ImmuPharma: £3.4m Funding To Support Lupuzor Phase III Trial

ImmuPharma has completed a £3.4m placing with Aviva and key investors that will be used to support Lupuzor’s pivotal Phase III trial. It has also been awarded a €400k grant to support its pioneering research in the Bordeaux region of France. We believe the successful placing is a major show of support for Lupuzor to enter its Phase III trial. While cautious of the risks, our stance remains Buy.

£3.4m Raised To Progress Lupuzor Phase III Trial

ImmuPharma has raised £3.4m from its longstanding shareholder Aviva and other investors through the issue of 6,340,000 shares at a price c.3.9% above the previous day’s close. This money will be used to support Lupuzor’s pivotal Phase III clinical trial. We feel this is a very positive development for Lupuzor as it not only provides ImmuPharma with financial resources to support the trial, but it is an endorsement for the drug’s potential given that a major investor appears to be backing its progress, in our view. Dealings in these new shares commenced on AIM on 23rd October 2014.

€400k Grant Awarded To ImmuPharma In Bordeaux

The French region of Aquitaine has awarded ImmuPharma’s subsidiary Ureka a grant of c.€400k that is non-refundable and that can be used to develop its Urelix technology. We understand that this technology is used to mimic natural peptides (that could be used to treat certain conditions) but with the addition of artificial residues to their chemical structure that help to protect them from degradation within the body. One of the first targets for this technology is a key peptide in diabetes. We see the award of this grant as a further endorsement for ImmuPharma’s work, this time with regards to its collaboration in Bordeaux with the CNRS and IECB and other partners working on this potential technology. Further announcements are expected on other programmes using this technology in the coming months.

Valuation

We have updated our valuation to reflect the increased number of shares in issue. We have also added the £3.4m raised to the most recent net cash position, reduced our GBP:USD rate to 1.65 from 1.71 due to a recent fall in rates, and accounted for the fact that ImmuPharma has moved closer to our expectations of first cash flow. Our FY’15 forecasts increase accordingly, with revenue and EPS increasing by £213k and 0.11p, respectively, while the FY’14 loss per share decreases by 0.4p. We highlight that the group currently generates no revenues and due to the nature of drug development companies any changes to our expectations could affect our valuation materially. Share dilution could also be a factor. Our valuation now implies value of 203p per share, but we maintain our 200p target price to help buffer for factors such as exchange rate movements. Buy.