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I observed a minor explosion (a superb one) down the underside of my portfolio final week. It was Angle (LSE: AGL), a penny inventory that’s a small holding of mine.
On 4 January, it rocketed 137% in a single day and ended the week 121% larger than it began it.
What information induced this sudden rise? And will I now be scooping up extra shares at 24p? Let’s discover out.
What was Angle getting proper?
Angle is a liquid biopsy firm, which suggests it specialises in most cancers diagnostics.
Via its Parsortix cell-separation system, the corporate has developed an answer for real-time evaluation of each ctDNA (fragments of DNA launched primarily by dying most cancers cells) and CTCs (residing most cancers cells) from a single tube of affected person blood.
Final week, it introduced that from 47 affected person samples, beforehand unidentified mutations have been found in 70% of breast most cancers, 70% of lung most cancers and 60% of ovarian most cancers samples.
The agency mentioned this “offers a very new perception into most cancers clonal evolution not at present out there to researchers or oncologists.” This breakthrough information is what induced the shares to rocket larger.
Now what?
The corporate’s CEO mentioned these most cancers outcomes “might transform groundbreaking.”
It is because a affected person’s most cancers adjustments as time goes on, which means the unique tissue biopsy basically turns into outdated. This liquid biopsy know-how supplies info on each lifeless and residing most cancers cells, which means clinicians can probably see how the most cancers is evolving.
In flip, this could inform higher decision-making on the suitable therapies.
Angle is now participating with genetics juggernaut Illumina and main oncologists to hunt their enter. It mentioned the “early stage responses have been encouraging.”
Some dangers to contemplate
Whereas that is encouraging, I’d level out that the agency has been diluting shareholders to boost funds on AIM for practically 20 years. That’s a key danger.
In fact, one may argue that is the purpose of capital markets (to supply capital). However that’s a very long time and the inventory is down 84% over that interval.
Nevertheless, in 2022, Angle obtained US Meals and Drug Administration (FDA) clearance for its Parsortix system. So the agency seems prepared for business lift-off and reckons it has sufficient money to final till the second quarter of 2025.
The shares are buying and selling on a price-to-sales (P/S) ratio of 34, which appears extreme. However that valuation ought to shortly come down, with 2023’s forecast income of £3m anticipated to treble to £9m subsequent 12 months.
Whereas there aren’t anticipated to be income for a while, gross sales ought to speed up meaningfully as the worldwide liquid biopsy market grows. In response to Priority Analysis, it’s projected to surpass $18.2bn by 2032, up from $4.7bn in 2022.
In fact, this market alternative isn’t a secret, which means there’s loads of competitors, notably from Illumina-backed Grail.
Will I purchase extra shares?
With its novel know-how and small £62bn market cap, I see Angle as a probably tasty morsel for an even bigger fish.
Nevertheless, I don’t make investments on the idea {that a} agency could also be taken over. The shares may all the time be acquired for a lower cost than I paid.
On stability, I’m protecting my small holding as it’s for now. However I’m now watching this penny inventory like a hawk.
