Motif Bio crashes 88% as WANdisco rockets
It was a classic case of 'boom and bust' on AIM as these two stocks enjoyed very different fortunes.
14th February 2019 14:54
by Graeme Evans from interactive investor
It was a classic case of 'boom and bust' on AIM as these two stocks enjoyed very different fortunes.
From joy at the latest "tech titan" partnership at live data company WANdisco (LSE:WAND)Â to the regulatory despondency at Motif Bio, the highs and lows of AIM investing were on display today.
The junior market is well known for its explosive share price growth, with Sheffield-based WANdisco no exception after surging 27% on the back of securing advanced technology partner status with Amazon Web Services and raising $17.5 million from existing shareholders.
On the other hand, Motif Bio (LSE:MTFB) crashed 88% after the US Food and Drug Administration (FDA) said it could not approve a new drug application for the company's superbug antibiotic. The regulator indicated it wants additional data on iclaprim, which treats acute bacterial skin and skin structure infections, so it can further evaluate the risk for liver toxicity.
Broker Peel Hunt said it was "very surprised" by the news, particularly given iclaprim's favourable safety and toxicity record established through 1,300 patients.
Motif will now request a meeting with the FDA, which it hopes could take place within the next 30 to 45 days. But in the meantime it will have to raise new capital as it is only financed into the second quarter of 2019. The update from the FDA also dealt a blow to Motif partner and shareholder Amphion Innovations, whose shares slid 71% today.
Motif made its stock market debut in 2015, not long after acquiring the late-stage iclaprim. It claims the antibiotic is more effective in the treatment of superbugs because it is able to penetrate the bacteria's reproductive machinery.
Antibiotic resistance is a key topic in the healthcare sector so new antibiotics are essential. Iclaprim was originally discovered by Hoffman-La Roche, but Motif has adapted the development programme to address the reasons it failed to gain FDA approval in 2009.
Source: TradingView (*) Past performance is not a guide to future performance
Meanwhile, shares at live data firm WANdisco were on the recovery trail today after announcing a major advance in its relationship with Amazon Web Services. It is one of a number of tie-ups with some of the world's tech titans, such as the 'co-sell' agreement allowing its Fusion platform to be sold as a packaged offering with Microsoft Azure.
WANdisco, whose name stands for Wide Area Network distributed computing, offers investors exposure to the 'noisiest' theme in IT currently – big data and hybrid cloud computing. Its recent success has been around the LiveData platform that enables companies to make their data always available, as well as accurate and protected.Â
However, shares fell more than 70% from 1,250p in June to 340p in December, with analysts at Stifel citing the "perceived risks on the company's ability to close out H2 bookings".
They surged back to 630p today after the Amazon announcement and the fundraising, which saw shares placed at a 9% premium. Co-founder and chief executive David Richards said the move would help the company to pursue a number significant opportunities to expand its existing partner relationships.
Source: TradingView (*) Past performance is not a guide to future performance
Investor confidence was further boosted by a trading statement revealing a strong end to the financial year, driven by contracts across a wide variety of end-markets and partners, including Microsoft and IBM.
Increasingly, these contracts are subscription based, which provides the company with the opportunity to scale the annualised value of recurring revenues over time.Â
Stifel analysts increased their price target to 936p following's today news.
They said: "WANdisco Fusion is the only solution that enables the hybrid-cloud, multi-cloud and seamless migration of critical live data for businesses in the moment and at scale and so its strategic attractions are undiminished."
*Horizontal lines on charts represent levels of previous technical support and resistance. Trendlines are marked in red.
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