The inaugural Future of Healthcare Investor Forum took place on Thursday, January 29th at the London Stock Exchange. LSE and MedCity acted as hosts with BIA and One Nucleus as industry partners and sponsorship from J.P. Morgan, Numis and Citigate Dewe Rogerson. We were delighted to welcome more than 100 attendees spanning the public and private life science corporate field, life science focused venture capital firms, UK and US public market investors and representatives of the media.
The key takeaways from the event were that the sector faces exciting developments in science and innovation, and in the UK with our integrated health system and vibrant capital market we can provide a better platform for these companies to thrive here. A number of UK-listed life science companies demonstrated how the UK market had provided them with a platform to grow their businesses by accessing UK and US investors and how they had rewarded that faith with strong performance. The private companies presented the varied opportunities in the sector being exploited by companies in the UK, some of which will be exciting listed companies in medium term. Continuing access to capital will be key both in the private sphere and in the public market. Finally, we have barely scratched the surface when it comes to the trends that we determine the future of healthcare: health data, digital health and diagnostics. There is no doubt that dynamic, innovative and exciting companies will emerge to exploit these trends.
Cathrin Petty of J.P. Morgan kicked off the event and explained how the equity pipeline for the life sciences sector remains strong, European life science companies have been able to attract US shareholders in number (30-40% of the shareholder base of European biotechs is US-based), there are a number of supportive domestic investors in UK life sciences but we need more of this crossover capital that supports companies’ growth from the pre-IPO to post-IPO phase.
We then heard from two prominent politicians: Kit Malthouse, Deputy Mayor of London for Business and Enterprise, who outlined how MedCity was created to capitalise on the world class research and innovation within the Oxford – Cambridge – London triangle and also enhance the visibility of these opportunities so that capital flows to those that need it.
George Freeman MP, the World’s first Minister for Life Sciences, noted how the UK’s integrated health systems offers huge opportunities in the realm of personalised and stratified medicine and the opportunity to innovate at scale. The Government sees the life science industry as strategic and is encouraged by the resurgence in life science investment and the restoration of investor confidence in the UK.
AstraZeneca’s Head of Innovative Medicines & Early Development, Mene Pangalos, outlined how the UK is a great base for life sciences and how AstraZeneca contributes to the UK economy. He outlined AZ’s core focus on developing life changing medicines in its three core areas: CV-Metabolism, Oncology and Respiratory, Inflammation and Autoimmunity. He has also stressed how important collaboration with the academic community is in making these breakthroughs and how the Cambridge Biomedical Campus will cluster together a powerful array of academic, non-profit research, public and corporate institutions with a wide range of medical capabilities. He believes that great science is redefining the future of healthcare, especially in the areas of immunotherapy, RNA research, genome editing, personalised medicine, cell technology and technology-enabled intelligent medicine.
Peter George, CEO of Clinigen, outlined the company’s impressive rise from the acquisition of Foscavir and the subsequent impressive growth in sales of that drug and Clinigen’s aim objective to a global leader in clinical trials supply and global access programs whilst expanding its speciality pharma portfolio. He reiterated that AIM is a positive home for healthcare and life science companies and that he has been able to access a supportive, long term investor base, many of whom invested at IPO in late 2012 and have enjoyed more than a 200% increase in the share price since that time.
We then showcased three exciting companies – differentiated in that they are active in different markets and are different stages of development. John Milad, CEO of Quanta Fluid Solutions, explaining how the imminent commercial launch of their portable, easy to use dialysis machine will disrupt the huge dialysis market, at $75bn one of the largest healthcare markets globally.
Eliot Forster of Immunocore demonstrated how their proprietary ImmTAC drugs can harness the power of the immune system to fight cancer – one of the hottest areas in biotechnology right now. The exciting prospects for Immunocore’s programmes – the most advanced of which is in Phase 2 clinical trials – has been validated through collaboration agreements with significant upfront and milestone payments signed with the likes of Glaxo SmithKline, Genentech, AstraZeneca and, most recently, the co-development, co-promotion collaboration with Lilly.
Acacia Pharma’s CEO Julian Gilbert’s punchy delivery focused our attention on the company’s supportive care pipeline, which has been generated by repurposing marketed drugs for new differentiated indications. The company’s commercial approach to product development and positioning was exemplified with its most advanced candidate addressing Post-Operative Nausea and Vomiting likely to be the subject of a New Drug Application to the FDA in 2016.
Rolf Soderstrom, CFO of BTG, detailed the company’s unusual history right back to its origins as a government entity focused on research commercialisation founded in 1948. BTG did not change its focus to life sciences until 2005. The company has grown from a £123m market cap business in 2004 to a £3bn business today which has strong diversified revenue streams in interventional medicine and speciality pharma.
We then heard from a further four private companies: Christian Groendahl of Kymab assured us that we would want to “go home and tell our spouses about the most amazing company” we saw present today. This spin-out of the Sanger Institute boasts an “industry-beating technology in human monoclonal antibody R&D” which will lead to leading projects in immuno-oncology and immunology. The company has already raised $70m from the Wellcome Trust and Gates Foundation and has a long-term revenue-generating deal with Novo Nordisk. It expects to take some of its pipeline into clinical stage trials in 2016.
Genomics England is a company founded by the UK Government in 2013, CEO Paul Jones explained how it aims to integrate genomic medicine practice into the NHS and promote private sector investment in genomics. Collecting and analysing genetic, health and clinic data will offer new opportunities to create value.
Continuing on the genomics theme, Jim McDonald, CFO of Oxford Nanopore outlined how its devices could radically shake up the genetic sequencing market. He held up a sequencer smaller than a smartphone which can be offered at much lower cost than the devices currently on the market and also has the ability to read longer sequences than the existing market leading technology and therefore making the reconstitution of the entire genetic sequence much easier. This MinION device is currently on trial with researchers around the world.
In the final presentation before lunch, Clive Dix of Convergence Pharma outlined how his plans for a likely London IPO for his company which developed experimental products for neuropathic pain were superseded by an offer by Biogen, which resulted in Convergence being acquired for a value of up to $675m including $200m upfront.
Post-lunch, we heard from Steve Harris, CEO of Circassia. Circassia was able to IPO on the Main Market in London in what was the largest biotech IPO globally in 2014 in terms of proceeds raised. Steve outlined how Circassia’s wealth of trial data combined with the huge market opportunity in the allergy field proved an attractive proposition for investors. Despite initial advice to list in the US, Circassia found UK investors supportive in pre-transaction soundings and they were also able to secure significant US investor participation with a London listing.
Kym Denny of Retroscreen Virology gave the final corporate presentation of the day, Retroscreen represents one of a number of revenue-generating drug development and discovery services companies in the UK which seek to remove cost and waste and accelerate the progress and efficacy of these development activities for their biotech and pharma clients. Retroscreen’s share price has increased more than 230% since its IPO on AIM in 2012 and the company has been able to return twice to the market since IPO to raise further capital.
The afternoon panel focused heavily on access to capital for UK life science companies, Dan Mahony of Polar Capital pointed to the markedly different risk profiles offered by companies in the sector and the fact that there is much more to the sector than exciting but pre-revenue biotechs and that companies need to be careful not to access the public markets too early. Harmesh Suniara of Henderson Volantis pointed to the specialist investors present in the UK market today alongside which generalists feel increasingly comfortable to invest. Charles Weston of Numis point to the strong base of technology transfer companies listed in the UK market which enable generalist investors exposure to exciting areas of life science but also enable investors to diversify risk. Debbie Harland of SROne stressed how patient long-term capital is the key to being successful when investing in this sector and the reasoning behind the evergreen nature of her fund. Moderator Steve Bates of BIA pointed out that UK companies can access US investors on IPO through a London listing and that it was vital to keep companies here so UK economy and society benefits from their innovation. Panellists agreed that increased access to crossover capital from investors pre-IPO that would be willing to support an IPO in future was important for the development of the sector in the UK.
Andy Richards, the driving force behind a number of successful life science businesses, framed his thoughts about the next 20 years in healthcare by looking back at where we were 20 years ago. For him, it was remarkable how many of today’s life science titans were struggling in the past and how their management needed the vision to change strategy at the right time and also the access to capital to execute. He surveyed his contacts within the industry and the feedback he received would be that healthcare trends for the next 20 years will be dominated by health data, digital health and diagnostics. These shifts will open up a multi-trillion dollar opportunity in the US alone but the irony is that there are relatively few listed companies globally who are well positioned to exploit these trends. Perhaps the healthcare titans of the next generation haven’t been founded yet.
Where do we go from here? Well, we hope that this event becomes a fixture of the financial calendar. The place where life science corporates, venture capital firms and public market investors to discuss developments in the sector and increase awareness about what an exciting opportunity lies ahead. As one tweet from an attendee read on Twitter with a reference to JPMorgan’s Annual Healthcare Conference in San Francisco, “perhaps Paternoster Square = Union Square”.