Independent article21 May 2008 09:06
“The group's shares have been on a downward trajectory since, after hitting year highs of 105p last June. However, observers are not as downbeat as you might expect. True, those at Investec, who revised their price target from 41p to 59p on the bad Renzapride news, say that given where the shares trade, the stock is theoretically a hold.
However, the analysts advise clients to buy the stock. The reason is the group's other potential blockbuster, the anti-obesity and type 2 diabetes drug Celilistat, which is expected to win "a major licensing deal... in the near future. We therefore recommend buying on weakness", they say.
Finn Capital points out that the group has raised £10m from institutional lenders to remain a going concern and, "this demonstrates institutional confidence in Alizyme's ability to deliver", they reckon.
The truth is that buying into smaller biotech companies is always a punt. Those with a nervous disposition should avoid the sector that depends largely on companies with sound ideas transforming good science into a commercially viable treatment. The failure list is long.
However, while analysts are all too happy to point out a basket case when they see one, none ascribes that moniker to Alizyme, which is also set to receive third phase results on another treatment, Colal-Pred, for ulcerative colitis, in July.
Biotech valuations are largely driven by news flow. Alizyme is expecting lots in the next few months, and most of