Hybridan's Small Cap Wrap

This article is an edited extract from a non-independent research note issued by Hybridan.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

African Medical Investments (AMEI) [1.25p/£4.03 million]

African Medical Investments, which operates in the African healthcare sector, announced it has agreed the sale of its wholly-owned subsidiary, AMI Aviation Services, for $1.3 million (£0.8 million). African Medical has signed an agreement with Hotline Holdings to sell its entire interest in AMI Aviation, being 100% of the equity and the loan account, with effect from 31 May 2012.

The primary asset of AMI Aviation is a Dassault Falcon 20F-5BR medical evacuation jet and associated medical equipment. Losses attributable to AMI Aviation since commencement of operations in March 2011 to the date of disposal totalled approximately $2.4 million. The transaction will result in an impairment loss to African Medical of approximately $1.17 million, to be recognised in the results for the year ended 29 February 2012.

The disposal is in accordance with the board's strategy of consolidating the company's portfolio of specialist private hospitals and improving its financial performance. In particular, the proceeds will be invested in the company's current portfolio of specialist hospitals and will facilitate the roll-out of further medical facilities in targeted markets in sub-Saharan Africa.

Clean Air Power (CAP) [12.5p/£16.89 million]

The developer of Dual-Fuel™ combustion technology that enables heavy-duty diesel engines to operate on a combination of diesel and natural gas has won an additional order from supermarket Sainsbury's (SBRY) for 25 units of Clean Air Power's Genesis EDGE Dual-Fuel retrofit system, expanding Sainsbury's fleet of Dual-Fuel trucks to 50.

The Dual-Fuel engines, which substantially cut fuel costs and carbon emissions, have seen substantial growth in sales, with a total of 170 orders for both the Genesis system and European OEM product so far in the year to 31 December 2012, compared to a total of 70 systems orders during the whole of 2011.

Forbidden Technologies (FBT) [21.5p/£18.61 million]

After licensing its FORscene Cloud editing platform to YouTube in December, Forbidden Technologies has made further progress in its announced intention to enter the relatively high-value sports sector.

The company has licensed FORscene for third parties to use to edit dozens of concurrent high-definition sports video streams this summer. The finished videos are to be distributed through third-party websites for viewing by the public across several continents. In addition, a major US TV network is using FORscene in a broadcast sports workflow.

Stephen Streater, chief executive officer of Forbidden Technologies, said: "FORscene's scaleability and ability to edit content as it arrives in real time are well suited to sport. These applications demonstrate FORscene's exceptional capabilities in a major sports project."

Fusion IP (FIP) [46.5p/£33.87]*

University commercialisation company, which turns university research into business, announced that its portfolio company, Diurnal, is a major partner in a new EU collaborative research programme for the treatment of adrenal insufficiency in neonates (TAIN).

The programme will, for the first time, create a regulatory-approved paediatric version of hydrocortisone, specifically for neonates and infants who suffer from the rare disease adrenal insufficiency.

Peter Grant, operations director of Fusion IP, said: "This is a prestigious award for Diurnal who will be taking a leading role in this project. With potentially over €1.6 million (£1.3 million) in EU contribution being allocated to Diurnal over the time frame of the project, successful completion of the TAIN project will highlight Diurnal's capabilities in orphan drug development."

Mesuro, the Cardiff University spin-out which sells RF testing equipment and device measurement services to the semiconductor industry, separately announced that it has completed a £700,000 funding round to expand overseas sales of its revolutionary RF testing equipment.

Fusion IP invested £300,000 in the round and as a result its shareholding is 46.5%. Sales of over £800,000 have been delivered to customers in the first half of the year, including the company's first sale to Japan, a key milestone for the company.

Hydrodec (HYR) [10.38p/£42.56 million]

Hydrodec, the oil-recycling specialist, has been jointly awarded a material mandate from Mexico's national electricity utility for 900,000 litres of polychlorinated biphenyl contaminated oil. System of Energy SA DE CV (SESA) was also awarded the mandate, which will see the oil exported and processed at the group's plant in Young, Australia.

This follows a competitive tender with the Federal Electricity Commission of Mexico, with the collaboration agreement allowing SESA sources to use oil from various locations in Mexico as a feedstock for the group, whilst Hydrodec will re-refine the Mexican used oil at Young to produce high quality SUPERFINE™ transformer oil and base oil.

The relevant export and import permits which are required for the transportation are expected in the third quarter of 2012. This is a significant win for Hydrodec, which last year supplied 3.1 million litres of SUPERFINE™ into Mexico.

I-Design (IDG) [34.5p/£4.87 million]

I-design, the leading developer and supplier of ATM and self-service marketing solutions for the banking industry, announced a contract win with FDR, a branch of First Data Corporation, a global leader in electronic commerce and payment processing, to provide its marketing software solution, joono.

The contract will increase i-design's total licensed ATM and self-service estate from 21,500 devices to circa 28,000 devices. This follows an announcement in early June that Barclays Bank PLC and Cardtronics, existing customers of the company, have purchased 3,000 additional software licences.

Imperial Innovations Group (IVO) [291.5p/£290.48 million]

Imperial Innovations, the technology commercialisation and investment group, has led a $28 million funding round for Oxford Immunotec, alongside Invesco Perpetual and existing investors.

Oxford Immunotec is a medical diagnostics company developing novel diagnostic tests in the field of immunological disease. Spun out from the University of Oxford in 2002, Oxford Immunotec is an established international business, enjoying strong revenue growth. Its lead product is the T-SPOT®TB test, an immunological blood test for the detection of latent tuberculosis (TB) infection.

This represents a huge opportunity, particularly in the US where certain professions have to undergo compulsory annual TB screenings and there are large populations of immunosuppressed patients, such as those with HIV or rheumatoid arthritis, for whom screening is mandated.

In 2011, Oxford Immunotec increased its lab-testing capacity by building a new Clinical Laboratory Improvement Amendments lab facility in Memphis, which allows US national coverage and rapid turnaround time.

Oxford Immunotec will use the new funds to develop further its logistics, sales and delivery infrastructure in the US.

Innovations and Invesco Perpetual each invested $9.5 million in this round, with existing investors including Clarus, New Leaf, DFJ Esprit, Wellington Partners, SPARK Ventures and the University of Oxford (OSEM) investing the remainder. Following the investment, Imperial Innovations will hold a 7% stake in Oxford Immunotec.

NextGen Group (NGG) [79p/£11.45 million]

NextGen Group, a London-listed diagnostics products developer, announced that it was launching its first generation of animal biomarker products for the development of brain disorder diagnostics. The new assay measures protein markers in rat cerebrospinal fluid and will expand the product offering of NextGen's contract research subsidiary, NextGen Sciences.

Assays are used to discover biomarkers which are in turn used to identify the existence and progression of a disease, while biomarkers are used in clinical trials to aid in patient selection, to evaluate the effectiveness of a drug and in the development of companion diagnostics that will drive the growth of the personalised medicine market.

Barry McAleer, chief executive officer of NextGen Sciences, said: "Assays that can discover biomarkers in animal models will enhance the drug development process within the pharmaceutical industry and could lead to reduced attrition in the drug development process." He also stated that the new products and those in development are attracting attention and the company is already in talks with potential clients.

In 2010, the total global market for biomarkers was an estimated $13.5 billion and is expected to grow to nearly $33.3 billion by the end of 2015 (BCC Research).

One Media Publishing (OMPP) [3.95p/£ 1.92 million]*

The PLUS-quoted consolidator and acquirer of music and video rights announced it has acquired under licence a pop video collection already offered for download sale via iTunes. The label OVOW has traded on iTunes for several years and has over 100 pop videos featuring performances by the Moody Blues, Phil Collins, Neil Sedaka, Dusty Springfield, Gene Pitney, Iggy Pop, Santana, Eric Clapton and Elton John to name just a few.

Michael Infante, chairman and CEO of One Media, said: "... we are very pleased to be working with more video content as the market 'warms' to downloading video for in home entertainment as opposed to physical media. We are as committed to expanding our content in the visual arena moving forward as we have been with our audio acquisitions."

One Media separately announced the acquisition of the income stream of various music rights. The $400,000 income-yielding music catalogue has been acquired for the life of copyright.

Port Erin Biopharma Investments (PEBI) [6.5p/£2.14 million]

Port Erin, the investment company focused on investing in the biotechnology and biopharmaceutical sectors, announced that Galloway Limited purchased 500,000 Ordinary Shares at a price of 7p per share on 15 June 2012.

Galloway is wholly owned by a trust in which Jim Mellon, chairman of the company, has a life tenancy. Denham Eke, a director of the company, is a director of Galloway.

Following this transaction, the ordinary Shares in which Jim Mellon has a beneficial interest total 3,941,000, representing 11.8% of the issued ordinary share capital of the company.

The company also announced that Tom Winnifrith had stepped down from the board with immediate effect. Accordingly, the agreement as set out in the AIM admission document whereby T1ps Investment Management (IOM) received new ordinary shares equivalent to 7.5%. of any increase in the net asset value of the company over each quarterly period will cease forthwith.

The performance fee due to Shellbay Investments will continue to be on the same terms, except that Shellbay will now receive new ordinary shares equivalent to 14.5% of any increase in the net asset value of the company over each quarterly period.

Proximagen (PRX) [340p/£214.61 million]

The company announced that Upsher-Smith will purchase Proximagen for shares of 320p each in cash; and up to a further 192p in either cash or loan notes by way of a contingent value right (CVR). The acquisition represents an immediate cash premium, excluding the CVR, of approximately 16.4% to 275p, the closing price per Proximagen share on 12 June 2012 (the last business day prior to the date of the announcement) or 50.5% to approximately 213, the three-month average closing price per Proximagen share up to 12 June 2012.

Commenting on the decision by the board of Proximagen to recommend the acquisition, Kenneth Mulvany, the chief executive officer of Proximagen, said: "I am delighted that the board of Proximagen has been able to unanimously recommend the offer made by Upsher-Smith for Proximagen which potentially values Proximagen at up to £356.8 million and believe that it represents a great opportunity for our shareholders, our staff and our drug development programmes.

"This deal demonstrates that the UK biotechnology sector can, with supportive investors, bring together scientific excellence and business acumen and generate significant returns for shareholders."

ReNeuron Group (RENE) [3.54p/£27.47 million]

ReNeuron Group, a clinical-stage stem cell business, has presented the interim data from the PISCES (Pilot Investigation of Stem Cells in Stroke) clinical trial of its ReN001 stem cell therapy for disabled stroke patients.

To date, six patients have been treated in the PISCES study, representing the first two of four dose cohorts and no cell-related adverse events or adverse immune-related responses were reported in any of the patients treated. The interim data being presented are from the first five patients treated, at two 12-month, one six-month and two three-month follow-up points. Reductions in neurological impairment and spasticity were observed in all five patients compared with their stable pre-treatment baseline performance and these improvements were sustained in longer-term follow-up.

Professor Keith Muir, SINAPSE professor of clinical imaging, division of clinical neurosciences at the University of Glasgow, and principal investigator of the PISCES study, said: "We remain pleased and encouraged by the data emerging from the PISCES study to date. The data indicate that the ReN001 treatment has a good safety profile at the doses administered thus far."

As previously announced, the company expects that the remaining higher-dose cohorts in the PISCES study will have been treated within the next 12 months, leaving the company on track to submit an application for a phase II clinical study with ReN001 during the course of 2013. Angel Biotechnology Holdings (ABH) is working closely with the study, providing material to ReNeuron for this trial, and benefits directly from the success of these studies.

Surgical Innovations Group (SUN) [8.62p/£34.77 million]

Earlier this week Surgical Innovations Group, the AIM-listed company which designs and manufactures creative solutions for minimally-invasive surgery, announced it has signed an eight-year exclusive distribution agreement with CareFusion (CFN), a global leader in medical devices, for its new advanced PretzelFlex® laparoscopic retractor in the US, which will replace the existing licensing agreement for the Diamond-Flex® (ending in 2012).

The device will be manufactured by Surgical Innovations for CareFusion and it will be marketed in the US under the CareFusion brand. The pretzelFlex® generated significant interest from US surgeons at the recent congress Society of American Gastrointestinal and Endoscopic Surgeons conference in San Diego, and having received 510(k) clearance from the US Food and Drug Administration in March 2012, this deal ensures continuous revenue streams in an already established market.

During the annual general meeting on Tuesday, the chairman, Doug Liversidge, made the following statement: "The group has continued to promote its own SI-branded products and encourage original equipment manufacturing (OEM) relationships in its core market of minimally-invasive surgery. We have also continued our investment in product development to ensure a continual stream of innovative products for our distribution network.

"Significantly we remain on target to launch pre-production devices for hip arthroscopy in the third quarter of 2012. Encouragingly we are beginning to gain interest in our cost-effective devices from the NHS as they continue to face pressures to produce annual savings of £20 billion. In order to support this NHS activity we recently announced a five-year contract extension with our distributor, Elemental Healthcare, worth £5 million.

"We remain confident about the future growth prospects of the business and look forward to reporting on the continuing success of the group over the remainder of the year."

Tristel (TSTL) [29p/£11.60 million]

The AIM-listed manufacturer of infection control, contamination control and hygiene consumable products provided a trading update in which it announced it expects full-year revenue to be no less than £10.7 million, having reported revenues for the year to 30 June 2011 of £9.3 million. Adjusted profit is expected to be no less than £650,000.

Also mentioned, following the cancellation of a supply agreement by Medichem which brought in annual revenue of £2 million, was the creation of a new brand identity, Anistel, which includes surface disinfectants, instrument cleaners and disinfectants, and skin disinfectants for the veterinary market.

One unnamed national wholesaler has committed to stock the Anistel range from 18 June, and discussions are progressing with two other wholesalers.

UniVision Engineering (UVEL) [0.38p/£1.44 million]

UniVision, the Hong Kong-based designer and installer of digital surveillance and integrated security systems, has announced it has filed a registration statement on Form 20-F with the US Securities and Exchange Commission (SEC) and has become subject to reporting requirements pursuant to the US Securities and Exchange Act of 1934. This is a pre-requisite for the company to have its ordinary shares quoted on the over-the-counter bulletin board of the US OTC Marketplace (OTC BB).

It is anticipated that trading of the company's ordinary shares on the OTC BB will commence in mid-August 2012, subject to completion of the SEC's review of the 20-F and other procedures as required by applicable rules and regulations.

The management believes that a quotation on the OTC BB will benefit existing shareholders by making the company's shares more accessible to US-based investors and will complement the company's AIM listing, which will remain the principal trading platform.

*A corporate client of Hybridan LLP

The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week. Our review will usually be of those companies whose market capitalisations are less than £50 million although we may occasionally cover larger companies. Our review is not intended to constitute research and is not to be taken as investment advice.

A non-independent research note:

(a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and

(b) is not subject to any prohibition on dealing ahead of the dissemination of investment research (although Hybridan does impose restrictions on personal account dealing in the run up to publishing research as set out in their Conflicts of Interest Policy).

The individuals who prepared this document may be involved in providing other financial services to the company or companies referenced in this document or to other companies who might be said to be competitors of the company or companies referenced in this document. As a result, both Hybridan LLP and the individual partners and/or employees who prepared this document may have responsibilities that conflict with the interests of the persons who receive this document.

It was not originally intended to be distributed to Retail Customers, and is included here for information and discussion purposes only. It does not form a recommendation to invest or otherwise. It is intended as a weekly review of some of the most interesting small cap stories of the past week. The content will usually review companies whose market capitalisations are less than £50 million although we may occasionally cover larger companies.

Our review is not intended to constitute research and is not to be taken as investment advice.