The rocketing share price, Physiomics and the health tech revolution

Does the tale of Physiomics allude to an even bigger opportunity for investors?

Article updated: 4 December 2017 10:00am Author: Michael Baxter

Bold claim

Health tech and bio tech will, in my opinion, create some of the most extraordinary share success stories ever. Technology is developing at such a pace that it is opening up the prospect of cures and treatments to conditions once thought incurable.
The trouble: for every success there will be many, many failures.

An investor in this space could enjoy riches, but for this to happen they will need some of the following:

  • An awful lot of luck
  • Considerable research
  • Diversification

Physiomics Rational Therapeutics

Physiomics is into health tech. It was founded at the beginning of the century, listed on the stock market (AIM) in the middle of the last decade and in the last few days the share price has gone ballistic.

The surge has been down to a deal struck with Merck, following the completion of a trial and the signing of a service agreement. In short, Merck, in its infinite wisdom, decided that the Physiomics technology is looking promising, catapulting the company from the realm of ‘maybe’ to ‘quite possibly.’

The technology

The company’s flag ship technology relates to its virtual tumour product.

The treatment of cancer is complex, and many different drugs are used in combination. We know that the specifics of the combination are key, that the order in which the different drugs are applied matters, and the timing of this combination is crucial, some combinations are more effective if the time lag between different drugs is of a certain length.

Up to now, ascertaining the ideal combination and indeed permutation of an oncology treatment is subjected to animal testing.

And that’s where the Physiomics technology enters the equation. It is designed to cut down the process of identifying this optimal combination, removing, or at least greatly reducing, the need for animal testing, saving time and money.

At heart of the Physiomics is a mathematical algorithm and computer technology.

Its technology would have been impossible pre-computers, I suspect that advances in computers in recent years have transformed the technology. I note, from the career section of the company’s web site, that computer engineers are among the people it hires.

Share price

Before the company revealed its contract with Merck, shares were trading at less than a penny, then surged to 17p within a day or so, and as I write are at 8p.

If you are a long-term investor in the company, congratulations, if you bought when shares were at 17p, it seems I might have to offer commiserations.

Size and bigger fish

I note that the deal with Merck is expected to be worth a minimum of $500,000. So, it is not exactly big beer.
It does not strike me that Physiomics has the potential to become a future behemoth.

That’s the big difference between health tech and tech. We know that techs can go from start-up to a billion-dollar company in a matter of a few years, a health tech company’s best prospects seem to lie with future deals with one of the big pharmaceutical companies.

If you really know what you are doing, investing in companies like Physiomics may pay off. But I am guessing few people are more knowledgeable than the men and women who run the big pharmaceuticals. And they are also looking at the likes of Physiomics.

There is massive opportunity in health tech, but if you want diversification and a safer strategy, the bigger pharmaceuticals may be the answer.

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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