Wednesday, December 6th 2023

12 Companies to follow in 2023

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12 Companies to follow in 2023


Investors need no reminders about this most frustrating of years. But it’s worth the reviewing the performance of the small cap markets that receive much less attention than the major indices from the mainstream investor press.

It hasn’t been good. The AIM 100 is down some 37pc this year, much more than the FTSE 100, which with its weighting towards energy stocks boosted by soaring commodities prices has fallen by around 7pc. With its preponderance of speculative growth stocks AIM’s performance has been similar to that of the tech-driven NASDAQ. The growth stock bubble that expanded so rapidly during and after the pandemic has been well and truly punctured this year, higher interest rates discounting the future cash flows that give growth stocks their shine. For sure, AIM has its share of commodities stocks, but tending to be more heavily weighted to exploration rather than production most have not been in the position to reap the windfall gains enjoyed by the FTSE giants.

This year’s shakeout has changed AIM. The market is cheaper than it was, the price/earnings ratio for the AIM 100 has falling from an extravagant 61x at the start of the year to 27x as of mid-October. The typical company is smaller, average market capitalisation down from £660m at the start of the year to £405m by the end of Q3. Not surprisingly the AIM 100 weighting of energy and resources companies is up, from 10.5pc to 14pc, and unsurprisingly, given the terrible time suffered by biotech healthcare’s weighting is down from 15.2pc to 11.5pc. The wider tech sector has been unexpectedly resilient, up from 10.3pc to 12.5pc, testament to AIM’s indefatigable capacity to bring forward start-ups or previously overlooked stocks with compelling narratives.

As with other markets the average number of daily trades is down, to 50 million – as of September – from 80 million last year, though it should be noted that last year’s figure was exceptionally high: the average for the past decade is 67 million. Some investors have simply given up and withdrawn most or all of their money from the markets. Understandable, perhaps, but inflation makes even that a risky strategy. With prices rising by more than 10pc a year and the best fixed-rate savings accounts delivering less than 5pc, cash will halve in value within the next 15 years.

As we wrote in October the plain evidence of stock market history is that investors who can afford to do so should keep their money in equities. Since modern markets emerged in the 1850s equities have generated a real annual return of around 6pc, well beyond any other asset class. Veteran fund manager Richard Oldfield puts it colourfully in his book Simple But Not Easy: ‘Rather like reputations, which are built up over many years and can be lost in a trice, markets seem to stagger determinedly though haphazardly up an infinite staircase and to throw themselves precipitously down a flight or two from time to time’.

And as we noted in an article this summer, choppy market conditions offer opportunities for smaller shares to shine due to the ’small company effect’, the capacity of the best small caps to sustain growth even in times of economic stagnation. Clearly, all businesses, large and small, tend to do better during the good times. But because of their dominant market shares the growth of larger companies is more closely correlated with economic trends. Good small companies, however, can continue to grow by taking market share during downturns. Their value is more closely correlated to the quality of their operations: they need only increase their market share at the margins to secure decent growth. They have greater opportunity to innovate, and to more quickly adjust to changing market conditions.

Oldfield insists that adverse market conditions offer informed and bold stock pickers opportunities to construct robust portfolios able to deliver considerably better returns than the index. Following legendary investors Benjamin Graham and Warren Buffet Oldfield argues that value investing has a simple robust logic that ensures it always comes good – in the end. The expected return of an asset rises as its price falls, making a share price that has fallen ‘more interesting than it was before it fell’. What has come down, tends to go up as the mean reasserts itself. The logic is simple but when the going is tough its hard to embrace. Being human, investors are naturally enthusiastic about things that are doing well and gloomier about those which are doing badly. It takes discipline to pass over high-flying stocks for those that have been overlooked, even when research indicates that those neglected stocks are due for renewal. But the truth is that ‘if the company involved is essentially sound, with scope for improvement, but an unduly low valuation, then in time the value is likely to be realised.’

Learning to pick good stocks is a lifetime’s work. Our series of introductory articles on trading the markets introduces the fundamentals. Most essentially during tough times make sure your portfolio has adequate diversification, and look out for debt-free companies with stable cash flows and higher current assets than current liabilities.

What about the prospects for 2023? The only accurate thing one can say about economic predictions is that they are nearly always wrong. The global economy in which even smaller companies operate is an infinitely complex mechanism subject to all kinds of unforeseen influences even during relatively uneventful years. In recent times it has been rocked by earthquakes such as the pandemic and the invasion of Ukraine. But given its profound impact on market psychology it is worth considering the likely trajectory of monetary policy. 

Central banks have been talking and acting tough on interest rates all year, signalling their readiness to prioritise price control over growth. The Bank of England has been no exception: the bank rate stood at just 0.25pc 12 months ago, successive hikes taking it to 3.5pc at the time of writing. But Investors’ Chronicle economist Hermione Taylor makes an interesting case that rates may not be set to rise as high as investors fear.

Rate changes take time to take effect, about six to nine months, so the initial rises introduced about a year ago are only now making an impact. Taylor suggests that ‘with the global economic outlook darkening and the impact of rate hikes yet to filter through, central bankers are beginning to run the risk of monetary policy ‘overshooting’ and depressing already-weak economies.’ So rates may stop rising even while inflation is high. Indeed the BoE has been clear that the cost of borrowing may not rise as much as markets fear – perhaps not much more than 4pc or so. Research by Goldman Sachs studying 85 hiking and easing cycles from 1960 onwards indicates that central banks tend to stop raising rates when inflation is within 10pc of its peak. In the best case scenario supply chain logjams will ease somewhat, in turn reducing inflation, allowing banks to actually cut rates sooner rather than later. Perhaps. We simply don’t know. But the gloomy picture of ever higher rates may be unfounded, opening chinks of daylight for investors.

However things unfold, we’ve picked out a few small cap stocks we think have the capacity to withstand continued bad conditions – or benefit from brighter economic weather.

Companies covered include :






Audioboom (AIM:BOOM) is one of AIM’s unabashed success stories, successfully riding the podcasting wave to consistently achieve stellar growth. The storm that has beset the markets, and particularly the tech sector, over the past few months has hit the company’s once soaring share price, which has tumbled from more than 2,000p to around 400p. But with strong Q3 figures is this stock poised to move again?

BOOM’s business is obscured by industry jargon, but simply put, the company connects podcasters with advertisers. BOOM has grown to become the fourth largest podcast publisher in the US, handling some 8,000 content channels and 3,000 advertisers, and serving more than 125 million episode downloads each month to over 30 million listeners. The platform provides commercial services for its ‘Premium Network’ of 250 leading podcasts, including US shows such as Casefile True Crime, Morbid, True Crime Obsessed, and The Morning Toast, and UK broadcasts such as No Such Thing As A Fish and The Cycling Podcast.

BOOM allows partners to distribute their content through a host of other services as well as their own platforms, including Apple Podcasts, Spotify, Pandora, Amazon Music, Deezer, Google Podcasts, iHeartRadio, RadioPublic, Saavn, Stitcher, Facebook and Twitter. BOOM takes advantage of the lightweight, scalable networks available to today’s digital platforms, which give it scope to continue to add podcast channels, advertising campaigns and listeners at minimal cost. The company’s organisational requirements are modest, allowing it to employ just a few dozen staff.

In addition to facilitating publication for third party material, the company publishes its own content through Audioboom Studios, which includes Dark Air, narrating the life of fictional talk-show host Terry Carnation, F1: Beyond The Grid, RELAX! and Covert. Earlier this year Audioboom’s UK production team launched the popular Devils in the Dark podcast, which topped the UK’s True Crime Chart and broke into Apple’s top 15 podcasts. Late last year the company introduced a significant upgrade to its advertising technology, Showcase, which makes it easier for brands to target advertising campaigns to listeners based on demographics, location, content types and keywords. The tool was augmented by an ad automation technology called AdRip, which makes it possible for advertisers to monetise BOOM’s extensive back catalogue, which accounts for half of the platform’s consumption – some 58 million downloads per month. Once an episode is 90 days old existing ads are replaced by fresh ads each time it is listened to in the future, ensuring the continued value of legacy content to advertisers. In this way Showcase complements BOOM’s Premium advertising service, focused on the network’s best performing 250 shows.

BOOM’s financial progress, and that of the wider podcasting industry, has been underlined by a series of impressive updates this year. The company’s annual report, published earlier this month, stated revenue of $60.3m, up 125pc on 2020 ($26.8m), year-on-year growth outpacing the predicted wider industry average growth by 108pc. BOOM reported a maiden annual net profit before tax of $1.7m, against a $3.3m loss for the previous year, and a 39pc increase in average monthly global downloads to 113 million. The company’s most recent trading update, for Q3, stated total revenue for the nine months to 30 September of $57.1m, up 44pc on the same period last year $39.7m, total adjusted EBITDA profit for the nine months to 30 September of $2.7m, up 125pc on the previous year, and global monthly downloads of 107.5 million, up 9pc on Q3 2021 (99.1 million). BOOM’s growth of 44pc continued to outpace wider market growth of 15pc.

As one of AIM’s most high profile companies BOOM is continually associated with possible takeover bids. Last summer asset manager All Active Asset Capital said it was in talks to take the podcast company private, valuing it at 1,200p per share, a (then) premium of 36pc. And this February Amazon and Spotify were reported to be considering rival takeover approaches. A Sky News report indicated that an approach from either of the two media giants was likely to be pitched ‘at a significant premium’. There has no been further news of a bid, though Mr Last used his CEO statement in BOOM’s latest annual report to say that the company’s ‘business model, structure and financial performance provides strong optionality on our future path’, adding that its ‘global scale and ownership of technology and content production will make us an attractive proposition for major media or technology businesses looking to fast-track a leadership position in podcasting.’

BOOM’s fundamentals seem robust. The company has worked its way into a strong position in a fast growing market forecast to grow at a CAGR of 31.1pc through the 2020s. Innovative solutions like Showcase and AdRip are further evidence that BOOM, along with the rest of the sector, is working out ways of turning impressions into advertising revenue, a defining challenge in an industry where listeners still expect free content. That said, with giants like Amazon and Spotify investing ever more heavily in the sector the possibility of new, exclusive and paid-for content is becoming more tangible.

BOOM’s share price was a stellar performer through 2021, rising from just over 200p to 1,000p, and it continued to rise this year through the teeth of the storm that blew away other tech stocks, peaking at just over 2,000p. The company’s value has tumbled since the summer to £70m as deteriorating market conditions have hit the advertising market and takeover speculation has receded. BOOM says that advertising demand began to rebound in the second half of Q3, and that trend is continuing into Q4, with advertising bookings of more than $73m in place for 2022. Time will tell whether those indicators are green shoots, or a temporary bounce. But investors looking to take positions in a tech sector that has been well and truly shaken out would do well to follow the BOOM story, a company with a proven cutting edge in a growing market, and one on the radar of the world’s largest media companies.

Gunsynd Plc


Small cap investment fund Gunsynd Plc (AIM:GUN) this year sharpened its focus on gold, copper and battery metals. Notably, the company confirmed its track record of investing in early stage nickel projects by taking a £1m stake in new venture Metals One, pursuing a nickel-zinc-copper-cobalt project close by and analogous to Talvivaara, one of the largest nickel mines in Europe, and supplier to the Renault Group. Metals One is farming into the Black Schist Projects focused on the Kainuu Schist Belt of eastern Finland, which contains existing inferred resources of 28.1Mt nickel-zinc-copper-cobalt (Ni-Zn-Cu-Co).

Permit applications have been submitted for three prospects: Paltamo, which contains a JORC exploration target of 16-24Mt of Talvivaara type ore containing 0.18-0.27pc Ni, 0.09-0.13pc Cu, 0.01-0.02pc Co and 0.33-0.50pc Zn; Rautavaara S, containing a JORC inferred mineral resource of 28.1 Mt of Talvivaara type ore at a grade of 0.19pc Ni (53,800t), 0.10pc Cu (27,900t), 0.01pc Co (3,400t) and 0.38pc Zn (180,000t); and Rauta 9-11, where an application has been made to extend the permit. The partners already have access to legacy geophysical, geological, and geochemical data covering large areas of the belt as well as historical geophysical surveys and diamond drilling. GUN’s investment will contribute to an 18-month work programme targeting resource expansion, subject to Metals One’s admission to AIM. The partners hope to develop a native supply chain that will make a major contribution to Europe’s pressing need for battery metals.

GUN’s stake in Metals One followed news that another of its strategic metals holdings, Pacific Nickel Mines (ASX:PNM), had entered into a non-binding indicative term sheet with Glencore for a three-year, $22m Pre-Export Finance Facility, and an offtake arrangement for its Kolosori Project to extend for at least four years. Pacific Nickel has 80pc interests in two nickel projects at Kolosori Project and Jejevo – both located on Isabel Island in the Solomon Islands – with a collective JORC MRE of 21.7 million tonnes at 1.35pc nickel. Pacific Nickel is now focused on the key steps to achieve commercial nickel laterite direct shipping ore cargoes from mid-2023.

GUN has several other holdings encompassing gold, silver, copper, tin as well nickel, most of which are engaged in or on the cusp of drilling programmes. The company has a 17pc stake in Rincon Resources (ASX:RCR), a gold and copper exploration company which listed on the Australian Stock Exchange (ASX) late last year, raising AUD$6m to drill three wholly-owned prospects in Western Australia. The largest, South Telfer, consists of six exploration licences and two prospecting licences covering approximately 540km2 with a prospective 40km strike geology. A maiden drilling programme got underway last year at South Telfer’s Hasties Prospect, just 10km south of Newcrest Mining’s Telfer Gold Mine, which has produced 27 million ounces of gold over the past 45 years. The first phase of the 5,000m programme, designed to confirm historical drilling results completed over 20 years ago by Newcrest, and test for extensions to known shallow copper-gold mineralisation, reported high-grades zones up to 17.4g/t gold and 5.31pc copper with mineralisation open in all directions. Reinterpretation of existing geophysical aeromagnetic data at South Telfer’s Copper-Gold Project has defined a significant new target: ‘Mammoth’ is the largest of three new targets defined over a strike length of 15km along the highly prospective Telfer – Westin Trend within the company’s underexplored Westin tenement area.

GUN has a 5.12pc holding in Charger Metals Limited, an Australian base metals and lithium exploration company with interests in three prospects in Western Australia and the Northern Territory: 85pc and 70pc interests in the North and Nickel-Copper-Cobalt-PGE projects at Coates (65km northeast of Perth); 70pc in the Lake Johnson Lithium and Gold Project; and 70pc in the Bynoe Lithium and Gold Project, Charger has set out a drilling schedule for the Coates prospect, which encompasses a mafic intrusive complex within the Jimperding Metamorphic Belt (which also hosts the 17Moz Gonneville Nickel-Copper-PGE Project owned by Chalice Mining Ltd, located 28km to the north-west).

GUN has a 1pc interest in another copper and gold miner, Eagle Mountain (ASX:EM2), focused on the Oracle Ridge and Silver Mountain Projects in Arizona, situated within the compass of the Laramide Arc which hosts the copper porphyry deposits mined by BHP, Rio Tinto, Freeport McMoRan and Hudbay. Eagle has secured AUD$16m equity financing towards drilling. Eagle’s most recent JORC Mineral Resource Estimate (MRE) for Oracle Ridge, based on a 1pc copper cut-off grade, stated an updated figure of 17.0 Mt grading 1.48pc copper, 15.09g/t silver and 0.17g/t gold for 251,000t of contained copper, 8.2Moz of silver and 93 oz of gold. Eagle Mountain commenced its first large diameter drilling in Oracle Ridge’s Talon area to collect samples for metallurgical test work which is necessary for future feasibility studies. Preparations for the refurbishment of the underground mine are well advanced to enable underground diamond drilling at Oracle. 

Last year Gunsynd took a £125,000 stake in Anglo Saxony Mining Limited (ASM), now First Tin Limited, a development and exploration company with a licence to establish sustainable tin production and processing at the Tellerhäuser Mine in Saxony, Germany. The mine is furnished with an extensive infrastructure from past investment and exploration expenditure, with 150,000 metres of tunnels and other underground development, approximately 140,000 metres of historical drilling and 3,000 metres of channel sampling. First Tin recently commenced Definitive Feasibility Studies at Taronga and Tellerhäuser, which are both scheduled to be completed in Q4 2023.

GUN has diversified interests in markets extending well beyond the natural resources sector, including gaming platforms, premium spirits and wines, medical cannabis, and treatments for mental health.

These include a 24pc stake in Rogue Baron (AQSE:SHNJ) (OTCQB:SHNJF), an emerging premium spirit and wine brand. Admitted to the Aquis Stock Exchange and OTCQB Venture Market last year, Red Baron has made significant progress with its flagship brand, Shinju Japanese Whisky, which is being rolled out across the US, where it is now available to some two-thirds of the retail market.

GUN has also invested £265,000 in Low6, developer of a white label betting platform which sport franchises can adapt to their own brand. Low6’s current focus is to charge customers, typically iGaming operators and sporting franchises, for developing and licensing digital free-to-play games that they embed in their mobile apps/websites as a way of driving users to their core operations.

Last year GUN took a 4.5pc stake worth £200,000 in Oscillate (AQSE:MUSH), an investment company seeking opportunities in the medical cannabis and mental health sectors, with particular interests in treatments for drug-resistant depression, anxiety, addiction and Post-Traumatic Stress Disorder.

GUN has suffered this year along with most of the rest of the small cap natural resources sector, hit by a short-term slackening of demand for commodities as the global economy has slowed. Its share price has drifted down from 2.12p last May to around 0.45p at the time of writing, taking its market cap to around £2m. But GUN has not raised money since 2020 and is ‘still adequately funded for the foreseeable future’, with cash balances of £0.824m (2021: £1.071m). There are plenty of funds accessing the major players in the strategic metals space: GUN offers exposure to a carefully curated set of smaller ventures below the radar of the bigger investment houses. Focused on natural resources, but diversified, the GUN story is worth following in 2023

Harvest Minerals


Harvest Minerals (AIM:HMI) has ridden this year’s surge in demand for agricultural commodities, selling KPFértil, a ‘direct application’ organic fertiliser – requiring little processing or chemical alteration – to the immense Brazilian market. With its abundant land, sun, and water the South American giant is one of the world’s largest food producers, which accounts for a third of the country’s GDP and nearly half of its exports. But it buys more fertiliser than any other country, able to meet no more than 15pc of its demand from native supplies.

HMI produces KPFértil at its wholly owned fertiliser plant at Arapuá, in the state of Minas Gerais. The company also has exploration licences for a phosphate prospect at Mandacaru, and has plans for a potash project in the Sergipe Alagoas Basin, close to Brazil’s only producing potash mine at TaquariVassouras. Last year HMI made its first venture into the agriculture limestone market, acquiring exploration rights for a soil input used by regional producers of different crops to neutralise soil acidity.

But the company’s primary focus through 2022 has been on ramping up production at Arapuá to help meet Brazil’s urgent demand for fertiliser. Sanctions against Russia and Belarus, which had supplied two-fifths of the world’s potash, a mineral rich in water-soluble potassium required for the production of food staples like corn, soy, rice and wheat, have pushed up European prices by 240pc to €875 a tonne, and those in Brazil by 185pc, hitting record levels of more than $1,100 a tonne. The shortfall cannot be easily addressed: most of the world’s most profitable and accessible potash deposits were developed during the China-driven commodities boom of the early 2000s, and new plants take several years to come on stream. Even if the war does not drag on as long as feared analysts believe that the market will take some time to completely recover, and that prices will settle above their long-term average for many months and perhaps years to come. A new floor of $500 a tonne has been mooted, half the current spot price but double the average price of the previous decade.

HMI has spent the past two years laying the groundwork for opportunities like these. In 2020 the company secured permits to expand Arapuá’s mining area to 78,894 square metres and its storage capacity to 30,000 tonnes, giving it the flexibility to begin to step up production to a targeted 400 kilo tonnes per year. A new Arapuá facility powered by solar with a modular design allowing capacity to be increased as production is ramped up, has the potential to cut the company’s power bill by 8pc a year. And Brazilian regulators have approved the registration of the company’s organic, multi-nutrient KP Fértil as a simple mineral fertiliser, a major breakthrough allowing HMI to reach larger customers that require MAPA certification as a requirement for purchase.

HMI had begun to record significant sales growth in 2021, allowing it to move into profit. But this year sales have really taken off. During H2 the company sold 35,014 tonnes of KP Fértil, a 108.3pc increase over the 16,812 tonnes sold in the same period of 2021, recording a gross profit of $1,582,149, up from $186,267 for the previous year. And a Q3 update reported that the company’s 2022 full year sales order target of 150,000 tonnes had been exceeded, sales orders for the year to date totalling 153,074 tonnes, a year-on-year increase of 106pc. Sales margins were in the region of of 55pc to 60pc.

The figures ignited HMI’s share price this year, rising from just over 4p to nearly 18p in the summer: the price more than doubled in the days after the war broke out. The company’s stock has since been caught up in the overall market downturn, falling back to just under 8p at the time of writing, taking its market cap to $16m. But that still represents 120pc increase for the year. And as HMI continues to establish itself in the huge Brazilian market the company looking like a sound longer term bet. With an established and growing consumer base, the certification required to reach bigger clients secured, and an operating plant with capacity to handle rising demand, we think HMI is one to watch now, and for the foreseeable future.

Hellenic Dynamics


Hellenic Dynamics (LON: HELD), a licensed cultivator and supplier of finished pharmaceutical standard medical cannabis products, went public on early this month through a reverse takeover worth just over £31m, raising gross proceeds of £1.125m through an oversubscribed fundraising.

HELD’s market update on the company’s first day of dealings set out its ‘ambition to be the dominant supplier of high quality and competitively priced dried medical cannabis flowers to patients across all 25 European counties that allow medical cannabis by prescription.’ Founded in 2018, the company has a 195,506 square metre facility near Thessaloniki, Greece’s second largest city, equipped for the cultivation, production and export of tetrahydrocannabinol (THC) dominant strains of cannabis flowers and their extracts. HELD’s licence sets no limitations on the THC content of the cultivars grown, or how much can be produced or exported. The facility has the capacity to produce some 54,000 kg of THS dried flowers each year.

HELD’s longer term ambition is to build a proprietary IP protected library of THC dominant genetics. The company has forged several research partnerships to identify strains suitable for registration with European regulators, including an agreement with the American Farm School, a well established southern European agricultural institution that works closely with the EU to establish best practices for emerging life sciences.

HELD is targeting a tantalising but fractured European medical cannabis market. Cannabis has been legal for medical use in much of Europe for several years now, approved for use in the UK, Germany and 24 other European countries for treating conditions, as HELD puts it, ‘including but not limited to chronic pain, Spinal cord treatment, Anxiety, HIV/AIDS Appitite loss, Multiple Sclerosis, Crohn’s disease, PTSD, Chemotherapy side effects, Glaucoma, Anorexia, Lennox-Gastaut syndrome, Alzheimer’s, Dravet syndrome, Tourette’s syndrome, Intractable spasticity and Cachexia.’ HELD says the continent’s growing medical cannabis market is worth more than €4bn and its value is ‘expected to reach €43.3bn by 2027, growing at a CAGR of 29.6pc’.

The company’s initial target is the relatively developed German market, where all of the flowers to be produced in the first phase of the company’s operations have been pre-sold to licensed distributors. Germany legalised the use of medical cannabis five years ago, and just a few weeks ago Berlin’s left-leaning government published an ambitious programme for the decriminalisation of THC products that would that make the country the world’s largest regulated national market for the drug. The German Hemp Association, an industry lobby group, suggests the legislation would open a market of 400 tonnes a year for marijuana and hashish, generating sales of €4bn. 

But the proposals will have to clear an extensive legal consultation with Germany’s European neighbours. As a member of Europe’s open border Schengen Zone German legislators will have to allay concerns that legalisation will open the floodgates for the smuggling of THC into countries with stricter narcotics policies. Although the wider European CBD market is gradually opening up – more than a dozen countries allow or are currently discussing liberalisation – regulations and attitudes differ sharply from country to country. Some jurisdictions allow the use of medicinal products containing cannabinoids, and others the medical use of unauthorised products or preparations. Some permit the manufacture of cannabis, some its import, and still others both.

The picture is similarly cloudy in North America, another huge potential market. The first US states legalised cannabis for recreational use in 2012, and Canada followed in 2018. But state-by-state deregulation in the US has created a patchwork market that makes it difficult for companies to scale. Financial services companies are wary of providing lending and payment processing services in the absence of consistent regulations at federal level, a patchwork system that deters institutional investors with the financial firepower to commit long-term patient capital to the sector. High hopes that the liberal Biden administration would be able to push through federal legalisation have so far been disappointed, but hope has been kindled by the Democrats’ better than expected performance in the November elections, and the President’s decision in October to issue a mass pardon for all people with convictions for ‘simple possession’ of marijuana under federal law. The White House is also asking the US Department of Health and Human Services and the attorney-general to review how marijuana is classified under federal law: marijuana is still classed as a ‘schedule-1 drug’, in the same category as heroin.

Investors who got entangled in – or even merely observed – the cannabis bull market that ran through early 2021 will need no reminder to approach CBD stocks with caution. European and North American markets attracted too much early stage investment, encouraging oversupply sharply followed by the current painful cycle of consolidation. As the Financial Times’ Lex column puts it, ‘pot stocks have been a crushing disappointment to the retail investors who jumped into the market when they listed in the mid to late 2010s.’ But lessons have been learned and the long term outlook for the CBD industry is undoubtedly promising. As social attitudes evolve liberalisation is following, slowly, maybe, but surely. To put progress is context, the US market grew to $100bn in 2020 from just $20bn in 2014.

These are very, very early days for HELD, but the £3.77m market cap seems well positioned to benefit from the trend towards liberalisation, and a shift in sentiment back towards nascent industries oriented to the future when the stock market’s current malaise finally lifts. Right now HELD is valued at 0.2p, down a third on the company’s IPO price. Prospective investors should look out for news regarding the company’s efforts to enter the German market, and the progress of the country’s evolving CBD legislation.



hVIVO (AIM: HVO) – until recently known as Open Orphan (AIM: ORPH) – a biotech small cap specialising in vaccine and antiviral testing using ‘human challenge’ clinical trials, has continued to record robust progress this year, building a £70m order book comparable to its market cap.

HVO was one of the cluster of biotech small caps to make headlines through the first months of the pandemic, working with the UK’s vaccines task force to organise the first Covid human challenge trial, in which volunteers were inoculated under controlled conditions with a version of the virus to test its impact on the immunity system. The trial helped HVO develop an infection challenge model able to serve as a ‘plug and play’ platform for testing new Covid variants.

Covid is just one of the infectious diseases the company is working to combat. The pandemic highlighted the world’s chronic neglect of investment in fresh treatments for continually evolving respiratory and infectious diseases such as the common cold and influenza. Chastened by the pandemic, governments and pharmaceuticals companies are sinking billions into new drugs generating a market forecast to grow from $20bn in 2019 to $250bn by 2025. HVO is working to establish itself as an indispensable partner to Big Pharma by rolling out a suite of human challenge trial services for diseases including Covid, Respiratory Syncytial Virus (RSV), influenza, asthma, human Rhinovirus hRV, and malaria.

The company has built the foundations for its challenge trial infrastructure on the basis of two transformative acquisitions, Venn Life Sciences, a drug development, clinical trial design and execution consultancy, and hVIVO, a challenge trial specialist with some 20 years experience safely conducting trials for a range of respiratory viruses. The company completed its transformation in the autumn by changing its name to hVIVO plc, a brand that still has strong global recognition for its accumulated human challenge expertise. Venn Life Sciences will continue to provide complementary drug development consultancy services, allowing the company to offer a comprehensive end-to-end early clinical development service. HVO has two London clinics equipped with virology and immunology facilities, and screening centres in the capital and Manchester. The company is led by Executive Chairman Cathal Friel, who has a track record in bringing pharma companies to market, including Poolbeg Pharma – featured below – and Amryt Pharma.

HVO’s high profile through the pandemic helped the company touch what it called ‘a financial inflection point’ in 2020, reporting revenues for the quarter of £22m, up from £3.5m for the previous year. Since then HVO has pursued an ambitious strategy of winning new and repeat contracts with leading pharmaceutical companies. Over the past year the company has signed significant contracts encompassing RSV, influenza, and Covid. It hasconsolidated its presence in the RSV market, signing a £5m human challenge study contract in March with a European biotechnology company to test an intravenous antiviral candidate using the hVIVO RSV Human Challenge Study Model. In May HVO was awarded a new study with an existing Big Pharma client to act as a vaccination site for Phase II analysis of the client’s RSV vaccine candidate. The company then signed a £7.2m contract with a top five global pharmaceutical company to test its orally administered antiviral product. Other agreements include ‘a substantial contract’ with another top five global pharmaceutical client for the manufacture of a virus for use in human challenge studies (the client went on to award HVO a £14.7m contract for an influenza characterisation study and a follow on influenza human challenge study); a £6.2m deal with a US-based biotechnology company to test its antiviral candidate, and a £10.4m contract with a top five global pharmaceutical client to manufacture a new batch of the H1N1 influenza challenge virus. HVO further extended its range of services in June by signing an agreement with NASDAQ-listed Vaxart Inc to develop the world’s first Omicron human challenge model, designed to test the efficacy of Vaxart’s oral vaccine candidate: human challenge studies are scheduled next year. It entered another contract in November, worth £13.6m, with a US-based biopharmaceutical client to test its RSV antiviral candidate using hVIVO’s human challenge study model. The study is expected to commence in Q3/Q4 2023, with the revenue being recognised in 2023 and 2024.

HVO’s most recent set of results, for H1 2022, reported an order book of signed contracts of around £80m at the beginning of September, as against £25m for H1 2021, allowing the company to reiterate full year revenue guidance of £50m. Double digit EBITBA profit margins – of 12.1pc – were achieved for the first time, up from 8.9pc for H1 2021. The company remains well capitalised with £15.9m cash as at 30 June 2022 (2021: £14.9m) and net cash of around £20m going into September.

Despite ORPH’s continued progress the company’s share price has yet to recover from the sell off that engulfed the biotech sector earlier this year, sitting at just under 11p at the time of writing, down from 24p at the start of the year. But biotech continues to offers opportunities for investors willing to do the research necessary to pick the right companies. ORPH may be one, a company recording impressive revenue growth as its flexible challenge test model continues to secure new contracts for the treatment of an ever wider range of diseases.



OnTheMarket (AIM:OTMP), the UK residential property portal provider, continues to benefit from a property market that has so far held up through the ongoing economic turbulence.

The portal is known for a ‘New & Exclusive’ feature allowing agents to make properties available to view at 24 hours or more before they appear on rival services such as Rightmove or Zoopla. The company’s growth strategy is structured around four pillars: an engaging and well populated property portal; software solutions to meet evolving customer needs; the provision of leading data and market intelligence; and investment in an innovative communications and marketing capability.

OMTP has refreshed user experience over the past 18 months, launching a new website, logo and branding, seeking to build a ‘one stop shop’ for property agents. The company now offers subscription-based software solutions to help agents operate more efficiently and effectively, and has managed a significant shift in its model, migrating agents previously on long-term free of charge contracts to paying contracts providing a robust revenue stream. 

OMPT succeeded in renewing contracts with many of the high-profile agency customers that had committed to five-year agreements on the company’s admission to aim in February 2018, including Arun Estates, Knight Frank, Chancellors, Savills, Chestertons, Spicerhaart, Douglas & Gordon, Webbers, Glentree, and Carter Jonas.New customers also came on board, notably London estate agents Foxtons and sales and lettings business Lomond signed listing agreements. Earlier this month the company announced a ‘proposed streamlined mechanism’ for eligible agent shareholders entered into five-year lock-in arrangements. The OMPT model allows for significant agent ownership through agent town halls which provide a platform for agent shareholders to influence the future direction of the portal.

The company’s H1 2022 results reported that valuation leads were up 69pc, traffic and average monthly leads per advertiser were up 11pc and 6pc respectively. New homes developments listings increased 6pc, and new homes revenues were up 73pc. OMPT recorded an adjusted operating profit of £1.3m, and H1 22/23 cash generated from operating activities was £3.1m. Period-end net cash increased to £8.7m from £8.4m, with no borrowings. 

OMPT’s fortunes clearly depend on continued buoyancy in property markets, which remain active, with demand for properties significantly outweighing supply, increasing mortgage rates notwithstanding. UK average house prices are 27pc above pre-pandemic levels of February 2020, with those in London 13pc higher. The market’s future depends on the extent and depth of the gathering economic slowdown. Unofficial data for November, including from the mortgage providers Nationwide and Halifax, showed UK house prices fell last month compared with October. OMPT’s most recent Property Sentiment Index showed that in April 2022, 82pc of sellers were confident that they could complete a sale within three months. The company’s data showed that 63pc of properties in the UK were sold subject to contract within 30 days of first being advertised for sale.

OMPT’s share price has not emerged unscathed from this year’s harsh conditions, falling back 25pc to 74p, taking the company’s market cap to £55.75m. As noted, much depends on economic conditions in 2023. If the property market holds up OMPT looks a decent bet at its current relatively low value.

Oxford Cannabinoid Technologies


Oxford Cannabinoid Technologies (LON:OCTP) continues to work towards defining a schedule for Phase I clinical trials for its emerging treatments based on cannabinoid derivatives.

OCTP is focused on cannabinoid-based pharmaceuticals rather than commercial medical cannabis products, aiming to develop prescription medicines that have passed rigorous clinical trials set by regulators. By doing so the company aims to secure market exclusivity for effective treatments for those suffering chronic pain, thereby following the path of another UK-based cannabis biochemistry company, GW Pharmaceuticals, sold to US drugmaker Jazz Pharmaceuticals last year in a multi-billion deal. GW now generates more than $500m in annual sales of Epidiolex, its cannabis-derived treatment for childhood epilepsy, after becoming the first cannabis-derived medicine to receive US regulatory approval and become available on the NHS. As OCTP puts it, in ‘a cannabis market where unlicensed medicines remain abundant and unproven … it is only the development of cannabinoid-based medicines through existing channels of licensed drug development that allows the medical community to prescribe drugs with confidence and in volume which gives us patent protection and market exclusivity.’

OCTP’s medicines will target the relief of inflammatory and autoimmune disorders such as rheumatoid arthritis, systemic sclerosis, fibromyalgia and osteoarthritis, and debilitating neurological and neurodegenerative disorders including multiple sclerosis, Parkinson’s, Alzheimer’s, and epilepsy. The company is also researching the potential of cannabinoids to alleviate cancer symptoms, and even treat their underlying causes. Although there are an estimated 1.5 billion chronic pain sufferers worldwide – more people suffer from chronic pain than cancer, heart disease and diabetes combined – pain treatments are limited, consisting primarily of opioids and anti-inflammatory drugs. OCTP’s research focuses on medicines that act on the body’s endocannabinoid system (ECS), which helps regulate many physiological functions, including pain, mood, memory, sleep, appetite, and immunity to cancer and infective agents. There is increasing evidence of the exceptional capacity of cannabinoids to map on to ECS receptors in the brain and peripheral nervous system: OCTP wants to develop cannabis-based compounds that target such receptors more precisely than the ingestion of cannabis flower and extracts allows, and blend natural cannabinoids with cannabinoid derivatives and other chemical entities to design a portfolio of drugs tailored for different ailments.

The commercial incentive is the immense potential for cannabinoid treatments verified through a robust regulatory process. Unlike natural cannabis treatments in which the plant is simply ingested, medically-proven cannabinoid derivatives qualify for patent protection, licensed drugmakers qualifying for a period of market exclusivity of up to 20 years in recognition of their investment. Prescribed cannabis-based pharmaceutical products thereby transcend the battle for legitimacy that continues to frustrate the wider medical cannabis industry. 

OCTP has made steady progress towards implementing the roadmap it set out on joining the LSE. Most of the net proceeds of the nearly £16m raised on listing are being used for the pre-clinical development and first phase clinical trial of its flagship drug candidate, OCT461201, which targets neuropathic and visceral pain caused by nerve damage or disease, and which the company is aiming to commercialise by 2027.

Rather than building an extensive in-house team the company has a partnership model, paying for research on a ‘fee for service’ basis that allows it to retain all intellectual property. A service agreement with drug discovery and development company Evotec entered the OCT461201 compound into Evotec’s INDiGO programme, an integrated drug development process designed to expedite the process of bringing early drug candidates to clinical trials. Evotec will deliver an approved batch of drug product to the OCT461201 Programme 1 Phase I clinical trial unit during Q1 2023. Analysis of pre-clinical data has indicated that OCT461201 is effective for the treatment of small fibre neuropathies, which can reduce pain within models of chemotherapy-induced peripheral neuropathy (CIPN). The market for an effective CIPN treatment is forecast to reach $2.37bn in the next five years, which OCTP believes could grow to more than $7bn once combined with other small fibre neuropathies. OCTP has also entered into a master service agreement and work order with clinical research organisation Simbec Research to work towards a first-in-human phase 1 clinical trial for OCT461201. The trial, designed to demonstrate the safety and tolerability of the product, is scheduled to begin in Q1 2023, following regulatory submission to the UK Medicines & Healthcare products Regulatory Agency (MHRA), with interim results expected by the end of March 2023 and the full report expected in Q2 2023.

OCTP is also progressing a second lead candidate, OCT130401, a drug-device combination that delivers phytocannabinoids to patients suffering from trigeminal neuralgia (TN) with a pressurised metered-dose inhaler. TN causes debilitating and excruciating pain, can take hold with unexpected speed, and is difficult to treat with conventional systemic medicines. Pre-clinical work for OCT130401 is almost complete, ensuring that the programme will be Phase I ready in early 2023 at which time further development will be placed on hold in order to preserve cash.

OCTP continues to research other compounds. On going public the company had a library of 93 proprietary cannabinoid derivatives, expanded last autumn through an exclusive license agreement with Canopy Growth Corporation for their entire pharmaceutical cannabinoid derivative library, including 335 derivatives and intellectual property rights including 14 patent families and associated research data. OCTP has started multiple screening programmes for drug-like compounds able to target multiple therapeutic areas, including pain, neurology, immune-inflammation and oncology. The aim is to develop one programme to the lead compound stage and another to drug candidate selection (ready for pre-clinical development) by the end of 2022.

OCTP’s most recent trading update stated cash reserves of £5m, and debt free status. The company is backed by FTSE 100 British multinational tobacco company Imperial Brands Ventures Limited, which has taken a 9pc strategic holding in the company to its second largest shareholder, a move reflecting the growing interest among tobacco giants in medicinal cannabis.

Since going public OCTP been entangled in the turn against biotech stocks, the company’s share price has fallen from its IPO price of 5p to under 1p, leaving its market cap at £5.7m at the time of writing. The company’s commitment to the long road that must be travelled to secure regulatory approval for cannabis-based prescription treatments make it something of a slow burner, but as the example of GW Pharmaceuticals demonstrates, the commercial reward can be very great. With a clear roadmap to achieving regulatory approval for a well defined product, investors seeking access to the UK’s biotech sector might want to take a look at OCTP at its current low price.

Pineapple Power Corporation


Special acquisition vehicle Pineapple Power Corporation (LON:PNPL) continues its search for a suitable clean energy venture.

A Special Purpose Acquisition Company (SPAC) is an enterprise that goes public with nothing but cash and the aspiration to acquire one or more private companies. Such ‘cash shells’ offer opportunities for companies seeking capital to secure investment without having to go through a lengthy and costly IPO process. According to Financial Conduct Authority (FCA) rules SPACs are expected to complete a significant acquisition within 24 months of listing (although this is extendable by up to 18 months). Once an acquisition is made, they change their name and listing code, and evolve into conventional listed companies, valued thereafter according to the performance of the business in which they have invested. PNPL listed on Christmas Eve 2020, raising gross proceeds of £1.3m with ‘the intention to acquire renewable or clean energy technology companies and to finance, develop and promote those environmentally sound projects internationally’. 

PNPL has already come close to securing a suitable deal, entering last August into a non-binding heads of terms to acquire Dublin-based fund manager BVP Investments Limited. BVP, which focuses on companies in the green sector that have developed technologies and services addressing the issues of sustainability, resource efficiency and the wider environment, has invested in some of Ireland’s most innovative companies such as HealthBeacon, Crowley Carbon, UFO Drive and UrbanVolt. Ultimately ‘the parties were unable to come to a mutually acceptable agreement on valuation and the final structure of the transaction’. But the prospect signposted the kind of company PNPL is researching. Re-iterating the investment strategy set out in the company’s prospectus, PNPL said it would ‘proceed immediately to seek an attractive acquisition opportunity, with the objective of maximising value for … shareholders’ and ‘will make further announcements in due course’.

PNPL’s search received a significant boost when the FCA confirmed that new regulations requiring companies to list with a minimum market capitalisation of £30m, which the company says do not ‘apply to Pineapple in relation to its first reverse takeover, provided that it makes a complete submission to the FCA for an eligibility review for listing and a prospectus review relating to that reverse takeover which does not lapse and is not withdrawn, prior to 4pm on 1 December 2023.’ In brief, PNPL remains ‘one of a very limited number of special purpose vehicles able to conduct future reverse takeover transactions on the London Stock Exchange with valuations of less than £30m’, and will therefore, following a reverse takeover, be eligible to re-list with a market capitalisation of £0.7m or more provided that it does so within the specified timeframe.

PNPL’s prospects ultimately depend on the clean energy sector’s continued capacity to generate promising new ventures of the right size, price and ambition. The developing energy supply crisis, exacerbated by the Ukraine conflict, has highlighted the complexity of the world’s energy requirements, making brutally plain our continued reliance on fossil fuels, which continue to meet some 80pc of global demand. European gas prices are hitting record highs, crude oil is at its highest level since 2014, and thermal coal prices have risen more than 80pc in the past three months.

The long term prospects for SPACs also seem to be becoming clearer since PNPL first listed. The company went public in the midst of a bloom of market enthusiasm for blank cheque companies. Last year SPACs raised more on US markets than traditional IPOs for the first time, as investors piled in on speculative growth stocks. UK regulators scrambled to keep up, easing LSE regulations to help the market keep up with Wall Street and EU rivals that were riding the SPAC wave more successfully. In addition to increasing the minimum market capitalisation (MMC) threshold for listing from £700,000 to £30m – certain companies – including Pineapple – can apply for exemption – the new FCA rules specify that cash raised by SPACs must be ringfenced to ensure shareholders have unconditional rights to redeem their money, and that funds are used to make acquisitions.

The boom times for SPACs have subsided, but, as markets learn how best to incorporate them, they are here to stay. In the past two years more than 850 have completed IPOs and close to 600 are seeking a target. About 270 have registered with the SEC but have yet to complete an IPO. They help fulfil a demand among ordinary investors for access to early-stage companies that would otherwise be tempted to remain private, giving start-ups access to a deeper pool of capital without undue administrative burden. Comparisons might be made with other financial instruments that once seemed novel, such as real estate investment trusts and business development companies, which went through boom and bust cycles before normalising.

As the dust settles, it would seem clear that the drive towards an environmentally sustainable energy infrastructure remains the global economy’s most significant mega trend, and that special acquisitions vehicles are maturing as a useful framework for opening promising new companies to investors keen for access to innovation. PNPL remains positioned at the intersection of those two vectors. The company has cash to fund its search, raising £357,900 last summer. It reported a loss for H1 2022 of £186,763. Its share price has held steady this year at around 5p. PNPL has work to do to find a new prospect, but with money in the bank, and a window open till December 2023, it has time on its side. Pineapple Power Corporation is still one for small cap energy investors to watch this year.

Mobile Streams


Mobile Streams (AIM:MOS) has recorded rapid revenue growth this year, making a splash in the fast evolving market for sports related non-fungible tokens – better known simply as NFTs

Listed since 2006 as a mobile content and data intelligence company, MOS has revinvented itself over the past two or three years, wholeheartedly embracing the metaverse, blockchain, NFTs and other cutting edge digital marketing technologies. MOS continues to distribute games and other content tailored to mobile devices to an international client base, with a particularly strong presence in Central and South America. But the company began the process of shifting its focus in late 2019, launching Streams, a data insight platform powered by the KrunchData AI framework.

Last year the company launched its LiveScores football 365 content service, initially in Argentina, Brazil and Mexico, and this January announced that esports and gaming services provider International Gaming Systems (IGS) will make its content available on MOS’s website, beginning with a FIFA Esports tournament involving a top Eurasian football league and a trading service for online gaming skins. The following month MOS and IGS extended their partnership with the launch of Battleriff, a global gaming platform that at the time of the deal had hosted more than 3,500 esports competitions. MOS went on to take full ownership of the LiveScores services, giving it control over the service’s platform engine, domains and IP. LiveScores contracts have extended beyond South America to Italy, India, Turkey and Africa. MOS further extended its presence in India through a new partnership with Vodafone India, exposing the company to some 273 million customers, and the launch of a virtual cricket game in which users build and manage their own team.

But the company’s primary source of momentum this summer has come through its commitment to the rapidly evolving market for sports related NFTs. An NFT is an unique digital item, the identity and ownership of which are verified by blockchain. Blockchain technology is still primarily associated with the ‘mining’ of bitcoin and other cryptocurrencies, but can be used to generate any kind of digital token that people might value. NFTs are an example, indicating, advocates claim, possibilities for a new generation of ‘Web3’ online services in which end users exchange with each other directly, without the mediation of corporations or governments. The NFT concept broke into the real world last year, embraced by celebrities and a host of corporations, generating $17bn sales and forecasts indicating the global NFT industry could be worth $122bn by 2028.

NFTs have been embraced by the sporting world more quickly and comprehensively than any other sector. Speaking to TMS earlier this year Mr Epstein said MOS was positioning itself for the mainstreaming of NFT technology: ‘It’s a game changer. If we can unlock it … We’re aggressively active in this space. We have a large pipeline of targets that we are actively engaged with.’ Indeed the company does seem to be unlocking it, making a string of significant announcements this spring and summer.

The company went on to announce a deal to become the exclusive global producer and provider of NFTs for top Mexican football club Pumas, targeting revenues of around $14.5m over the course of a five year contract, and then, in the run up to the World Cup, became the exclusive producer and provider of collectable trading card NFTs for the Mexican National football team. Under the terms of the three year contract, similar to those of the Pumas deal, MOS will earn revenue of 5 to 10pc on the sale of each NFT, and royalties every time they are traded thereafter. The tokens will be sold primarily through a marketplace MOS is creating for the Mexican national team accessible through team digital touch points, such as the Mexican Football Federation website and social media accounts. MOS continues to pursue other football contracts, signing deals with two other Mexican teams, Atlante and Necaxa. And it has also moved into the golfing and martial arts worlds, entering deals to provide NFTs for LPGA golfer Gaby Lopez and the Extreme Fighting Championship.

With its embrace of NFTs and other emerging marketing technologies MOS is seeking to ride an esports wave that continues to gain momentum. Newzoo’s 2021 global esports market report forecasts the global games live-streaming audience will reach 728.8 million in 2021, up 10pc from 2020, and that worldwide esports revenues will grow to nearly $1.1bn in 2021, a year-on-year growth of 14.5pc, up from $947.1m in 2020, with more than three-quarters of that revenue coming from media rights and sponsorship.

During the pandemic, esports, along with the wider gaming world continued to permeate mainstream culture. The virtual environments created by games developers offer vast spaces where huge audiences can gather to view art exhibitions, theatre and films: the ‘metaverse’ billed by advocates as the successor platform to the mobile internet. The platform’s development is being driven by Meta and Microsoft. Meta, which went so far as change its name from Facebook, acquired the pioneering VR company Oculus for $2.3bn in 2014, and is investing more than $10bn a year in the technology. Microsoft has made a big bet on its augmented reality HoloLens system.

MOS has been been able to post a series of positive financial updates this year on the back of rapid revenue growth generated by its focus on NFTs, which is reducing the company’s dependence on big South American economies such as Argentina. The company’s half-year results showed revenue to 30 June 2022 reached £1.1m, an increase of approximately 180pc over the previous year’s figure of £0.395m. MOS ‘expects revenue to continue to grow strongly throughout calendar year 2022 and into 2023, with particularly fast revenue growth from its NFT business which, based on internal forecasts, has the potential to exceed all other revenue streams by the end of the financial year 2023.’

MOS has set out a bold strategy to become a major producer of next generation Web 3.0 content and digital merchandise, and on this year’s evidence is delivering. The company’s value – around 0.1p at the time of writing – has fallen with the rest of the tech sector this year. But with strong revenues continuing to roll in through the company’s venture into the NFT market, the £4.6m market cap is one worth watching next year.

Poolbeg Pharma


After a tough year for biotech stocks some of the more robust prospects are perhaps now moving into value territory, pressing ahead with the patient process of developing new treatments with the potential to open big new markets. One may be Poolbeg Pharma (AIM: POLB), which has made quiet progress this year towards defining three new candidate biotechnologies, and an array of other initiatives.

POLB is another sciences small cap to emerge from the Raglan Capital stable run by health care entrepreneur Cathal Friel, following in the footsteps of hVIVO (AIM: HVO) – covered above – and Amryt Pharma (AIM:AMYT). The company aspires ‘to become a “one-stop shop” for big pharma to find Phase II ready products for development and commercialisation’. HVO made waves at the height of the pandemic when it worked with the Government’s vaccines task force to organise the first Covid ‘human trial challenge’, in which volunteers were inoculated against the virus under controlled conditions. POLB aims to commercialise HVO’s extensive clinical data repository, developed through 20 years of challenge trials testing how the body’s immune system can be boosted to overcome influenza, RSV, HRV, and now Covid-19. The company has developed an innovative ‘capital light clinical model’ designed to position the company to bring products to market quickly and cheaply where they can potentially be monetised through licensing to the pharmaceutical majors.

POLB 001, the company’s flagship candidate technology, is a ‘Phase II-ready p38 MAP Kinase inhibitor’ offering an effective treatment for inflammation suffered by patients with severe influenza. Though there are robust vaccines influenza still infects some 12pc of the world’s population each year, responsible for nearly 10 million hospitalisations and 500,000 deaths. Severe influenza triggers ‘cytokine storms’, violent whole-body responses to the infection that can generate serious complications including sudden, serious cardiac events, tissue damage, pneumonia and sepsis. Current treatments disrupt viral replication, but POLB 001 directly addresses hyperinfammatory episodes. If licensed the inhibitor would offer potential for applications beyond influenza, including certain covid cases. 

POLB develops other prospects that draw on data and expertise accumulated by hVIVO. The PredictVital Biomarker Platform is designed identify the risk of severe disease before the onset of symptoms, like POLB 001 reducing the need for antiviral treatments and their possible side-effects. And the Vaccine Discovery Platform will allow users to search the hVIVO repository for new treatments based on reengineering of the immune system.

POLB 001 has passed Phase I trials confirming its safety for human use, and patents for both the European and US markets have been secured. Significant progress has been made towards Phase II trials, after which POLB would be able to begin the licensing process, which the company estimates might take some 18 months. POLB signed a contract for the manufacture of POLB 001 for use in human challenge clinical trials, a major stepping stone towards Phase II trials. Access to a validated manufacturing process gives the company the flexibility to produce POLB 001 as and when required for the development of diseases beyond influenza. The rials got underway in July, testing POLB 001’s effectiveness in dampening the robust immune response to lipopolysaccharide (LPS), which acts as a surrogate for the hyperinflammatory response associated with severe influenza and other diseases, reporting positive initial results earlier this month. No further clinical activity is required to complete the objectives of the trial, bringing the recruitment and clinical phase to a close on schedule. The final dataset is expected to facilitate progression of the product to the next clinical phase. The company is now ‘ planning the next steps for POLB 001 and are engaging with industry on potential partnering opportunities.’

While progressing POLB 001 the company has advanced POLB 002, a novel, ‘first-in-class’ RNA-based immunotherapy for respiratory virus infections spun out from research at the University of Warwick. POLB has secured an exclusive licence to the dual antiviral prophylactic and therapeutic candidate, which is at a late-pre-clinical development stage, and which targets pan-respiratory virus infections, which could include influenza, respiratory syncytial virus, covid and others. Respiratory virus infections are a notorious worldwide killer, contributing to more than three million deaths each year. The vaccines and antiviral drugs currently available are typically pathogen specific, meaning that some 85pc of illnesses caused by non-influenza viruses cannot be adequately treated. A US patent for POLB 002 has been secured.

POLB has also signed an Option Agreement to with University College Dublin to licence POLB 003: MelioVac, a vaccine for melioidosis, an infectious disease commonly found in the soil and surface groundwater of tropical and subtropical regions. Also known as Whitmore’s disease, melioidosis is widespread in south-east Asia, northern Australia and India, and, through climate change, is spreading to South America. There are an estimated 165,000 cases of melioidosis each year, of which more than half prove fatal. There is currently no approved vaccine. The Agreement also gives POLB access to five other potential vaccine candidates discovered by the University.

In addition to advancing these three candidates, POLB has signed an agreement to access microencapsulation and nanoencapsulation technologies developed by AnaBio Technologies to develop an oral vaccine delivery platform. Oral vaccines, which trigger the development of ‘mucosal immunity’ that prevents pathogens from infecting the body, have been used for many years against polio and typhoid. POLB will work on broadening their scope. Clinical trials are now underway.

 The company has also licensed cutting edge AI technology to help identify new treatments, using AI analysis tools developed by OneThree Biotech to facilitate the identification of new drug targets and treatments for RSV. The company has also signed a deal with CytoReason, another AI company, for the analysis of influenza disease progression data derived from human challenge study samples.

Like its biotech peers the company’s price has since fallen back, to around 6p at the time of writing, taking the company’s market cap to around £20m. But the sector offers opportunities for investors willing to do the research to pick the right companies, and who are prepared to wait for the regulatory process to take its course. Advances in fields such as genomics, biotechnology, diagnostics, radiotherapy and robotic surgery make it possible even for small caps to identify and treat an ever wider range of conditions. New starts have, for example, pioneered groundbreaking gene sequencing treatments, and are revolutionising the treatment of cancer through ingenious manipulation of the immune system, using techniques like those employed by POLB. With steady progress this year on multiple fronts, and the backing of a proven management team, POLB is one prospect worth following.

Seeing Machines


Seeing Machines (AIM: SEE) develops AI-powered Driver Monitoring Systems (DMS) that monitor drivers and pilots, signalling alerts when the possibility of error is detected. The company launched at the turn of the millennium as a Volvo-sponsored spin-out from the Australian National University to develop driver monitoring for crash-proof vehicles, and now offers a range of DMS solutions for commercial fleet, cars, and airplanes.

SEE’s ‘Guardian’ driver fatigue and distraction technology, a flagship product within its ‘Fleet’ range, is used by more than 400 commercial transport and logistics organisations and their drivers globally, including Coach USA, Toll Group and Transport for London. It uses face-and eye-tracking algorithms to measure the driver’s head position, eye gaze and tendency to eye closure to detect fatigue or distraction. When safety parameter thresholds are triggered audio alarms and seat vibrations are activated to alert the driver. Data and footage of the event are relayed to the organisation’s fleet managers through a secure connection, who use Guardian’s software interface to advise the driver to take appropriate action, such as taking a break or ending a shift. The recorded data allows managers to analyse patterns of their drivers’ behaviour, and thereby continually refine their operations. SEE’s Automotive and Aviation products, tailored for cars and planes, work on similar lines.

The company’s DMS solutions are designed to complement Advanced Driver Assistance Systems (ADAS), a related cluster of technologies designed to automate acceleration, deceleration and steering. Today’s advanced systems can go some way towards automating many tasks, such as emergency breaking and motorway driving, but the fully autonomous car is not yet reality. Tesla’s much publicised Autopilot system, for example, can steer, brake and accelerate but still requires human supervision. According to the US National Transportation Safety Board Tesla’s use of the term ‘Full Self-Driving’ to describe its software is misleading, still far from what regulators call the top ‘Level 5’ scale of autonomy: a fully computerised vehicle that users can instruct to go anywhere in any conditions, without further intervention.

In the meantime DMS can integrate with ADAS to make driving a much safer – and more leisurely – experience. ADAS can automate emergency braking, signal lane departure warnings, and detect blind-spots, all of which work best when combined with DMS. DMS can, for example, offer another layer of security to a car fitted with an emergency breaking system, detecting driver distraction and thereby giving the system additional time to kick-in. Or DMS might augment the lane-keeping functionality of an ADAS equipped vehicle, informing the system to take control when sensors detect the driver is drowsy. The two technologies can also work together to enhance comfort as well as safety. Gesture recognition, for example, might be used to change vehicle temperature, reduce music volume or allow the driver to have a conversation with a voice assistant.

Vehicle manufacturers are integrating DMS and ADAS technologies as standard features of their new product lines. Around 1.35 million people die and up to 50 million are injured every year because of transport accidents caused by human error, unpredictable events or unsafe conditions. The US National Highway Traffic Safety Administration says that distracted driving alone causes more than than 3,000 deaths a year, and drunken over 10,000. In 2015 US automakers agreed to integrate ADAS as standard equipment by 2022, and the 2020 Moving Forward Act passed by the House of Representatives, a $1.5tn infrastructure bill designed to make roads safer, makes the installation of technology that detects inattentive or intoxicated driving mandatory in newly-produced vehicles. The Stay Aware For Everyone (SAFE) Act introduced to the Senate last year would require US regulators to mandate the installation of DMS to ensure motorists are engaged while using semi-autonomous driving systems. If the legislation is passed, every new car would need to adopt some version of the technology by 2027. General Motors’ next-generation system, UltraCruise, which uses DMS to ensure motorists can drive when needed, is an example: according to GM, this Level 2 system will allow for hands-free driving in 95pc of all driving situations.

There is also momentum in Europe and China. In November 2019 the EU introduced regulations to mandate the presence of advanced safety systems in automobiles by mid-2022. Under this General Safety Regulation (GSR) compliance all motor vehicles including trucks, buses, vans and sport utility vehicles will have to be equipped with DMS. Jiangsu has become the first province in China to implement regulations requiring long-distance trucks and vehicles transporting hazardous goods to use driver monitoring. Consumer advocacy groups and safety organisations like the NCAP – a European, government-backed group that rates cars for safety – and US product testing pressure group Consumer Reports have revised their ratings systems to prioritise DMS-enabled vehicles.

SEE has long been seeking to position itself to take advantage of the mainstreaming of DMS technology, work reflected in positive trends in its most recent trading updates. An autumn update  reported that there are now more than 447,000 SEE-equipped cars on the road, spanning 24 vehicle models across five original equipment manufacturers (OEMs), a 246pc year-on-year increase. A further 30 distinct vehicle models featuring the technology are expected to launch by the turn of the year. SEE says its cumulative order book for its Automotive division now stands at AUD$395m with the majority expected to be recognised over the next six years. The company has also recorded an underlying year-on-year increase in non-recurring engineering (NRE) revenues, which it describes as ‘a strong lead indicator for future royalty revenue’. The company now provides products for 13 automotive programmes spanning 10 individual OEMs, covering more than 110 distinct vehicle models.

SEE’s most recent annual results reported a 15pc increase in revenue to AUD$54.4m, and a 17.3pc increase in gross profit to AUD$24.4m. The company notes particularly robust performance in its ‘after manufacture’ business, the retrofitting of DMS to older vehicles, as manufacturers seek to meet the EU’s deadline for GSR compliance, revenues up 13pc to AUD$39.8m. Cash was AUD$58.8m. SEE still has work to do to record a profit: the company reported a total comprehensive loss of $AUD25,736,000, up from the previous year’s $AUD17,589,000, mainly attributed to higher research and development expenses.

The supply-side shocks that have rocked the global economy over the past year have impacted SEE’s ability to roll out units to meet demand. More than 2,000 Guardian units have been ordered and not yet supplied, representing around AUD$3.5m in forward orders to be recognised in the next financial year. But it says the issues ‘have been resolved with the Company’s manufacturer, resulting in their guarantee to deliver satisfactory levels of stock by the end of H1 2023 to meet the growing demand for Guardian hardware.’

SEE’s stock performance has broadly followed that of the wider tech sector over the past couple of years, rising sharply in 2020 to touch 12p before falling back this year to its current level of just over 6p, taking the company’s market cap to around £250m. SEE is no untried tech new start: this is a company that has been building towards serving a defined market for some 20 years. It seems well positioned to benefit from the mass adoption of DMS technology, as its recent financial figures indicate. The company’s long term prospects look promising, but prospective investors should expect volatility during the journey, as demand for vehicles is buffeted by the ebb and flow of the world economy, and the possibility of ongoing turbulence in the supply of components. With those provisos SEE might make for an interesting longer term hold.

Versarien Plc


Versarien Plc (AIM:VRS), the UK-based advanced engineering materials group, continues its search to unlock the commercial promise of graphene, doubling-down on developing possibilities in the construction and textile sectors. 

Discovered in 2004 by researchers at Manchester University, the superconductive, one atom-thick carbon material that is 200 times the strength of steel almost seemed too good to be true, opening possibilities for the transformation of everything from the tiniest electronic components to city skylines. It soon became apparent that potential applications included flexible digital screens, ultra-efficient batteries, artificial bodily organs, radical extrusion, moulding, and 3D printing processes, stronger, lighter aircraft, ultra durable clothing, new printing inks, and diamond-hard cladding that inspired visions of a new generation of super high skyscrapers and space elevators reaching into the outer atmosphere.

Work continues to move graphene from the realm of science fiction to real world 21st century infrastructure. VRS is one of a still select set of ventures developing commercial applications. The UK-based company has a suite of revenue generating ‘mature businesses’. Total Carbide manufactures ‘sintered tungsten carbide’, hard metallic coatings suitable for arduous environments like oil and gas platforms and the flow control mechanisms used in the defence and aerospace sectors; AAC Cyroma designs vacuum-formed and injection-moulded graphene enhanced plastic products for the automotive, construction, utilities and retail industry sectors. Gnanomat develops energy storage devices with high power density, fast recharging and very long lifetimes for use in electrical vehicles and portable electronics products. 2-DTech produces a range of graphene enhanced polymers with commercial possibilities, including Polygrene, Nanene and Hexotene.

But VRS’s primary focus is on the development of groundbreaking graphene applications within the construction and textile sectors, vast markets in which the material has increasingly compelling – and viable – possibilities.

VRS’s G-SCALE project highlights the range of the company’s exploration. The project, made possible by a £5m loan awarded through the Government’s Innovate UK initiative, seeks to apply graphene technology in five application areas: Graphene, Seat, Concrete, Arch, Leisure and Elastomer:

‘Graphene’: VRS has commissioned the first of four ‘Graphene-Tech’ reactors which together could provide up to an additional 100 tonnes of powder capacity for use in multiple sectors including energy storage.

’Seat’: VRS has installed large scale dispersion systems to produce graphene-enhanced thermoset resins for incorporation into fibre-reinforced polymer composites. The company has completed a Technology Developer Accelerator Programme with Lotus Cars, and has completed a Graphene-Loaded Polymer Composite project with the Defence, Science and Technology Laboratory. Discussions continue with potential customers for graphene enhanced bio-resins as well as sustainable fibre reinforced thermoset polymers. Graphene-enhanced carbon fibre reinforced polymers have a range of applications in the automotive industry, opening the possibilities for significant vehicle weight reduction that would improve ranges for electric vehicles and reduce fuel consumption for internal combustion engines.

‘Concrete’: Almost 1,000 tonnes of concrete have been poured containing Cementene, the company’s graphene enhanced concrete admixture. VRS is assessing product viability with major UK and European construction companies following the successful completion of testing by a United Kingdom Accredited Service laboratory. The company has commissioned a 3D concrete printer and successfully completed several projects. It intends to co-fund research fellowships as part of the Digital Roads of the Future project led by National Highways. VRS’s Graphink processing machines can produce up to 12,000 kg of Cementene. VRS used Cementene for its new innovation centre at Longhope, Gloucestershire, and has showcased its use in the Lunar Pod, a 3D printed graphene enhanced concrete unit with potential applications ranging from garden offices to humanitarian shelters. The versatile Pod offers the prospect of greater durability and lower costs than traditional concrete structures: 20pc cost savings on ground bearing slab, 30pc less material, and the halving of carbon emissions.

‘Arch’: This application concentrates on commodity, speciality and engineering thermoplastics including adding graphene to recycled and bio-based feedstocks. Using graphene enhanced polymers manufactured by Versarien, Inspecs Group has produced prototype eyewear and is in the process of demonstrating these products to potential customers.

‘Leisure’: VRS continues to progress its relationships with clothing brands, including Umbro, SuperDry and GoToGym. The Graphene-Wear product is scheduled for launch in Spring/Summer 2023, and designs have been completed for Autumn/Winter 2023 and Spring/Summer 2024. VRS’s Graphene-Wear formula is designed to enhance thermal transmittance, reducing moisture and speeding drying without compromising air or water vapour permeability. Sportswear brand Umbro is to integrate VRS’s Graphene-Wear technology into its Elite Pro-Training Kit range, initially for the 2023 spring/summer collection.

‘Elastomers’: The company continues to take enquiries from global brands for Graphene-Wear rubber compounds, following the launch of the Flux Footwear brand designed to provide greater durability through improved abrasion resistance whilst preserving the shoe’s traction.

A major focus this year has been the relocation to a new dedicated graphene production facility in Longhope, Gloucestershire to significantly expand production capacity. The 10,000 square foot floor slab laid for the innovation centre used the company’s Cementene and Polygrene enhanced concrete. VRS is commissioning manufacturing assets to secure an additional 100 tonne powder capacity per annum, and has installed equipment to scale up graphene ink production capacity by an additional 12,000 litres each year.

While pursuing ongoing initiatives the company continues to develop new technologies, this summer announcing the launch of a new hybrid nanomaterial that has ‘superparamagnetic’ properties that can be used across a range of applications, such as in defence and healthcare. The new material combines graphene with both iron oxide and manganese oxide nanoparticles that provide the material with magnetic properties. In return, graphene provides electrical conductivity to these electrically insulating metal oxides. Potential applications of the material include the treatment of wastewater whereby pollutants are adsorbed onto the graphene surface. The material also lends itself to biomedical and biotechnology applications, or defence applications requiring the shielding of electromagnetic fields. Magnetic manipulation could allow the recovery and recycling of the graphene, something that could not be done with normal graphene compounds. The development was led by the company’s Gnanomat subsidiary, which has pioneered the generation of a new family of versatile nanocomposites based on graphene and other forms of carbon, combined with metal or metal oxide nanoparticles typically intended for energy storage applications.

As with most of its peers in the nascent graphene industry, VRS continues to work to move into profit. The company’s interim results for the twelve months ended 31 March 2022 reported a loss of £5.2m. But that was less than the previous year, £8.7m, and group revenues from continuing operations were up 34pc to £7.63m, and graphene revenues rose 170pc to £1.89m. The company reported case of £3.1m, boosted by a £1.85m placing in December

Like other speculative stocks, VRS has been battered by this year’s downturn, down over 70pc to just over 8p at the time of writing. VRS is flying a number of kites that may come good sooner rather than later, notably in its target construction and leisure sectors, with the promise of re-energising the company’s near-term value. But VRS is probably best viewed as a longer term investment, one of just a handful of graphene pioneers doing the hard work to turn commercial promise into reality. The company’s price may turn with that of the rest of the tech sector, when market sentiment changes. And, if it can hold on, it is well positioned to take advantage of when this most tantalising of prospects finally comes good. It’s worth noting that the company’s share price touched heights of nearly 190p just four years ago.