This week: Conroy has new gold targets up its Slieve, new contracts high in the RapidClouds, Vectura storms the US


AVO new American entity,AFPO appointed Drill Contractor at Lac Dinga Potash Project,CGNR new gold zones, CUP AGM statement,FTC interim management statement, GKO preliminary results, HCM initiation of Phase I clinical trial and refinancing, KLBT trading update,KMK contract wins, R4E trading update,RCI contract wins, RENE preliminary results, TLA agreement to bring ICC tournament to Asia-Pacific,TLY new contract,VEC VR315 US development milestone, VRP phase IIa results 

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A full archive of previous weeks’ Small Cap Wraps can now be viewed on www.hybridan.com.

The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week. Our review will usually be of those companies whose market capitalisations are less than £50m although we may occasionally cover larger companies. 

Advanced Oncotherapy (LON:AVO)

The developer of innovative radiation technology for cancer treatment, has established AVO Americas Inc. The office will be based in the Central New York Biotech Accelerator building, a 40,000 square foot facility designed to be at the forefront of commercialising biomedical technology businesses. The state of the art building is well equipped with modern laboratory space, office space and conference areas for a group of synergistic growth orientated companies. At SUNY Upstate Medical University in Syracuse, New York, AVO is already targeting the first installation of its LIGHT proton based radiation machine, promising to be more affordable, smaller, lighter, and requiring less shielding than incumbent proton treatments which are proven to cause less side effects than the more widely spread x-ray based machines.

African Potash (LON:AFPO)

African Potash, the exploration company focused on sub-Saharan potash assets, recently announced that it has appointed RCT srl to undertake a maiden 1,000m diamond drill programme at the Company's Lac Dinga Potash Exploration Project in the Republic of Congo (Lac Dinga). The objective for the maiden drilling programme, due to commence in July 2014, is to test the interpreted prospective salt sequence for the development of high-grade sylvinte (KCl) horizons within the basin-wide carnallite layer.  The initial programme will include two approximately 400m to 500m deep vertical drill holes.  It is expected that the holes will intersect the evaporite horizon between 300m and 350m below surface.  The drill holes are planned to be drilled as open rotary holes through the cover sequence consisting of mainly poorly consolidated sandstones, limestone and dolomites, and to be cased to the top of the salt and then Pooled Quota (PQ) size (~8.5cm diameter) core drilling into the evaporite formation.  The historic drill hole information confirms the development and presence of potash mineralisation in the form of sylvinite and carnallitite in the area immediately to the south (~5km) of the Project area.  The records refer to layers of sylvinite and/or carnallitite developed in the same stratigraphic position as that exploited in the nearby Holle historic potash mine.

Conroy Gold and Natural Resources (LON:CGNR)*

The gold exploration and development company focused on Ireland announced the discovery of a series of gold zones at surface on its Slieve Glah gold target. These gold zones were identified by rock chip grab sampling. The zones occur on the most South-eastern gold target (Target area 1) of the Slieve Glah gold targets in Co. Cavan. They are the first gold-in-bedrock results recorded within Target area 1.  They are located over 3km (2 miles) from previous gold-in-bedrock results identified through trenching and drilling within Target area 2 of Slieve Glah. The Company has previously identified, through geophysics and soil sampling, four large gold targets areas at Slieve Glah. These gold target areas appear to be structurally controlled. They occur as a series of right angle zones adjacent to the Orlock Bridge Fault. This major structural fault is believed to be an important influencing factor on mineralisation in the region.  At Slieve Glah the fault undergoes a pronounced strike swing.  The Company believes that this strike swing may be of significance in relation to potential mineralisation in the area. The Slieve Glah gold targets lie at the southern end of the 50km (30 miles) gold trend discovered by the Company.  This gold trend stretches from Co. Armagh in Northern Ireland across Counties Monaghan and Cavan in the Republic of Ireland. The Slieve Glah gold targets are located approximately 40km (25 miles) south of the Clontibret Gold Project in Co. Monaghan where the Company is planning to develop its first operational gold mine. 

Cupid (LON:CUP)

The online dating operator updated on H1 trading. The EBITDA loss is estimated to be c. £3m, which is better than anticipated. Revenue for the first half will be c £7m, slightly lower than management's expectations.  The stronger EBITDA result has been achieved through the close management of costs, which in turn will enable Cupid to end the half with circa £11m of cash (pre-dividend). The Company noted however that there is increasing pressure from the advance of a new breed of more intuitive, mobile, social dating applications.  Cupid continues to develop its core offering and will address this development in the on-going strategy.

Filtronic (LON:FTC)

Filtronic issued a statement, updating the guidance given in the Interim Management Statement of 31 March 2014. During the final quarter of the financial year, both the Wireless and Broadband businesses traded in line with the Board's expectations, delivering full year unaudited revenues of £23m (2013: £31m) and £9.7m (2013: £8.1m) respectively. After central costs and the costs of establishing the new antenna activity, the Group expects to report a small operating loss, of not more than £0.5m, before exceptional items and the amortisation of goodwill for the year ended 31 May 2014 (FY2014). The Group had net cash at the year-end of £2.5m. The Broadband business completed its relocation to a lower cost facility, the combined effects of the lower operating cost base and the improving volumes enabled Broadband to achieve a small underlying profit, on a run rate basis, at the conclusion of FY2014. The Board still expects some of the Wireless projects to deliver revenue in FY2015 but the timing and quantum of such revenues still remains uncertain.

Greenko Group (LON:GKO)

On the same day as its preliminary results Greenko, the Indian developer, owner and operator of clean energy projects, announced the commissioning of a further 50 MW of wind assets, taking the Company's total generating portfolio to 661 MW, more than doubling capacity since April 2013. The results to 31 March showed that revenue grew 59.5 per cent and adjusted EBITDA grew 90.5 per cent in constant currency terms. Reported revenue was up 38.2 per cent to €53m and reported EBITDA was up 65.9 per cent to €40.9m generating eps growth of 53 per cent to 4.5c. Operating cash flow was up from €21.3m to €30.2m.

Hutchison China MediTech Limited (LON:HCM)

Chi-Med announced that Hutchison MediPharma Limited (HMP), the majority owned R&D company of Chi-Med, has initiated the first-in-human Phase I clinical trial of HMPL-523 in Australia.  HMPL-523 is a novel, highly selective and potent small molecule inhibitor targeting spleen tyrosine kinase, also known as Syk, a key component in B-cell receptor signalling.  HMPL-523 is HMP’s second active immunology programme in clinical development.  The first drug dose was administered on 17 June 2014. As one of the major cellular components of the immune system, B-cells play pivotal roles in autoimmune diseases.  Targeted B-cell receptor signalling therapy has been proven to be clinically effective for the treatment of rheumatoid arthritis (RA) and B-cell malignancies, leading to scientific and commercial success.  Syk is an essential enzyme involved in B-cell receptor signalling pathway and a novel target for investigational therapies in immunology and oncology. HMPL-523 is being developed as an oral formulation for the treatment of autoimmune diseases such as RA and lupus. The first-in-human trial aims to establish the safety profile of HMPL-523.  Initial results are expected around the end of this year. Chi-Med also announced the refinancing of its existing 3-year term loan facility issued on 9 December 2011 for a principal amount of HK$210m (approximately US$27.0m) as announced on 12 December 2011, by a new four-year term loan facility with the same lender.

Kalibrate Technologies (LON:KLBT)

Kalibrate Technologies, a provider of proprietary software-based products and services to the global petroleum retail industry, provided an update on trading for the year ending 30 June 2014. The Group has performed strongly during the period, driven by new and existing customer wins in the second half of the current financial year and the year as a whole, supported by growing recurring revenues. New geographies have been successfully opened up, the Group has expanded its revenues from its existing client base, enhanced its market leading position with new clients taken on in core markets of North America and Europe, increased the number of clients on a SaaS/Managed Services offering, and the Group is successfully monetising revenue from new products being developed and released to its client base. Underlying EBITDA is expected to be comfortably ahead of current market expectations given the strong revenue performance whilst the Group has continued to focus on careful cost control whilst investing in its strategic growth plans. The Group's balance sheet remains strong with year-end net cash expected to be approx. $9m.

Kromek (LON:KMK)

Kromek, a supplier of patented radiation detection technologies to the medical, security and nuclear markets, recently announced that it has signed a number of further contracts, in the Nuclear Detection and Medical markets.  Kromek has been awarded a contract with the US Defense Threat Reduction Agency for the design, manufacture and optimisation of high sensitivity, next generation, solid state detectors for the homeland security radiation detection market.  The contract is worth $1.45m to Kromek over the next two years and will commence in July 2014.  Additional contracts, amounting to over $950,000 to supply innovative nuclear detection products to customers in the US and around the world, have recently been signed across a broad range of clients. These contracts are in the process of being fulfilled with revenues due to Kromek now and falling in the financial year ended 2015.  Kromek has also been granted contracts worth £150,000 due over of the next twelve months from the Technology Strategy Board, the UK Government's innovation agency. These are to develop an enhanced detection system for breast imaging in conjunction with the UK's Centre for Process Innovation.  The project proposes to develop conformal detectors based on plastic electronic solution which can be wrapped around or inside regions of interest (e.g. breasts, limbs, suspicious packages, parts for inspection) and that the production methods will be cost competitive versus existing silicon technologies. Work on this project has already begun. 

Reach4Entertainment Enterprises (LON:R4E)

R4e has enjoyed a strong start to trading in the current financial year and is confident of meeting market expectations for the full year. Historically, r4e's financial performance has been weighted towards the second half of the year, which includes the peak summer and year-end theatre seasons. However, primarily due to a very strong performance from Spot & Company of Manhattan Inc., the Group's New York based theatre and live entertainment business, it is expected that trading in the current financial year will be more equally balanced between half year periods. David Stoller, Executive Chairman, r4e, said: "I have been pleased with the Group's strong start to the year and am confident of it meeting expectations for the full year. Our New York operations have been the highlight so far, performing strongly at a time of robust spending on Broadway, with an encouraging book of new business boding well for the rest of the financial year." 

RapidCloud International (LON:RCI)

RapidCloud International, the Southeast Asian based software solutions provider offering subscription services through all segments of cloud computing, announced two significant contract wins, the combined revenue value of which is in excess of £1m. This revenue is expected to be recognised in the current financial year. RapidCloud has won a material contract with the national legislature of a country in Southeast Asia. The contract is to assist in the development of a cloud management system which can rapidly process vast amounts of legislation data while providing members of the legislature easy access to required information such as documents, video, profiles and events through a single secure interface. The core of the integrated legislation management system is being built on RapidCloud’s in-house developed solutions, RapidSearch and PortalWeb. Launched in May of this year, RapidSearch is RapidCloud’s ‘big data’ solution offering comprehensive reporting and data analysis of both structured and unstructured data. PortalWeb is RapidCloud’s web portal building solution enabling the unified presentation of diverse information feeds. RapidCloud has additionally won a contract with a separate government owned institution in Southeast Asia to deploy its recently launched cloud-based application programming interface, RapidAPI. RapidAPI gateway solution streamlines the management and operation of applications whilst at the same time enhancing security and regulatory compliance. The solution is ideal for organisations that are exposed to management and security challenges, such as Governments, Telcos, Internet Service Providers and large-scale enterprises, given the existence of the large and diverse number of applications running within their network.

ReNeuron Group (LON:RENE)

ReNeuron Group, a UK-based stem cell company, announced its preliminary results for the year ended 31 March 2014. The reported loss for the year was £7.07m (2013: £6.35m); the cash outflow from operating activities was £6.00m (2013: £6.02m); and cash, cash equivalents and bank deposits at 31 March 2014 of £20.92m (2013: £3.55m). Commenting on the results, Bryan Morton, ReNeuron’s Chairman, said: “The past year has been transformational for our business, both operationally and financially.  Our cell therapy candidate for stroke has entered Phase II clinical development and we have commenced clinical development of our cell therapy candidate for critical limb ischaemia.  In both cases, and earlier-than-planned, we have gained regulatory approval to use a second-generation cryopreserved variant of our lead CTX stem cell line, providing the potential for significant commercial and competitive advantages for our business.  We remain on track to move into our world-class cell manufacturing facility in South Wales in the early part of next year, which we believe will become a major element of ReNeuron’s overall value proposition.  We are also on track to file an IND application in the US early next year seeking FDA approval to start a Phase I/II clinical trial of our retinitis pigmentosa cell therapy, and we are greatly encouraged by the progress and potential of our emerging CTX cell-derived exosome therapeutic platform. These developments represent significant steps to building real future value in the business and the £34.6 million equity and grant financing completed in the year provides us with a robust balance sheet to reach further key clinical milestones in the business.  We look forward to the future with great confidence.’’ 

TLA Worldwide (LON:TLA)

TLA Worldwide, a leading athlete representation and sports marketing group, has signed an agreement with Relevent Sports, to bring the elite International Champions Cup (ICC) to Asia Pacific from 2015-2018, the first time the football tournament will be played outside the United States.   TLA has partnered with Nine Live, wholly owned by Nine Entertainment Co, a leading Australian media and entertainment company, to organise, promote and deliver the ICC to the region. The agreement is expected to have a materially positive impact on results from next year. The first ICC was held in 2013 and broadcast in 150 countries, featuring eight top clubs from across the world, including A.C Milan, Chelsea, Everton, Juventus and Real Madrid. This is a major move into Soccer for TLA, whose focus has historically been baseball and other sports.

Totally (LON:TLY

Totally, focused on the provision of professional health coaching which promotes and facilitates self-care announced that Totally Health Ltd, the Company's wholly owned subsidiary and the provider of a range of services to the healthcare sector, has been appointed by Merton Clinical Commissioning Group (CCG) to undertake a clinical health coaching programme focused on the management of Long Term Conditions.  During the course of the programme, Totally Health will work with up to 100 patients, diagnosed with Chronic Obstructive Pulmonary Disease (COPD), over a 12 month period, to help the patients to better manage their own conditions, thereby reducing visits to hospitals and to their GP. Revenues from this contract are expected to amount to around £110,000 over the 12 month period.

Vectura Group (LON:VEC)

Vectura Group, a product development company that focuses on the development of pharmaceutical therapies for the treatment of airways-related diseases, announced that it has triggered a milestone of $1.5m associated with the development of VR315 in the US.  In August 2011, Vectura signed a licence agreement for the development, manufacturing and commercialisation of VR315 in the US with the US division of a leading international pharmaceutical company. To date, Vectura has announced development milestones under this agreement totalling $6m. Vectura announces today that it will be recording a further development milestone under this agreement of $1.5m. Vectura is eligible to receive a further $27.5m upon achievement of future pre-determined development milestones. These milestones, together with the initial payment of $10m in August 2011, total $45m. In addition, Vectura will receive a royalty from all sales of VR315 in the US.

Verona Pharma (LON:VRP)

Verona Pharma, the drug development company focused on respiratory diseases, announced that the Phase IIa clinical trial, to evaluate the efficacy of a single dose of VRP700 as a novel treatment for chronic severe cough in patients with idiopathic pulmonary fibrosis (IPF) did not meet the primary endpoint of a statistically significant reduction in cough frequency when compared to placebo. This placebo-controlled, cross-over exploratory study was conducted in 20 IPF patients who received, as part of the protocol, a single inhaled dose of either 100 mg VRP700 or placebo. It follows the successful outcome of a single centre pilot study in which an inhaled dose of VRP700 effectively inhibited coughing in a smaller group of patients with interstitial lung disease (ILD). Verona Pharma CEO, Dr. Jan-Anders Karlsson, commented: "…While we will not undertake any further in-house development of VRP700, we will comprehensively review the data from this study and explore opportunities to realise further value from this asset….we will continue to focus on the development of our novel lead drug, RPL554. This inhaled, first-in-class, PDE3/PDE4 inhibitor has both bronchodilator and anti-inflammatory properties and is initially being developed as a nebulized treatment for acute exacerbations of COPD. The next set of clinical data for RPL554 is expected in early 2015." 

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