New Issues Examined, by Oliver Haill

In contrast to the 17 medical-related floats seen in 2006, only two such ventures came to AIM in the first five months of 2007. Until a late June flurry that is, when four companies debuted in just over a week

One of the more interesting healthcare newcomers – although its technology was originally developed to assist the army in spotting tanks in the desert – is MedicSight, a London-based concern boasting technology that can help hospitals accelerate their cancer screening processes. Collins Stewart helped the company raise £32 million at float, with the funds earmarked to support clinical trials and expand MedicSight’s product portfolio in-house or by acquisition.

Chief executive David Sumner (whose chairman is Scottish renewable toilet roll entrepreneur Tim Paterson-Brown, brother of Willy who chairs AIM-listed Accsys) explains that the technology reduces human error in identifying potential anomalies and areas of interest in colon and lung scans. So, because it increases the accuracy of a radiographer’s ability to spot problems, it not only speeds up the time it takes but also means hospitals can ‘employ cheaper staff members and still get better results’. A win-win like that is a great selling point to the cash- and time-strapped NHS.

With regulatory approval only just granted in Europe and Canada, China expected this year, and Japan and the USA due ‘by the first quarter of next’, Sumner anticipates first sales ‘within weeks’ and the share price has quickly moved beyond 120p, with AXA Framlington having shown its hand with a four per cent stake.

The rest of the new medical troupe includes £70 million cancer treatment developer Northwest Biotherapeutics, which debuted alongside a £15 million fundraising; profitable Chinese pharmaceutical group China Medical System Holdings, which lured £10 million from investors to increase sales of its drugs and add new products to the portfolio; and CBaySystems, focused on things medical indirectly through the provision of business outsourcing services to the US healthcare industry. Yet another medical enterprise, spine and trauma device maker AOI Medical, will shortly touch down with a hoped-for £8 million fundraising sponsored by Numis.

TyraTech’s krafty prospects

Not within the health or medical sectors, but with products providing serious medical benefits among its diverse portfolio, is Floridian venture TyraTech, a spin-out from tech incubator XL TechGroup valued at £110 million following its recent £25 million fundraising. Its technology is based upon essential oils that are toxic to insects and other bugs but not to humans. TyraTech has signed an agreement with the self-proclaimed ‘world’s favourite’ food company, Kraft, to develop compounds used in ‘functional foods and beverages’ to deal with intestinal parasites in the developing world. Other products include an agricultural insecticide and an insect spray for hotels, homes and hospitals.

In a drawl reminiscent of John Wayne, TyraTech’s knowledgeable chief executive, Douglas Armstrong, claims six of the company’s 24 products in development are likely to be released ‘in the next six months’. He stresses that the company’s diversity is its strength: ‘It’s a business model that gives you multiple shots on goal, in multiple market segments,’ he says. Already up 7p from a placing price of 500p, I believe the shares offer exciting potential.

Boding well for the share price prospects of all the above are the warm receptions received by the two previous biotechnology debuts of this year, Neuropharm and Epistem. Brought to market by Investec, Neuropharm is a developer of drugs for autism and obsessive compulsive disorder and has risen by 42 per cent since its £4 million March float, while the valuation of David Evans-chaired stem cell commercialisation play Epistem has already gained 35 per cent since its £1.75 million April placing.