results in a huge 5.1% yield.

ReNeuron Group

Shares in biotech play ReNeuron (LSE: RENE) have gone gangbusters in end-of-week trading following news of a huge cash injection, and the firm was recently changing hands 18% higher. The stem cell researchers announced that they had raised £68.4m in a bid to fast-track its product to market, with superstar investor Neil Woodford giving ReNeuron the seal of approval by hiking his stake from just over a quarter to 36%.

The Guildford firm announced that the capital will be used to fund “core cell-based therapeutic programmes and new exosome nanomedicine programme in oncology” through to the first half of 2019, giving plenty of wiggle room in what is obviously a capex-heavy industry. And ReNeuron added that the funds — which it describes as the largest such investment in cell therapy so far this year — should push its stroke and retinitis pigmentosa programmes through to the market authorisation application stage.

Naturally the business of healthcare is a lumpy and expensive one, and as a result ReNeuron also announced today it had made a £10.3m pre-tax loss in the year to March 2015. But with several of its clinical trials making excellent headway, and the company now having the financial clout to really get its R&D operations trucking, I believe ReNeuron could explode higher in the coming years.

Zotefoams

Cellular material producer Zotefoams (LSE: ZTF) also released its latest trading update in Friday business, although prices have so far failed to react and the stock was recently flat on the day. The Croydon company — which manufactures cross-linked block foams across a variety of applications, from packaging and toys through to clothing — announced that revenues are expected to have risen 8% in January-June.

In particular, sales at its MuCell Extrusion technology licensing arm are anticipated to have leapt 40% higher during the period, while revenues at its High-Performance Products division is predicted to have advanced 20%. With raw material prices also declining, the City expects improving demand to propel earnings 14% higher this year, and by another 19% in 2016.

These numbers create high P/E ratios of 27.7 times and 23.2 times for 2015 and 2016, however, while projected dividends of 5.7p and 6p for these years do not create eye-popping value, either — yields ring in at just 1.7% and 1.8% for these years. But beyond the medium term, Zotefoams’ market-leading expertise in niche products could make it a potentially barnstorming pick should demand remain resilient, helped by a planned expansions in Kentucky to boost manufacturing capacity.

The post Should You Invest In Vodafone Group plc, ReNeuron Group Plc Or Zotefoams plc? appeared first on The Twelfth Magpie.

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Royston Wild 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.

In fact, ReNeuron stated today that it is excited about the prospects for its exosome platform, especially as a potential new therapeutic approach that targets cancer. Furthermore, the company believes that its CTX-derived exosomes may eventually become a new pipeline of cancer therapeutic candidates, which is excellent news for ReNeuron’s long term growth outlook.

Transitional Period

Of course, ReNeuron remains a loss-making company. In fact, during the last four years its bottom line has been in the red and, looking ahead to the next two years, it is expected to see its pretax loss widen from £7.8m to almost £12m.

However, looking ahead to financial year 2017, ReNeuron is forecast to post a pretax profit of £26m, as it is expected to see revenue increase from a very small amount to around £40m. As such, investor sentiment in the company could rapidly improve and push the company’s share price higher. In fact, it appears as though investors are already beginning to price in the company’s anticipated top and bottom line transition, with ReNeuron’s shares being up 65% already this year.

There could, though, be much more to come over the medium to long term. That’s because ReNeuron is expected to post earnings per share of 1.56p in financial year 2017 and, with its shares currently trading at 5.75p, it equates to a forward price to earnings (P/E) ratio of just 3.7. This is extremely low and, while there is a good chance that ReNeuron’s guidance will change over the next couple of years, there appears to be a sufficiently wide margin of safety to make the risk/reward ratio appear to be highly appealing.

Sector Peers

Of course, it could be prudent to combine ReNeuron with other, larger health care companies such as BTG (LSE: BTG) and Shire (LSE: SHP) (NASDAQ: SHPG.US). That’s because they offer greater stability and a more robust earnings profile, so a combination should be able to provide reduced company specific risk and greater consistency over the medium to long term.

And, looking ahead, both Shire and BTG appear to offer considerable potential rewards, too. Like ReNeuron, BTG is expected to rapidly improve its bottom line, with it set to rise from a pretax profit of £26m last year, to as much as £130m next year. If met, that would represent growth of 5x in just two years, which would be a stunning performance and could stimulate investor sentiment in the company moving forward.

Meanwhile, Shire trades on a price to earnings growth (PEG) ratio of just 1.1, which is relatively low for such a large company and compares very favourably to its large pharmaceutical peers. Therefore, it could be a strong performer even though its shares have already risen by 17% during the course of 2015.

The post Is ReNeuron Group Plc The Perfect Partner For BTG plc And Shire PLC In Your Portfolio? appeared first on The Twelfth Magpie.

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

A whopping 34% of the CF Woodford Equity Income fund is invested in the healthcare sector, compared with the FTSE All-Share index weighting of less than 9%.

GlaxoSmithKline (LSE: GSK), AstraZeneca (LSE: AZN), Circassia Pharmaceuticals (LSE: CIR), Oxford Pharmascience (LSE: OXP) and ReNeuron (LSE: RENE) are just five of Woodford’s holdings in the sector.

FTSE 100 giants GlaxoSmithKline and AstraZeneca need little introduction. With market capitalisations of £76bn and £57bn, respectively, they are among the bluest of blue chips.

Glaxo currently trades on a forward P/E of 17.3, while Astra trades on 16.3. These earnings ratings may not appear particularly cheap, but as high dividend yields of 5.1% and 4.1% suggest, it is the prodigious cash generation of these mature companies that is the big attraction.

Glaxo and Astra are among the cornerstones of Woodford’s fund. Astra is his biggest holding, weighted at 7.8% of the portfolio, while Glaxo stands at number four with a 6.3% weighting. If you’re in the market for some solid blue chips, these two giants are certainly worth considering.

Oxford Pharmascience and ReNeuron are both capitalised at around £60m, and both companies are targeting areas of unmet medical need. Oxford Pharmascience redevelops already-approved drugs to make them better, safer and easier to take. ReNeuron is a leading, clinical-stage stem cell business.

Oxford Pharmascience is expected to post a loss before tax of £3.5m for 2014, but to swing to a £15m profit this year, giving the company a P/E of under five. ReNeuron is expected to post annual losses in the region of £10m through to its financial year ending 31 March 2016, but is forecast to post a £26m profit the following year. ReNeuron’s P/E is similar to that of Oxford Pharmascience, adjusting for ReNeuron’s later move to profitability.

Circassia has a market capitalisation of over £500m, but isn’t expected to be profitable in the near future. However, the company does have cash of £187m to absorb forecast annual losses of around £60m in 2015 and 2016.

Circassia is developing allergy treatments that build up immunity quicker than traditional remedies and without the risk of anaphylactic shocks. The company’s most advanced treatment is for cat allergy, and it has six other treatments in the pipeline.

Woodford is excited about the prospects of Circassia, Oxford Pharmascience and ReNeuron — and you may be, too, if you’re looking for higher-risk investment ideas — but it should be noted that each of these three companies has a weighting of less than 0.4% in the CF Woodford Equity Income fund.

The post Should You Follow Neil Woodford And Buy GlaxoSmithKline plc, AstraZeneca plc, Circassia Pharmaceuticals PLC, Oxford Pharmascience Group Plc And ReNeuron Group Plc? appeared first on The Twelfth Magpie.

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