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Development shares typically dominate the headlines on each side of the Atlantic. Within the US, the S&P 500 is pushed by giants similar to Nvidia, whereas within the UK, Rolls-Royce has reworked itself into one of many FTSE 100’s hottest progress tales.
However a few of the greatest progress shares aren’t the large family names. They’re typically smaller companies hiding in plain sight, ready for a breakthrough second. This week, two such corporations caught my eye — and I’ll admit I’d barely heard of them till now.
Each Defend Therapeutics (LSE: STX) and Pantheon Sources (LSE: PANR) soared by greater than a 3rd in simply 5 buying and selling days. Let’s take a more in-depth look.
Defend Therapeutics
Defend Therapeutics is a distinct segment pharmaceutical agency that I first found earlier this week. It has a single on-market product known as Accrufer, used to deal with iron deficiency. Regardless of being a penny inventory, it has simply posted outcomes that lit a hearth underneath the share value.
Earnings doubled, whereas income surged 139% yr on yr. The inventory jumped 40% in response — though it stays down 94% over 5 years.
The enterprise continues to be unprofitable, posting a £9m loss in H2 2024. However that’s a significant enchancment from the £16m loss in H2 2023. Debt sits at £21m with £5m in money, though it not too long ago raised £10m from its largest shareholder, AOP, and renegotiated a £20m debt facility.
It’s dangerous, after all. With just one marketable product, all the pieces hinges on Accrufer’s success and future approvals. That makes the inventory extremely speculative.
Nonetheless, I just like the path of journey. Losses are narrowing, gross sales are rising quickly, and funding has been secured to push progress ahead. For these with the urge for food for higher-risk penny shares, I feel Defend may very well be price contemplating.
Pantheon Sources
Pantheon Sources is a somewhat completely different beast. This £388m market-cap firm is targeted on oil and gasoline exploration in Alaska’s North Slope.
The shares shot up 35% this week after the corporate introduced the spudding of the Dubhe-1 properly within the Ahpun discipline. The outcomes exceeded expectations, with the gross hydrocarbon column thickness coming in 26% above pre-drill estimates. Administration reckons the online current worth of the challenge may very well be as a lot as $1.74bn.
Financially, Pantheon appears to be like sturdier than many exploration friends. It has £13.6m of debt towards £307m in fairness, with a price-to-book (P/B) ratio of 1.46. Like Defend, it stays loss-making — £9m down in 2024 — however that’s an enchancment from a £13.5m loss in 2020.
Nonetheless, oil and gasoline exploration is notoriously unstable and valuations are sometimes primarily based on estimates and best-case eventualities, which can not materialise. Whereas the Dubhe information is thrilling, I’ll admit I’m no professional in mining and drilling valuations.
It may very well be one to think about for traders who know the sector properly and may abdomen the ups and downs.
My verdict
This week jogged my memory that not all progress shares come wrapped in huge model names. Defend Therapeutics and Pantheon Sources are each high-risk, early-stage tales with loads of uncertainty. However for traders searching for publicity to small-cap progress with huge potential, they might be price placing on the watchlist.
As for me, I’ll be watching from the sidelines — however I’ll admit, seeing them rocket practically 40% in per week does pique my curiosity.
