SMALL CAP MOVERS: Scancell heads to Nasdaq as Aim’s headcount falls to 612

Scancell Holdings saw its shares drop 27 per cent this week, but the movement obscures the real story, which is a largely positive one for investors.

It may take the market a while to process some transformational changes that will see the oncology research specialist fully funded and headed for a US listing.

The mechanism is a reverse takeover, which sounds more dramatic than it is.

In plain terms, Scancell is merging with a smaller American company, Neuphoria Therapeutics, and inheriting its Nasdaq quotation, so the buyer effectively steps into the seller’s listing rather than queuing up for a fresh flotation of its own.

Scancell shareholders keep 85.5 per cent of the enlarged group, and the Scancell name stays over the door.

The prize is access to a market that understands biotechnology far better than AIM currently does. American investors are more comfortable funding long clinical timelines, the pools of capital are deeper, and comparable cancer immunotherapy companies routinely trade on valuations that London has never come close to awarding.

Add up to $89 million of new funding to take its lead melanoma treatment through a phase III trial, and the dilution starts to look like a small price to pay.

AIM’s shrinking pool

After starting the month on the back foot, the AIM All-Share was in recovery mode, rising 1 per cent over the week to 768.74. It outperformed the FTSE 100, which edged up 0.7 per cent.

The week’s biggest loser was Celsius Resources, which tumbled 96 per cent after a lender moved to seize and auction its 40 per cent stake in the Makilala copper-gold project in the Philippines.

Equinaire, a subsidiary of India’s Kiri Industries, issued notices of default, foreclosure and disposition, having acquired the loan from the Philippine sovereign wealth fund last month. Kiri wants preferential copper supply for a plant it is building. Celsius disputes the default and says it will defend its interests fully.

CPPGroup’s shares were cancelled from trading on AIM on Friday at the company’s own request, marking another departure from London’s junior market and leaving shareholders without a public venue to trade the stock.

The number of companies on AIM has collapsed to just 612, down from a peak of 1,694 in 2007, according to research from UHY Hacker Young. The concern is that the pool of quality companies is thinning fast, with too few flotations to make up the numbers.

The week’s winners

The week’s biggest gainer was IQE, which jumped 34 per cent after guiding to full-year revenue growth above 30 per cent, with first-half sales of at least £64 million on strong demand for indium phosphide used in AI and data centre applications. The compound semiconductor maker ended June debt-free with £41.6 million of cash.

Sunrise Resources rose 30 per cent after picking up the Lake copper-silver-gold project in Nevada, where historical drilling returned 50 metres grading 0.73 per cent copper, 31 grams per tonne of silver and 0.2 grams gold from surface. Geophysical surveying and follow-up drilling are planned.

Tooru, the functional foods specialist, advanced 28 per cent without any obvious news to explain it. Worth noting, though, that the market barely blinked at a fairly upbeat trading update alongside the preliminary results at the end of last month. Perhaps the penny has finally dropped.

Hardide rose 27 per cent after third-quarter revenue of £4.1 million took the year-to-date total to £8.9 million, prompting guidance that full-year results will land materially ahead of the £13.4 million previously expected. The coatings specialist is spending £4.5 million on three new reactors.

Blockchain with big ambitions

Finally, Valereum, which is building a regulated marketplace where traditional shares and bonds can be traded on blockchain rails, rose 12 per cent on a pair of announcements.

The first concerns Quorium Global Photonics, a partner Valereum is in the middle of doing a deal with. Quorium has launched a stablecoin, simply a digital token pegged to a fixed value, usually a dollar, so it can be used to move money around without the wild price swings associated with cryptocurrencies. 

Valereum says it gives the partner’s ecosystem something to trade with, and takes the pair a step closer to completing their agreement.

Valereum holds 20,000 Quorium notes it values at $10,000 apiece, a sum that dwarfs the company’s own market value, and it openly admits that putting a price on tokens like these is an uncertain business.

The second announcement is a tie-up with Blockchain Digital Assets, aimed at Africa and the Indian Ocean. 

The idea is tokenisation: ownership of a physical asset such as a gold or lithium deposit is represented by a digital token that can be bought and sold far more easily than the thing itself. Throw in a mobile payments app, and it is an ambitious plan for a company of this size.

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