Times saying21 Jun 2016 10:36
Buy drop way way overdone as we all knew: paleje: Tempus in today's Times says its a buy. http://www.thetimes.co.uk/edition/business/dividend-safe-with-grid-lights-staying-on-whw22qwzb When Circassia came to the market in 2014 at 310p a share, it was seen as the owner of a promising but unproven treatment for allergies, including hay fever. En route the company paid £239 million for a couple of companies making treatments for asthma and pulmonary disease, raising fresh funds at 288p a share. The first widescale trials of that allergy treatment for people allergic to cats have been an unmitigated disaster. Put simply, sufferers given the treatment did well but so did those given a placebo. This is frankly baffling. Circassia is giving up trials of the same treatment for sufferers of hay fever and those allergic to ragweed, though two others are sufficiently well advanced that there is no point in abandoning them. The conclusion of these may give an idea why the feline trials went so badly and whether the treatment has any value whatsoever. This leaves the company with those asthma products, several of which are on the market. If the study was baffling, the market’s response was equally so. Circassia shares lost two thirds of their value, falling 179¼p to 91p. This gives it a market capitalisation of £257 million. Tot up the cost of those acquisitions and the cash in the bank and you get to £379 million. This suggests that the fall in the price is wildly overdone, assuming those businesses bought have the value ascribed to them, with the original allergy treatment assigned no value whatsoever. Any biotech company is always going to be speculative, but this looks a good gamble. MY ADVICE Buy WHY Risky, but the share price fall looks overdone