Our latest BIA member webinar took place earlier this month, focussing on how to raise capital while retaining control. BIA CEO Steve Bates was joined by three key biotech CEO’s who provided an overview of their experience: Darrin Disley detailed how Horizon Discovery was able to bring in different types of capital at different stages of the business; Harren Jhoti covered the potential of mergers and acquisitions following his experience at Astex Pharmaceuticals; and Neil Murray spoke about the evolution of Redx Pharma and their collaboration with the NHS. Read on to find out more…

The BIA’s recently published report, Money, momentum and maturity, provides an overview of the current financing environment in UK biotech. The report details encouraging trends in follow-on funding, venture capital activity, the strength of the R&D pipeline and rate of regulatory approvals which are promising as we look to develop the UK as the third global biotech cluster. Investors’ appetite for venture finance was stronger than ever in 2015 with £489m raised, accounting for over a third of the European total. 2015 also saw an impressive level of follow-on funding raised by biotech companies on the LSE.

With many methods available to raise capital in the industry, each guest speaker on the webinar was invited to tell their own experience, describing the route they took.

First to speak, Dr Darrin Disley of Horizon Discovery outlined his approach to attracting different types of capital at different stages of the business, aligning their funding with the growth and market of the business. Horizon Discovery has utilised a number of different funding options, including angel investors, corporate investment and venture capital. In March 2014, Horizon Discovery completed an IPO on AIM, returning money to their pre-IPO investors. More recently, the company has raised capital through a follow-on on the public markets, money which is now being invested to drive forward the growth of the company.

Taking a different approach, Dr Harren Jhoti of Astex Pharmaceuticals discussed the option of a merger or acquisition as a means to raise capital. In 2011, after dismissing the option of an IPO due to the financial climate, the company underwent a merger with SuperGen – a Nasdaq listed company. The merger represented significant capital in terms of future royalty streams and was also a company building exercise. A few years later, in 2013, Astex was acquired by Japan’s Otsuka.

Discussing the pros and cons of M&A, Harren highlighted the importance of Board composition with regards to retaining control. In the case of a small company being acquired, there is a danger of losing this control and becoming swamped or integrated into a large organisation. For Astex, the company was able to secure assurances that its name would survive the transaction and they would continue to have a significant level of operational independence. As such the company is as a wholly owned subsidiary of Otsuka but runs effectively as a small biotech company.

Finally, Dr Neil Murray of Redx Pharma detailed the benefits and challenges of raising capital through high net worth investors, the company’s primary source of capital up until its IPO last year. When dealing with this type of investment, Neil highlighted the importance of ensuring you provide enough feedback to the investors to showcase the company’s development – nothing succeeds like delivery.

Neil also spoke about the evolution of Redx Pharma and their opportunistic collaboration with the NHS, which helped to bring in just under £6M of funding.

The webinar finished with a Q&A for each of our speakers, with Steve Bates asking what people should be thinking about in the current climate. Each panellist agreed that people will continue to invest in good ideas, whatever the environment. There’s money to be had in the sector and companies should continue to reach for it!

For more details and to hear the Q&A, watch the webinar below.