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Four years after pre-surgery treatment with a novel combination of immune checkpoint inhibitors, nivolumab and relatlimab, 87% of patients with stage III melanoma remained alive, according to new results from a study led by researchers at The University of Texas MD Anderson Cancer Center.

Long-term follow-up data from this Phase II study, published today in the Journal of Clinical Oncology, demonstrate this combination provides long-term benefits to patients when given before and after surgery, and identified unique biomarkers associated with better outcomes and lower chance of recurrence.

Of the 30 patients enrolled on the study, 80% had no recurrence of their cancer after four years. For patients who had a significant response, called a major pathologic response, from treatment when evaluated at the time of surgery, even more remained recurrence free, at 95%.

“If immunotherapy eliminates most of the tumor before surgery, then we have sufficiently trained the immune system for an antitumor response, which minimizes the possibility of recurrence,” said corresponding author Elizabeth Burton, Ph.D., executive director of MD Anderson’s Strategic Research Initiative Development (STRIDE) program. “We are encouraged by these results showing the long-term benefit of this combination and approach for our patients and the opportunity it provides to learn as much as possible about what is driving this response to treatment.”

Stage III melanoma has a high risk of recurrence following surgery, highlighting an opportunity for the addition of pre-surgical, or neoadjuvant, immunotherapy to shrink the tumor and prime the immune system to guard against future recurrences.

Relatlimab is a LAG-3 inhibitor, an immune checkpoint inhibitor that was approved in 2022 in combination with nivolumab by the Food and Drug Administration (FDA) for patients with advanced melanoma based on the Phase II/III RELATIVITY-047 clinical trial, led by Hussein Tawbi, MD, PhD, professor of Melanoma Medical Oncology.

In this Phase II trial, led by Rodabe Amaria, MD, professor of Melanoma Medical Oncology, researchers were first to evaluate this combination in the neoadjuvant setting for earlier stage disease. Initial findings reported this combination was safe and effective in that setting.

Because of the strong association to outcomes with major pathologic response, researchers evaluated biomarkers to better understand the factors associated with treatment response.

They found that patients who had high pre-treatment levels of one biomarker, called TIGIT, or low levels of another biomarker, called B7-H3, had the best chance of remaining recurrence-free, highlighting the potential to use these markers to predict patient responses in the future.

“This study highlights the tremendous impact integrating excellent multi-disciplinary care with team science can have on improving patient outcomes while advancing science and innovation. The neoadjuvant treatment approach allows us to quickly evaluate the clinical impact of a treatment and serves as a springboard for biomarker research.” Burton said. “This is a good starting point for where researchers can look in terms of mechanisms of resistance that could be potential therapeutic targets in the future.”

Going forward, the authors are collaborating with researchers at MD Anderson’s James P. Allison Institute to validate these biomarkers and to use spatial profiling to further understand where they are located and how they can impact the tumor microenvironment.

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A lot has happened at Unilever since Nelson Peltz’s activist hedge fund, Trian Partners, started building a stake in the company three years ago.

The consumer staples giant has since been through two chief executives, sold a bunch of non-core brands and is in the midst of spinning out its ice cream business via an Amsterdam stock market listing later this year.

If one were to look at the bare figures, this activity has yet to feed through into earnings — though this may change when Unilever publishes half-year figures this month. Pre-tax profit stood at €8.6bn (£7.4bn) in December 2021 (the month before Trian’s investment was first revealed by the Financial Times) and three years later it had edged up to €8.9bn. Earnings per share have marginally declined from €2.33 to €2.30 over the same period.

Achieving meaningful change in such big businesses takes time, though, and on the main metric that matters for investors — the share price — there has been progress.

Based on public disclosures of trades, Trian acquired its shares at an average price of 4,044p a share. With the shares now trading 4,488p, the activist is sat on a gain of about 11 per cent in simple price terms, although it will have also made gains through shareholder payouts. According to FactSet, Unilever shares have generated a compound annual return of just shy of 10 per cent since Trian’s stake was divulged.

Peltz has also moved on to fresh battles. He failed to secure a seat on Disney’s board last year, but his fund did win a seat at Rentokil Initial.

The desire to take some cash off the table is therefore understandable, and on July 1 it was revealed that Trian had sold £25.6mn of Unilever shares. That said, this is only a fraction of its overall holding — 579,000 shares equates to less than 2 per cent of its remaining holding of 32.2mn shares.

Trian said the sale was made for “portfolio management purposes”. Peltz “looks forward to continuing to work with the company’s board and management team to create long-term shareholder value”.

It may seem a rather curmudgeonly, and premature, caveat in a week when US AI chip designer Nvidia hit a new record valuation for any listed company ($4tn), to warn that investors cannot assume that star performers will always deliver flawlessly in the future or remain at the top of their industries.

Certainly, investors with a zest for tech are always on the lookout for the next big name, an innovative competitor, changing market conditions and new opportunities. While hugely successful companies such as Apple, Microsoft and Nvidia have had a lasting and transformative effect on the world, they all started life as unknown entities. For the first two decades of its existence, Nvidia focused on improving graphics for computing and video games. 

Britain has a good record in tech and innovation — Arm, Darktrace, Avast, FD Technologies, Wise, Sage and Oxford Nanopore among them, although only the last two retain their primary listing in London — and the market boasts many other quality stories. Raspberry Pi, one of the newest arrivals, makes low-cost, high-performance computing platforms. Among cyber security and fraud detection specialists are NCC and GBG. Others, such as consultancies Bytes Technology, which is Microsoft’s reseller in the UK, Softcat, Iomart, Kainos and Computacenter, offer software and hardware services to businesses and the public sector.

Software businesses include Alfa Financial which sells its asset finance software to carmakers such as Mercedes-Benz, and Cerillion, which supplies specialist billing and relationship management software mostly to telecoms companies globally. Celebrus Technologies specialises in digital identities and data — helping businesses to recognise and understand their customers in a digital world.  

These firms may not command the premiums of the Magnificent Seven and are often punished harshly for the smallest of misses, but returns for patient investors can be excellent. 

BUY: Celebrus Technologies (CLBS)

The software company’s share price has dropped despite a shift towards higher-margin software contracts, writes Arthur Sants.

Celebrus Technologies sells software that allows businesses to track customers’ behaviour on their websites. This is useful for marketing purposes, as it gives businesses insights into how to prompt their customers into spending more. It also helps with fraud protections, as the technology can spot users who are behaving unusually.

It recently announced it has signed two new customers, including a European bank and a US fintech brokerage. The combined contract value of these two is just under $4mn (£2.9mn) and will add $1.1mn in annual recurring revenue (ARR). This brings the group’s ARR to almost $20mn, up from $16.5mn in full-year 2024.

However, last year’s figure was revised down from more than $20mn. This is because Celebrus is now recognising the revenue evenly over whole contracts, rather than front-weighting them. It is always a little concerning when sales numbers are restated, but broker Shore Capital says the changes make the reporting more consistent, and “signal operational maturity and strategic clarity”.

These new contracts were not included in Celebrus’s full-year results, published on the same day. In the year to March, revenue dropped 5 per cent to $38.7mn, but adjusted pre-tax profit increased by 14 per cent to $8.7mn. This growth is due to a shift towards higher-margin software, with the gross profit margin up nine percentage points to 62 per cent.

Since the end of last year, the company’s share price has fallen by 40 per cent. Most of the drop followed a trading update in April, which announced that full-year revenue would be behind expectations due to customers “slowing down” decision-making. However, this means the shares are now trading on a forward price/earnings ratio of 16, down from 24 last year. We think there is more space for margin expansion and, at this more affordable price.

BUY: Jet2 (JET2)

The travel group’s shares have slipped by 8 per cent as a 13 per cent dividend increase and 18 per cent more passengers fail to impress, writes Michael Fahy.

Investors remain nervous about the outlook for Jet2, despite the company continuing to deliver on its targets.

Full-year earnings were in line with forecasts, with the strong sales underpinned by a 13 per cent increase in capacity over the past 12 months, following the opening of new bases at London Luton and Bournemouth. The dividend was increased by 13 per cent, and ongoing share buybacks meant earnings per share came in ahead of analysts’ expectations.

Trading for this year’s peak summer period also remains in line, even with capacity increasing by a further 8 per cent. But the shares still fell by 8 per cent.

One potential area of concern is the fact that some passengers — particularly those on flight-only deals — are leaving bookings until the last minute. This translated into a slightly lower ticket yield per passenger, down 2 per cent year on year to £118.81. Yet the overall number of flight-only passengers increased by 18 per cent to 6.6mn, and the number of package holiday customers (who paid 5 per cent more for their holidays year on year) grew by 8 per cent to just under 6.6mn.

The other concern is whether the growth it has enjoyed in recent years can be maintained — especially given the amount of planes it has on order. It firmed up an order for 36 more Airbus A321 neo aircraft in June last year, meaning it is now committed to taking delivery of 146 owned and nine leased aircraft over the next decade — all of which need to be both filled and paid for.

Admittedly, this is a big step-up from the 127 aircraft flown last summer, and it comes with some sizeable capex commitments — of about £1bn a year from 2027 onwards. But there will also be retirements of older, less efficient aircraft along the way, meaning annual capacity growth will only be about 5 per cent, based on management forecasts, and even then there is a degree of flexibility in terms of timing aircraft deliveries.

Besides, a solid balance sheet suggests these can easily be funded through earnings. Last year, it spent just shy of £400mn on capex as 14 planes were delivered and, even after factoring in a repayment of £653mn of convertible bonds, it still ended the period with positive net cash.

As such, Jet2’s current valuation of eight times FactSet consensus earnings still looks too cheap to us, given its recent performance.

BUY: Begbies Traynor (BEG)

The company reported a surge in cash flows and an eighth successive dividend increase, writes Mark Robinson.

There were no surprises on the release of Begbies Traynor’s full-year figures, which were broadly in line with May’s trading update.

Adjusted profits for the business consultancy and recovery group were 7 per cent to the good at £23.5mn, and there were no undue problems with the transition through to adjusted earnings, judging by the 6 per cent increase in earnings per share to 10.5p. That is set against revenue growth of 12 per cent, two percentage points of which were attributable to acquired assets. A focus on working capital fed through to a 56 per cent rise in free cash flow to £19.4mn, along with the group’s eighth successive dividend increase.

However, management won’t be altogether content with marginal profitability, which was held in check by a faltering corporate finance market. So, while business recovery and advisory margins were flat on the previous year, property advisory services dragged on the group operating margin — down 60 basis points to 16.9 per cent. And yet activity within the property advisory business remains elevated, with 125,180 UK non-residential property transactions, set against 119,270 in the previous year. Begbies attributes this to an improvement in “transaction levels in October 2024 prior to the UK Budget”.

Chancellor Rachel Reeves’ fiscal endeavours could have a pronounced impact on group volumes going forward. Given the scope of its operations, it isn’t always straightforward to determine whether they will prove positive to volumes or otherwise, though it’s worth keeping in mind that it operates a countercyclical business model.

Corporate insolvencies in the period under review were slightly lower than the previous year but “high relative to historical levels”. There are signs that the additional costs levied on businesses in the last Budget are placing strain on already stretched corporate finances. Begbies is well placed to exploit any step-up in activity within its business recovery arm, as it has boosted capacity through organic recruitment and the additions of White Maund and West Advisory.

Canaccord Genuity has increased its adjusted earnings projection to 10.6p a share, rising to 10.9p in full-year 2027.

With “supportive” market conditions, a growing order book and increased scale, group chair Ric Traynor expects revenue to come in “at the upper end of the range of market expectations”. With corporate UK under intensifying pressure and an apparent move up the value chain, we don’t think a forward rating of 11 times adjusted earnings represents an unreasonable asking price, particularly with an implied dividend yield of 4 per cent into the bargain.