I attended a conference in Oxford last week to hear from a range of emerging IT and biotech companies. Most of them had spun out from the University’s various research departments and as well as hearing about some amazing technology, it focused my mind on the challenges faced by early-stage companies. While it’s true that we are still a long way behind the US, the UK is getting a lot better at commercialising research coming out of our world-leading universities.
One recent IPO is seeking to grasp the opportunities in early-stage biotech. Joe Anderson of Arix Bioscience (LON: ARIX) thinks the industry is seeing ‘unprecedented levels of research productivity’. Our greatly improved understanding of disease places biotech in a similar position to where IT was over a decade ago in his view. Arix was formed 18 months ago to ride what should be a wave of profitable innovation if he is right.
The company raised £100 million of new equity at the IPO, making £165 million in total when added to earlier funds. This pool of ‘permanent capital’ means it can take the long view which is often necessary in developing new drugs. However the company has adopted a broad approach towards investment policy. It will focus on life sciences and investment decisions will be driven by the quality of the science; but it intends to invest internationally, across a range of therapeutic categories, and in companies at various stages of development. The plan is to invest the cash over the next 18 months to give around twenty holdings.
Arix’s main attraction at this stage is its people. CEO Anderson has 25 years venture capital experience in the sector, Chairman Jonathan Peacock was CFO at Amgen and Novartis, while the third investment committee member is Sir Chris Evans, the serial biotech entrepreneur. There are six highly qualified specialists on the operating team and a heavyweight group of non-execs on the main board. So there’s plenty of management bandwidth to generate strong deal flow and carry out proper due diligence. In addition there are formal academic and industry relationships giving early access to opportunities. These include strategic partnerships with pharma companies UCB and Takeda, both of whom are Arix shareholders.
So far there are five direct holdings on the company’s balance sheet. When GCI spoke to him Joe Anderson was particularly excited by Autolus, an immuno oncology company spun out of UCL; and Artios, another oncology company which targets the DNA repair mechanism of tumour cells. A later-stage holding is Verona Pharma (AIM: VRP) which has a respiratory product in phase II trials.
Arix complements the likes of Touchstone Innovations (LON: IVO) as a pure life sciences play and looks like an interesting option for investors wanting exposure to this sector.