Proximagen

Prospects at cash-rich drug discoverer Proximagen, which focuses on neurological diseases including Parkinson's, have been boosted by the signing of a deal with the National Institute of Health in the United States.

Proximagen, spun out of Kings College, London, in 2004, has inked an agreement with the National Institute of Health for one of its epilepsy drugs, Naluzotan, for a Phase II clinical trial. Proximagen is developing a number of other drugs including epilepsy treatment Tonabersat, for which it has partnered with pharma giant Upsher Smith, schizophrenia drug Sabcomeline and Parkinson's treatments 5HT6 and PRX5.

CEO Kenneth Mulvany, who joined Proximagen following a career as a tech-sector venture capitalist, says Proximagen’s model, which sees the US government directly funding many of its programs, provides an unusually low level of risk for both the company and shareholders. 'One of the things we have been outspoken about is the amount of risk small companies have at the clinical stage', explains Mulvany, 'as biotech is a business with a big chance of failure. We don’t feel it should be companies and shareholders that should be the only ones to take on that risk, since drugs provide a great benefit to society'.

Proximagen, with £50m of cash and no debt, is forecast by research house Edison to lose £9.9m and £12.6m in 2010 and 2011 respectively, as development costs rise and profits are not expected near-term.

Neverthless, being cash-rich and with a relatively secure source of funding, Proximagen shares, 8% ahead of the 98.5p at which Growth Company Investor recommended them in 2008, are worth holding onto for further capital growth.