Insider: bosses buy two small-caps cheaply

Leading PureTech Health (LSE:PRTC) directors have spent £175,000 on increased stakes after their recent dealmaking failed to end City caution over the biotech hub’s strategic progress.

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

The buyers included chief executive Robert Lyne, who this month hailed a “transformative milestone” after completing a $180 million (£134 million) financing for one of PureTech’s key assets.

His purchase and those by interim chair Sharon Barber-Lui and two non-executive directors including Pfizer veteran John LaMattina took place last week at 119p a share.

The shares were more than 400p in early 2021 and an average of 253p during the last three months of 2022, when the company was a member of the FTSE 250 index.

The selling pressure has come despite a recent record that has included 2024’s return of $100 million to shareholders, having generated significant proceeds from the schizophrenia treatment business it founded with an initial investment of $18.5 million.

Lyne has also sharpened PureTech’s focus on value realisation by returning to the company’s core strengths, including “a capital-efficient engine for high-impact innovation”.

PureTech operates a hub-and-spoke R&D model, where the “hub” drives new innovations and early programme advancements, which are spun out into founded entities or “spokes” that leverage external capital to further advance a programme.

It recently secured $180 million of financing for founded entity Celea Therapeutics, whose lead programme LYT-100 is ready for a Phase 3 trial as a potential treatment of idiopathic pulmonary fibrosis (IPF) and other fibrotic lung diseases.

PureTech has committed $30 million alongside a syndicate of leading healthcare investors and will retain 35.4% ownership of Celea as well as the right to certain royalties, milestone payments and sub-licence income.

• Stockwatch: a turnaround play for both capital upside and yield
• Share Sleuth: a one-of-a-kind new holding for the portfolio

House broker Peel Hunt, which has a price target of 508p, noted the impact of other IPF treatment candidates on the value of Avalyn Therapeutics and United Therapeutics.

It added recently: “We believe LYT-100 already has the best/most promising efficacy and safety profile for treating IPF and this deal allows PureTech to retain upside potential in the future.”

The company’s primary financial metric of cash balances stood at $248.1 million at the end of March, representing an operational runway at least through the end of 2028.

The current market capitalisation is £290 million, which compares with £363 million when shares were priced at 160p in the company’s 2015 stock market debut.

PureTech’s remuneration committee said recently that a “very strong” three-year performance in relation to strategic objectives had not translated to growth in the company’s share price.

Lyne added in the same annual report: “In the coming year, we will continue strengthening our engagement with shareholders to ensure that the benefits of PureTech’s model and portfolio are more clearly understood.”

Lyne is the former chief executive of Arix Bioscience and joined PureTech as chief portfolio officer in January 2024.

• Six stocks that could double their dividend quickly
• 20 hottest tech stocks of the week: Kioxia, SpaceX, Micron

The Massachusetts-based company recently delisted its shares from Nasdaq in order to simplify its structure, reduce cost and administrative complexity and strengthen “engagement with the UK investment community.”

Peel Hunt said after April’s annual results: “We have been saying for a while that it feels like the stars are aligning for PureTech and today’s results reinforce this.

“With a focus on LSE moving forward (saving significant costs in delisting from Nasdaq), we believe a re-rating is quickly on the way with the delivery of upcoming catalysts.”

Bargain hunting at Boku

The cheapest Boku Inc Ordinary Shares (LSE:BOKU) shares in four years have been bought by bosses at the payment technology firm after a profit warning offset a “landmark” partnership with US fintech Stripe.

AIM 100-listed Boku, which connects merchants such as Amazon, Google and Netflix with a network of localised payment methods, lost 30% of its value following Wednesday’s update.

Chief executive Stuart Neal responded that day by spending £100,000 on shares at 95p before chief financial officer Robert Whittick made an investment worth £64,000 on Friday.

Neal said last week: "Looking ahead, we remain excited by the substantial market opportunity we have ahead of us.”

• Week Ahead: Rio Tinto, Barratt Redrow, Antofagasta, Ocado
• Portfolio Dilemma: how to decide whether to cut a loser or hold on

The progress includes the collaboration with payment service provider Stripe, which offers a significant indirect route to market that is already in use by two merchants.

Neal said first-half trading had been affected by a number of specific factors, including a dual sourcing move by a merchant that reduced Boku's share of volume in one market.

First-half revenues of $66.5 million rose 11% on a year earlier but were short of City forecasts, meaning full-year underlying earnings will miss hopes at between $38-42 million.

UBS cut its price target from 270p to 160p, while Deutsche Bank moved to 155p from 320p.

• Is the state pension triple lock on borrowed time?
• Sign up to our free newsletter for investment ideas, latest news and award-winning analysis

Peel Hunt, which lowered its price estimate to 173p, said the warning marked Boku’s first material downgrade since its 2017 stock market debut.

However, it said the deal with Stripe strengthened the business model and investment story.

It added: “We view this as strong validation of Boku’s infrastructure, regulatory expertise, know‑how and broader relationship moat. Tweaking is needed in client diversity, to dampen the impact of delays/events beyond Boku's control given mega-tech exposure.”