London Stock Exchange: Chris Mayo’s view on JP Morgan and the industry at large

In the recently released film ‘The Revenant’ Leo DiCaprio is savaged in grisly (or grizzly) fashion by a bear. Life science executives across the globe had a similar feeling in recent weeks as they faced threat of the onset of a more general bear market and the ensuing (temporary) closure of the IPO market.

Perhaps the tone at industry conferences going forward such as the bellwether JP Morgan Healthcare conference will be more subdued. From an industry perspective, the focus of conversation and meetings at these conferences may increasingly pivot to partnering with industry players rather than pitching investors on the latest capital raise.

The British contingent I have encountered at recent conferences appear to be showing typical resolve perhaps used to a more capital constrained environment in the past but also comforted by the fact that the UK sector has benefited in recent years from an influx of patient capital whose strategy is to take a long view and ignore the short term gyrations of the stock market.

This longer term more upbeat view was also in evidence at the 2nd Future of Healthcare Investor Forum held at the London Stock Exchange a few weeks ago and ably supported by industry partners like One Nucleus, BIA and MedCity. A packed audience of investors and life science industry stakeholders were treated to a broad discussion of life science industry trends with a particular focus on what will be driving investment into the sector. We also heard from a selection of innovative private companies who could in future become standard bearers for the sector on the public markets.

When you consider the recent sizeable private rounds for Inivata and Mission Therapeutics, then it is clear that capital is still flowing into sector. Indeed a key player underlying this investment activity has been Imperial Innovations who themselves raised another £100m in a stock market placing this week.

There are probably two key takeaways from the recent developments in the sector. One, you need to have a plan B when it comes to having strategic financing plan, public market windows open and close without warning but remember, once listed, it is by far the most efficient way to raise equity capital – we saw a substantial rise in life science follow-on offerings from £0.8bn in 2014 to £1.1bn in 2015 and more than 60% of 2014’s UK life science IPO class have already raised follow on capital. Second, you need to take a long term view – go online and take a look at the 5 year index performance charts for the NASDAQ Biotech Index and the FTSE AIM Healthcare Index (+75% over the five years to the end of 2015) – pretty impressive stuff.

We have had more than £2.5bn raised in the UK public markets in the last two years in the sector, representing the best life science issuance environment in over a decade, this capital is now being put to work. I would hope that when we are looking back in 5 years time that we will see that the amount of capital accumulated by UK life science companies in the past few years resulted in stunning innovation and a number of notable successes in the UK public markets.

As for Leo DiCaprio, he survives the bear attack and then what happens to him? I couldn’t tell you, I only saw the trailer but as for the UK life science story probably many twists and turns but as in Hollywood we are hopeful for a happy ending.

Written By Chris Mayo, Primary Markets, London Stock Exchange Group

 The One Nucleus blog is written by individuals and is not necessarily a reflection of the views held by One Nucleus.

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About onenucleus

The One Nucleus blog is written by individuals and is not necessarily a reflection of the views held by One Nucleus.
This entry was posted in February 2016 and tagged , , , , , , . Bookmark the permalink.

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