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Floats shine light on Amphion's portfolio

The tech/bio company investor may have an image problem, but definitely not an imaging problem
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New antibiotics are needed fast

Amphion Innovations Plc ( LON:AMP), which invests in high-growth companies in the medical and technology sectors, already has a couple of successes under its belt.

The listing of portfolio company and antibiotic developer Motif Bio in 2015 led at the time to a sharp rise in the tech/bio company investor’s net asset value (NAV), as investors got a better handle on the value of its investments.

The NAV per share shot up to 3.8p per share at end December 2015 from 0.7p a year earlier and by the middle of June had risen further to 4.3p.

The company still retains a stake in Motif Bio and this is proving useful as security for a draw-down facility that serves to provide seed money for investments in more partner companies. In total, Amphion has drawn down US$6.15mln, which could be repaid in cash or converted into Amphion shares.

Motif Bio is addressing fears that antibiotics are losing their silver bullet status

Motif’s lead drug Iclaprim is one of the next-generation of antibiotics and it will be used, initially at least, to treat acute bacterial skin and skin structure infections.

Its development is timely as world leaders are becoming increasingly concerned about the growing resistance of bacteria to antibiotics.

Results from the first of two phase III clinical trials came back positive, and the company said it will file for a new drug application for iclaprim in first half of 2018.

Not just about Motif Bio

Another spin-off, computerised tomography (CT) scanning technology company Kromek (LON:KMK), has had more of a bumpy ride, but is up 15% year-to-date and Amphion (5.3%) continues to believe in the potential of its technology platform.

“Kromek’s technology should be widely adopted for use across all of its target markets, including medical imaging systems,” according to Richard Morgan, the chief executive officer of Amphion.

READ Kromek predicts 'step-change' in revenue growth as demand for detectors builds

More recently, another medical imaging company in which Amphion has invested – m2m – has merged with Polarean Inc, a magnetic resonance imaging (MRI) specialist, to create Polarean Imaging.

READ Amphion's partner company m2m subsumed into Polarean Imaging

m2m has a number of patents for  technology that improves the diagnostic quality of MRI images, while Polarean’s main technology is a drug-device combination product that enables the visualisation of hyperpolarised Xenon129 via MRI with a particular application for the diagnosis of a number of pulmonary indications..

Amphion holds around 26% of the merged entity.

Other investments include Axcess International (8.6%), Firestar Software (11.4%), Privatemarkets Inc (20.6%) and WellGen Inc (23.9%).

Axcess is an “Internet of Things” play with a focus on security solutions. provides what it calls micro-wireless system solutions for real-time business activity monitoring and control, whether it be guarding access to the front door or tracking how long individuals spend in a particular part of the building.

Firestar’s software addresses the increasingly important electronic information exchange market.

PrivateMarkets offers an internet-based marketplace that links together a network of potential buyers and sellers who trade specific physical commodities – a virtual private market, if you will.

WellGen’s brief is to discover and develop medical foods for inflammation-based diseases using natural products that are safe.

The value-creation process

Amphion is not alone is seeking to commercialise intellectual properties developed at Britain’s universities, but its reach extends even further.

It can draw on a collaborative network of strategic partners built up over a period of more than 20 years. As well as generating investment leads for the company, those same strategic partners are available for “hand-holding” and advice throughout the company building phase.

The key from a value-creation perspective is to eschew high risk/high reward punts.

Amphion looks for companies with proven technology that addresses a quantifiable market opportunity, and it is not interested in companies with technology that requires huge capital investment over a prolonged period.

Amphion’s management team will generally take a hands-on approach, guiding the partner company on strategic positioning, scaling up and expansion.

It is a symbiotic relationship; what’s good for the partner company should be good for Amphion and, by extension, Amphion’s shareholders.

Value not reflected

Morgan concedes that his company's value currently is linked with Motif Bio.

At the current price Amphion's market cap is under £6mln whereas the Motif Bio stake is worth about £7.6mln.

Chuck in the 5.27% stake in Kromek, currently worth about £3.65mln in the market, and you have a “what the heck?” moment.

On the plus side, Amphion’s share price is up 15% to date, so there is hope the market is finally waking up to the inherent value in the company.

 

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