A couple of weeks ago I bought a very small (just over 1%) (probably too small) portfolio weight in 4D Pharma at 247p per share.
This is very much an experiment for me – its the first pharma stock I have ever bought in my 17 years investing.
DDDD are a company involved in developing remedies related to bio-theraputics. This is using the body’s own bacteria / product of that bacteria to heal. They are initially focused on gastrointestinal issues.
I have something of an interest in this as I suffer a bit from my stomach which has been seriously helped by taking probiotic bacteria… This means I know the underlying logic is sound – this stuff can be used to help people. What I don’t know is if 4d will be able to successfully apply this but it derisks it in my mind. I think some level of success as these guys are effectively using what is already in the body to repair it.
4D are backed by a successful UK fund manager Neil Woodford he holds 27% of the shares.
They have completed first stage (safety) clinical trials of their blautix drug they said:
IBS patients receiving Blautix showed an increase in microbiome diversity and microbiome stability that was comparable to healthy controls. Conversely, as expected, IBS patients receiving placebo showed a reduction in microbiome diversity and exhibited microbiome instability over the period of the trial. This result may be indicative of a relevant therapeutic effect of Blautix and will be investigated further in phase II clinical studies scheduled for 2017.
They have a pipeline of other drugs / diagnostics based on the same underlying ideas / technologies (below). This means lots of scope for good news.
Another couple of things I like is that they have been working on developing tools / methods of developing their technology. Its near impossible for me to assess the accuracy of what the are saying / likely value but they have been buying research companies / tools so it seems on the level.
They have 68m cash and a market cap of 168m – enough to do quite a bit of work and I think they are cheap at this price for the potential opportunity – although it is very hard to value.
I’d like to emphasise this is very much a punt. Having said that my last biotech idea (which I didnt do) was Hutchinson China Meditech – I lived in China so knew Chinese medicine worked and there was opportunity there. It went from £5 to £35.
I hear about lots of people making money on pharma / biotech. As ever with investment people like to talk about winners, not so much losers…. This is one I intend to buy (small) and forget about.
With markets getting higher my usual investment staple of winding up investment trusts are getting harder to find. I need to get developing new investment skills and trying new things… Any advice / book recommendations on this sort of investment from my readers would be gratefully received…