Welcome to the inaugural City and Finance update. Each month we plan to: introduce an investor, explain a piece of jargon you may have heard, discuss an interesting deal and highlight key City and financial news that will impact the BIA membership.

In this update we cover the Chancellor promising more money into venture funding and IP Group and Touchstone Innovations flirting over a takeover. Plus, we explain what MiFID II means for you, Horizon Discovery’s acquisition of Dharmacon is deal of the month, and our first investor profile is on one of the most important investors in the UK’s life sciences sector – Woodford Asset Management.

IP Group/Touchstone Innovations – the impact on UK life sciences

On 23rd May, IP Group announced a 2.149 IP Group shares for 1 Touchstone Innovations offer. This equated to 307p offer for Touchstone Innovations and a 320p cap.

Both businesses are major UK-listed IP commercialisation players, investing in a large number of university spin-outs and other early-stage high-tech businesses. Touchstone Innovations rebuffed and continues to rebuff IP Group, but with around 90% of shareholders minded to agree to the deal, Touchstone Innovations independence may be on shaky ground. 

What happens next?

The combination of the two businesses would give a £1.49bn IP commercialisation business on the UK market. The vast majority of the investments in the two businesses are based in the UK and include 50+ life sciences businesses, roughly half the portfolio.

Touchstone Innovations is vigorously defending itself with a number of chairman’s letters and comments, with the latest rejection on 18th July of the slightly improved 2.2178 IP share for 1 Touchstone Innovations share offer. This valued each Touchstone share at the time at 304p (with a 330p cap). Touchstone’s management argues that the offer undervalues the business and that as of 30th June their NAV (Net Asset Value) was £502m or 312p per share. In addition, management has voiced concerns around employee/investee company relationships.

What does it mean for UK biotech?

The deal has both pros and cons for the sector. On the negative side, two businesses with two different approaches had offered UK biotech more investor options and helped make the IP commercialisation space in the UK a viable sub-sector, attracting overseas businesses such as Puretech. However, on the plus side, there may be economies of scale in a combined business, and a larger business may be better placed to follow-on initial investments to companies scaling up their activities.

If this deal does take place, there would certainly be room in the UK market for an emerging management team (or even for the existing Touchstone management) to launch their own fund.

British Business Bank to replace EIF money

The Chancellor has promised to replace some of the monies the UK will lose from the European Investment Fund when the UK exits the EU. 

The European Investment Fund invests in venture funds, which in turn invest in early stage and SME European businesses. After the UK exits the EU, UK venture funds are unlikely to have access to EIF monies. This could be a significant blow for UK VCs; the EIF currently has over €20bn invested in 351 venture funds and the UK’s biotech industry relies heavily on venture capital investment; £681m venture capital funding was raised in 2016 alone.

The story behind the story

At the Chancellor’s annual Mansion House speech in late June, Philip Hammond said that the British Business Bank (BBB) “will extend the limits in its current venture capital investment programme … As part of this, the BBB will, if necessary, be able to bring forward some of the £400m additional investment that the Chancellor announced at Autumn Statement 2016. We estimate that the short-term additional demand for the extended programme could be up to £80m, unlocking up to £320m of total investment into funds in the coming months.”

The EIF recently committed one of its largest investments in life sciences to date in the Medicxi Growth 1 (MG1), a new US$300m fund that will focus on growth-stage companies in European life sciences. Other investors in MG1 include Novartis and Verily (part of Google’s Alphabet).

What does this mean for UK biotech?

The UK’s biotech industry relies heavily on venture capital investment to complete early stage clinical programmes. But, with the loss of the EIF monies, a potentially smaller pot of money may focus only on those companies with a quicker return on investment, leaving biotech businesses, with their longer time frames and higher risk profiles, worse off. Public money invested through the BBB could offset some of the likely shrinkage in the pool of capital available to invest in these riskier long-term businesses.

Jargon of the Month: MIFID II

MiFID II (Markets in Financial Instruments Directive) is perhaps the city’s most soporific acronym against tough competition. But it’s important. It’s a set of new regulations to be implemented in early 2018 and it will have a huge impact on the UK’s investment industry. Of interest here is that the regulations require “research” on companies and their shares to be paid for directly by fund managers as opposed to being “bundled” into other services (such as trading). So, will UK Biotech need to pay more for investment research?

What could happen?

These are European regulations but the investment industry expects to abide by them, even with the UK exiting the EU, since this will allow UK banks and fund managers to work in the EU too. So what impact will they have? There are a number of possible scenarios:

  1. Fund managers will pick a limited number of investment banks from which to obtain their research. There is likely to be consolidation in research analysts and so less diversity of opinion in the market.
  2. Investment banks may choose to specialise in either research or trade execution. While some buy-siders believe this would improve the quality of execution service they receive, others warn that it could drive up the price of research, which will put pressure in particular on smaller investment managers.

You can find out more in the Consilium and BIA briefing.

What does this mean for UK biotech?

There are likely to be fewer analysts covering a growing number of stocks. Smaller life sciences businesses, perhaps covered by a single in-house broker (bank), may struggle to attract the attention of independent research analysts and could have to turn to expensive non-independent paid-for research. Since many are sceptical about the objectivity of paid-for coverage smaller companies may struggle to get their investment case heard in the market.

Deal of the Month

On 19th July, Horizon Discovery announced an US$85 million (£65 million) acquisition of GE Healthcare Dharmacon, which comprised both cash and shares, and a placing (fund raising) of £80 million. This gives Horizon Discovery a global brand in RNAi and gene expression technology.  In addition, it provides access for Horizon’s products on Dharmacon’s eCommerce platform and established global distribution channels. Horizon Discovery expects a return on invested capital of 10% by 2020. The remaining money will be used to accelerate the existing Horizon Discovery business. The shares reacted positively to the news.

Introducing the investor

Woodford Investment Management was established in 2014 by Neil Woodford – one of the UK’s most well-known fund managers – after he had spent many years at Invesco.

The investment team comprises three experienced fund managers and two specialist analysts: Stephen Lamacraft focuses on the FTSE 350 companies and other mature international businesses; Saku Saha and Lucinda Crabtree cover earlier-stage investment opportunities, with a particular focus on the healthcare industry; and Paul Lamacraft and Harry Raikes cover earlier-stage investment opportunities but mainly in the technology and industrial sectors. There are three funds:

  • The CF Woodford Equity Income Fund, the first fund offered by Woodford Investment Management. It aims to offer investors capital growth and a growing income stream, paid quarterly. As of 31st May, it was valued at £10.15bn with a historic yield of 3%. Healthcare is c. 29% of the fund, well ahead of the benchmark’s 9%.
  • The Woodford Patient Capital Trust. It invests in a mix of disruptive early-stage companies, along with some of Woodford’s high conviction mid and large capitalisation ideas. As of 31st May, it had £828m in assets. Healthcare accounts for 67% of the fund with financials at 32% and the final 1% made up of tech, industrials, telecoms and consumer goods.
  • The CF Woodford Income Focus Fund: a fund focused on listed shares, offering a higher level of regular and sustainable income (at an expected 5% pa). The fund is invested in quoted stock, mainly in the UK, though it has no geographic constraints. It currently has 13% of the fund invested in healthcare, well ahead of the benchmark of 9%. 

This communication should not be regarded as investment research and does not constitute any recommendations to buy or sell shares.

The second round of Brexit negotiations took place last week in Brussels, with not much to report on in terms of progress made. The next round of talks begins at the end of August and we will keep you updated on any developments affecting the industry. For those of you who missed our Brexit webinar last week, you can catch up here.

Here in the UK, there remains much new activity as we head into the summer.

I am delighted to announce that the BIA along with a group of bioscience companies has established the BIA Rare Disease Industry Group (RDIG), which aims to develop recommendations that can address the challenge of patient access to treatments for rare and very rare conditions. Better access to treatment for people living with rare diseases has been something the BIA has advocated for many years, so I am pleased that we are able to build upon our work through this new group. You can find out more on our website here.

Another sector announcement came from One Nucleus last week who announced that its Chief Executive Harriet Fear, is moving on to become Chief Consulting Officer at MAP BioPharma after eight years in her current position. The organisation’s current Director of Business Development, Tony Jones is to become the new Chief Executive from 18th August. I wish Harriet the very best in her new role and look forward to working with Tony and One Nucleus through the United Life Sciences partnership.

Another news story you will no doubt have seen is that the ABPI is seeking a judicial review of new processes to evaluate the cost-effectiveness of medicines. This has attracted a fair amount of public attention and the BIA has therefore had to clarify that it is not party to this legal action. Ensuring that NHS patients continue to have access to innovative medicines and treatments is clearly an important objective. However, it is important that this action does not impact or delay broader industry engagement with the UK government at a time of significant external change. We will continue to communicate with the ABPI on this matter and its wider implications as the situation evolves.

As you will be aware, we have been working throughout the year with Alzheimer’s Research UK, our charity partner of the year 2017. We worked with the charity on our Celebrating UK Bioscience campaign that looked at how the Dementia Discovery Fund, launched in 2015 by Alzheimer’s Research UK, the Department of Health and global pharmaceutical companies, supported BIA member Gen2 Neuroscience in its work to tackle dementia. You can view the campaign here. We are now beginning the search for our charity of the year for 2018. You can find further information here.

Finally, before you go away for the summer, take a look at our upcoming events that we’re offering early bird discounted rates for. The UK Bioscience Forum is taking place on 12 October in London, and the Annual bioProcessUK Conference will be held in Cardiff on 29-30 November. You can book your place for the Forum here (early bird rates end on Monday 31st July) and for bioProcess here.

When it takes an average of 17 years to develop an idea into a publicly available medical product, how can medical research charities show the difference they make?

This animation explains how charity-funded research can have an impact in one or more of five key areas: generating new knowledge, translating ideas into new products and services, influencing government policy, developing researchers, stimulating further funding and partnerships.

To find out more take a look at ‘Making a difference: Impact report 2017‘.

We’ve pulled together the best social media quotes, stats and comments from the BIA/MHRA conference which took place in London on Friday 14th July. Check out the event’s highlights here. #biamhraconference


Susie Middlemiss from Slaughter and May tells us about the latest developments in the creation of the Unified Patent Court and Unitary Patent system

The past few weeks have seen two significant developments in the process for setting up the Unified Patent Court (UPC). The UPC is a new litigation system established to enforce a new form of patent – the Unitary Patent (UP) – which will provide patentees with a single patent right enforceable across Europe. Before the new system can begin to operate, ratification of the UCP Agreement by the UK and Germany is required.

On Monday 26 June, the UK Parliament was presented with secondary legislation which is the final legislative step in the UK’s ratification process and will pave the way for the UK Government to formally ratify the Agreement. This step would appear to ease uncertainties which had developed following the Brexit referendum result and the General Election as to whether the UK would ratify the UPCA.

Meanwhile, the Chairman of the UPC Preparatory Committee confirmed in a statement that the opening of the UPC is likely to be delayed until early to mid-2018. This is significantly later than the original plan of having the court operational from December 2017. The delay is due to problems with ratification not just in the UK but also in Germany, where ratification has been postponed pending a judgment of the German Constitutional Court. There is little detail so far on the substance of this claim or the probability of its success.

Despite the delays and uncertainties, the current expectation is nevertheless that the UPC will come into operation within the next year and BIA Members should make preparations accordingly. Members should be aware that European patents and pending European patent applications will automatically be under the competence of the UPC unless an opt-out is registered by the patent owner. There will be a ‘sunrise period’ of at least three months prior to the opening of the UPC in which patent owners can register their opt-outs. Opting-out will protect the patent owner from an attack on their patent which could lead to it being lost across Europe. Whether the benefits outweigh the costs is likely to vary depending on the nature of each individual patent.

Patent owners should also be aware of the potential risk that the UK may leave the jurisdiction of the UPC following Brexit. The latest delays reduce the time available for when the UK could join pre-Brexit and could ultimately make it difficult for the UK to join which could have a knock-on effect on the viability of the system as a whole.

BIA members should seek advice on the best option for them. The BIA has also updated its guidance document to reflect the latest developments.


July is proving a busy month for the industry so far. Last week, the BIA was one of the signatories of an industry letter from UK and European bioscience trade bodies (AESGP, EFPIA, EuropaBio, Medicines for Europe, ABPI, BGMA, BIA and PAGB) to David Davis, UK Brexit Secretary and Michel Barnier, Chief EU Negotiator. The letter highlighted the importance of securing ongoing co-operation between the UK and the EU on medicines post-Brexit. In the letter, we argued that authorisations to market medicines should continue to apply for the sale of medicines in the UK and Europe following the UK’s departure from the EU. You can read more here (you will need a subscription to access the article). The full letter can be found on our website here. Our next Brexit Briefing Webinar is taking place on 19 July. You can register your place here.

We rounded off the week with the BIA/MHRA conference on Friday where it was great to see so many of you. Delegates heard from an array of expert speakers from across the industry on issues such as the Accelerated Access Review, personalised medicines and Brexit. Simon Stevens, Chief Executive Officer, NHS England opened the day and discussed taking medicines through regulatory approval, health technology assessment and faster adoption of innovative healthcare across the NHS for the benefit of patients. He credited the BIA as ‘the UKs thoughtful and impactful life science trade association’ and emphasised that the NHS is keen to work with industry to ensure patients get access to innovative treatments and outlined the challenges that the service faces in uptake of innovation.

Lord O’Shaughnessy, Parliamentary Under Secretary of State for Health, highlighted the government’s commitment to support and promote UK life sciences throughout the Brexit negotiations, outlining three key principles that must underpin any future relationship with the EU: first, patients must never be disadvantaged; second, the UK will continue to play a leading role promoting and ensuring public health – both in Europe and around the world; and third, industry must be able to get their products into the UK market as quickly and simply as possible, with the UK and Europe at the forefront of medical innovation.

The highlight of the day was Lord O’Shaughnessy’s announcement during his keynote address that innovative UK firms will benefit from a new package of support worth up to £86 million to help them develop real world medical breakthroughs that will help patients across the NHS.

These new building blocks for the UK life science innovation ecosystem will help UK small companies get their innovations into the NHS more quickly to benefit patients – something the BIA has long campaigned for. It will make the UK a more attractive location for starting and scaling life science businesses. Enabling smaller companies to access the Early Access to Medicines Scheme will be particularly helpful for small UK biotech companies. You can read more about Lord O’Shaughnessy’s keynote here and the government’s press release on the funding announcement here.

Hot off the press, we have just published our latest quarterly report ‘Influencing and shaping our sector’ which gives a round up of the work that the BIA has done for the sector in the second quarter of 2107. The report includes details of our work around Brexit, the government’s industrial strategy and raising the profile of the industry. You can read the full report here.

As the summer holidays approach, I’m sure many of you will be going away on holiday and I’d like to wish you a relaxing summer break. Looking forward towards the autumn, we have the UK Bioscience Forum on 12 October in London, and the Annual bioProcessUK Conference that will be held in Cardiff on 29-30 November. You can take advantage of early bird rates for the Forum here and for bioProcess here.

Grants can be an attractive option as they don’t always require repayments or equity stakes in return for funding. The eighth in our series of ‘Essential business tips’ looks at how to find the right grant for your business.

Tip 1 – Research your grant options
Tip 2 – Make sure you are eligible
Tip 3 – Prepare fully before applying
Tip 4 – Explore possible alternatives to grants

With the right combination of research, planning and determination, there’s every chance you’ll find a grant or suitable alternative to help you develop your business idea or grow your company.


Last Thursday, 40 senior representatives from the UK’s life science industry convened in London for the BIA’s seventeenth annual Parliament Day – a key day of engagement between BIA members and policymakers in Westminster and Whitehall.

Taking place less than a month after the snap general election and just two weeks after Brexit negotiations began, Parliament Day 2017 was an excellent opportunity for our members to engage with key figures from the new government and parliament and to make them aware of the sector’s priorities for Brexit and the upcoming Industrial Strategy and Life Sciences sector deal.

BIA’s report, Building something great: UK’s Global Bioscience Cluster 2016, published earlier this year, shows that financing of UK biotech remains strong. The UK retained its leading position in European biotech funding last year and has the strongest pipeline in Europe for future drug development. However, for the UK to become the third global bioscience cluster, closing the gap on Boston and San Francisco, this momentum must be maintained despite the current economic and political uncertainty. We provided each of the policymakers we met on Thursday with a briefing outlining how this could be achieved:

  • Prioritise public health and protect the sector in the ongoing Brexit negotiations. The BIA is seeking:
    • Regulatory cooperation with the EMA
    • Frictionless trade in goods and services
    • A quick, simple, consistent and cheap immigration system
    • Reassurances on EU funding
  • Deliver an effective Industrial Strategy and Life Sciences Industrial Strategy which supports SMEs
  • Achieve the ambitions of the Accelerated Access Review

Parliament Day 2

As well as attending various meetings throughout the day, our members also enjoyed a canapé lunch on the House of Lords Terrace, kindly hosted by Lord Willets.

Our thanks also go to specialist recruitment firm Ellwood Atfield, who very generously allowed us to use their gallery space, appropriately decorated with election paraphernalia, as our base for the day – an excellent location from which to access Parliament and Whitehall.

Given the unexpected outcome of the snap election, resulting in a Conservative minority government, the opportunity Parliament Day provides for BIA members to engage with backbench and opposition MPs, as well representatives from the Government, has renewed value. In total, our members met with 36 policymakers in 22 meetings on Thursday, strengthening the BIA’s relationship with key contacts across the political spectrum – a full list is provided below. The BIA will now follow-up with these contacts to make sure they are aware of the value of UK life sciences and are actively supporting the sector.

Civil Servants

Dr Ian Campbell Director – Health and Life Sciences Innovate UK
Dr Cheryl Case Deputy Director, International Team Department for Environment, Food & Rural Affairs
Kenny Chigbo Senior Policy Advisor: Science Workforce Department for Business, Energy and Industrial Strategy
Nicola Commander Senior Policy Adviser Office for Life Sciences
Tasha Niesen Senior Policy Manager Office for Life Sciences
Sir Andrew Dillon Chief Executive NICE
Ruth Froggatt R&D Tax Credits Policy Lead HMRC
Dr Hilary Glidden Chief Commercial Officer Life Sciences Organisation, Department for International Trade
Professor Sir Malcolm Grant Chairman NHS England
David Harris Patent Box Policy Lead HMRC
Lord Philip Hunt of Kings Heath Opposition Spokesperson for Health Labour Party
Jane James Patent Box Technical Lead HMRC
Holly Kelley-Weil Head of International Ecosystems Department for Environment, Food & Rural Affairs
Dr Zahid Latif Innovation and Supply Chain Specialist Life Sciences Organisation, Department for International Trade
Saira Madden Head of Investment Life Sciences Organisation, Department for International Trade
Dr Nicole Mather Director Office for Life Sciences
Wyndham North Head of Enterprise Investment HM Treasury
Professor Sir John Savill Chief Executive Medical Research Council
Dr Tony Soteriou Head of Research Infrastructure and Growth Department of Health
Joseph Spencer Policy Adviser: Enterprise Investment HM Treasury
Matthew Speers Chief Executive Officer Life Sciences Organisation, Department for International Trade
Dr Louise Wood Director of Science, Research & Evidence Department of Health
Tony Young National Clinical Director NHS England


Hilary Benn MP Member for Leeds Central Labour Party
Tom Brake MP Member for Carshalton and Wallington and party spokesperson on Exiting the EU and International Trade Liberal Democrat Party
Jo Churchill MP Member for Bury St Edmunds

And PPS to Jeremy Hunt MP


Conservative Party
Anneliese Dodds MP Member for Oxford East and Shadow Treasury Minister


Labour Party
George Freeman MP Member for Mid-Norfolk Conservative Party
Chris Green MP Member for Bolton West Conservative Party
Kit Malthouse MP Member for North West Hampshire Conservative Party
Rt Hon John Spellar MP Member for Warley Labour Party
Dr Philippa Whitford MP Member for Central Ayrshire and party spokesperson for health Scottish National Party


Lord Sharkey Chair of Association of Medical Research Charities
Lord Hunt o/f Kings Heath Shadow spokesperson for health
Lord Haskel Deputy speaker
Lord Willetts Chief Executive of Resolution Foundation and BIA board member

Parliament Day 3

Parliament Day 4

Parliament Day 5

Parliament Day 7

Parliament Day 3

Last week we saw the work the BIA has put into advocacy with partners around Brexit starting to pay off with some fantastic news for our sector as for the first time UK government ministers championed continued collaboration with the EU on medicine regulation post-Brexit. Signed by Health Secretary Jeremy Hunt and Business Secretary Greg Clark, the letter to the FT highlighted that in order to secure industry investment “the UK would like to find a way to continue to collaborate with the EU”. You can read their full statement on the BIA website here.

This is a very positive step for the industry and I would like to thank all members for their continuing support as we navigate Brexit. The UK Government publicly communicating its full commitment “to continuing the close working relationship we enjoy with our European partners” is good news for patients, industry and investors in the UK and EU. Industry has responded with our own letter to the FT signed by AstraZeneca, European Medicines Group, GSK, Pfizer, Eisai Co, ABPI and the BIA. You can read the letter here. For the latest news on Brexit you can join our next Brexit briefing webinar will take place on 19th July. You can sign up here.

There will be more discussion and, I hope developments on the future of medicines regulation this week, at our joint BIA/MHRA Conference on Friday titled “Innovation in Life Sciences in a Changing and Dynamic Environment”.

Taking place this Friday 14th July, the event will feature keynotes from the UK government minister responsible for the MHRA Lord O’Shaughnessy and NHS Chief Executive Simon Stevens as well as senior industry experts and leading speakers from the MHRA. Last chance to join what is proving to be an extremely popular and timely event with over 250 industry peers and colleagues. Register here. This is the conference of the year on one of the hottest topics of this Brexit year in our sector.  I hope to see you there.

Another success last week was our annual Parliament Day where the BIA and our members had valuable meetings with MPs and officials across government. The day offers a fantastic opportunity for ministers, lords and civil servants to get hear first-hand the key issues for our industry and to build greater awareness of the UK biotech ecosystem. Lord Willetts also hosted us for a lunch in the House of Lords. Following this successful event, it was great to see so many of you at our Summer Reception on Thursday evening. Held at the IET, Savoy Place, the reception provided a great opportunity to unwind, network and enjoy the fantastic views. Many thanks to John Brennan the new Secretary General of EuropaBio, who travelled from Brussels to meet many of you.

As we are still part of the EU, Enterprise Europe Network is holding an event on how to write a successful application for European funding on Thursday 13th July in London. Experts will be available at the event to provide practical advice and support on project ideas and provide guidance to those requiring more investment to undertake market feasibility and technical development projects. You can find out more and register your place here. (On this occasion, I’m also interested to hear from members who are not prioritising this funding route – do drop me an email – has Brexit changed the dial for you? or have EU funding mechanisms not matched your needs? Perhaps you are going in the other direction – these grants are easier to access and more relevant so you are applying for the first time – any feedback would be welcome).

The next round of Brexit negotiations begins next Monday and we will continue to work with partners in the UK and at European level to ensure that the industries concerns remain a priority for the UK negotiating team.

Professor Sir Mark Walport, Chief Executive Designate of UK Research and Innovation, has given a speech outlining the vision, objectives and next steps in development for the organisation.

The speech was introduced by Professor David Cannadine, incoming President of The British Academy, and Jo Johnson MP, Minister of State for Universities, Science, Research and Innovation.

UK Research and Innovation will be formed in April 2018, bringing together the Research Councils, Innovate UK and a new body, Research England. The organisation’s ambition is to be the best research and innovation agency in the world.