AquaBounty Technologies

GM salmon developer AquaBounty Technologies (ABTX) widened losses $500,000 to $5.3 million (£3.2 million) on results for the year to December as its efforts to win FDA approval continued.

The AIM-quoted venture, which last October raised $4.9 million in a placing with its largest shareholder, Linnaeus Capital Partners, also reported a cash position of $6.2 million, something it enthused was 'sufficient to take the company into Q2 2012 at the current rate of spending.'

An unusual business, AquaBounty are developing Atlantic salmon for human consumption that grow at a significantly faster rate than is normal for the breed. The company noted that in recent testing its fish 'achieved an average weight of almost 3 kilos in 608 days' which was 'more than double the average size achieved by the control animals in the same time under identical conditions'.

The company, whose prospects are essentially contingent upon FDA approval, noted that in September of last year the FDA concluded that its salmon is 'indistinguishable from other Atlantic salmon, is safe to eat and does not pose a threat to the environment under its conditions of use.' The next stage in approval involves an environmental assessment as well as a 'period for public comment' with the company remarking that it has 'not been informed of the likely approval date, but remains confident that the process is advancing towards a successful conclusion.'

In an interview with Growth Company Investor CEO Ron Stotish remarked that the company had gone through a 'milestone year' adding that AquaBounty has 'gone further than any other organisation in terms of receiving approval from this technology.' Regarding the fierce criticism AquaBounty received from some environmentalists he argued that 'most of the statements made about AquaBounty reflected a lack of familiarity with publicly available documents that address such concerns.' He added that such accusations 'had very little substance and no basis in reality.'

Looking forward Stotish emphasised the plan was to 'secure approval and enter the commercial phase' noting that while some have taken the delays to mean that the application will not go forward 'this is not the case.'

Following the results analysts at house broker Nomura Code noted the loss was $300,000 ahead of its forecast loss of $5 million and added that it expects the company to burn $5 million over the year.

Growth Company Investor first recommended shares in AquaBounty last June at 8p as a speculative buy and just like their fish they grew fast, reaching a high of 24.5p. Last September we rated the shares as a hold at 18.5p and they have slipped 46 per cent since, currently trading at 10p.

With investor sentiment having cooled somewhat due to the uncertainty around the date of the FDA's decision, we sympathise with investor nerves around AquaBounty's prospects. Nonetheless we think at the current price the shares represent a good speculative opportunity as any positive news from the FDA will lead to a significant rerating. We therefore upgrade the shares to a speculative buy.