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Aim-listed contract research group hVIVO gained momentum last month: its shares rose as much as 13 per cent and a capital markets day on July 17 generated further buzz.
Some of that heat was cooled by a statement to the London Stock Exchange on July 23. The company said its chair, Cathal Friel, had sold more than 21mn shares at 29p each to “satisfy institutional demand” following the event. Listed five years ago, hVIVO’s stock climbed to an all-time high of nearly 40p in 2021, when excitement around vaccine development reached a fever pitch.
The company calls itself the world leader in testing infectious and respiratory disease vaccines via what are known as human challenge trials (HCTs). This type of research involves infecting healthy volunteers with a pathogen to study their immune response in a controlled environment. The group this year opened a new trial facility in London’s Canary Wharf business district, complete with specialised virology and immunology labs.
According to hVIVO, four of the world’s 10 largest pharmaceutical companies are among its client base.
“The message that HCT can deliver high-quality data at a significantly lower cost vs a field study appears to be resonating with both biotech and big pharma, who increasingly see HCTs as a key part of the infectious disease drug/vaccine development,” said Stifel analyst James Orsborne.
Across the six months to the end of June, the company reported a 31 per cent year on year uptick in revenue to roughly £36mn, while its ebitda margin expanded to 24 per cent from 19 per cent. Management also reaffirmed full-year revenue guidance of £62mn, with margins anticipated to be at the upper end of analysts’ forecast range.
ME Group director sells entire stake
ME Group is enjoying an excellent run this year. The FTSE 250 company, which installs photo booths and public washing machines, has seen its share price rise by over 50 per cent since January.
Its interim results, which were published this month, were also strong. Excluding the impact of currency movements, revenue climbed by 9 per cent to £150mn and profit before tax jumped by 14 per cent to £30mn. The laundry division was responsible for a lot of this growth, with 420 new washing machines installed between November 2023 and April 2024.
Non-executive director Jean-Marc Janailhac has taken advantage of the cheerful market mood. On July 17 he sold 198,555 shares for £1.842 apiece — a total of £365,700. He now has no stake in the company.
The transaction comes at an interesting stage of ME Group’s trajectory. The group is ramping up investment in both washing machines and photo booths, and between 2022 and 2023 capital expenditure jumped from £38.2mn to £53.5mn. It is expected to remain at an elevated level for the next couple of years at least.
Some of the money will be funnelled into new washing machines, with a deal signed this week to install 300 machines at petrol stations owned by Motor Fuel Group. However, ME Group is also rolling out up to 2,500 “next generation” photo booths this year, with new features such as smartphone printing. In the first half of this year, capex in the Photo Me division increased from £1.3mn to £9mn.
ME Group needs to expand its footprint to grow, and remains a very cash generative business. However, there is no guarantee that pumping money into photo booths will drive up demand, given the threat of smartphone images. The other side of the business also has its risks: washing machines require more maintenance than booths and typically need to be replaced more often.
