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Going forward, we will sub-categorise the companies we follow under the theme of the Future of Healthcare in one of the following sub-categories:
Despite companies such as GSK (having divested its consumer health business Haleon) proclaiming its dedication to “preventing and treating disease”, larger pharma companies still tend to be very selective (and not particularly successful) in developing new therapies, and often end up buying in late-stage projects. This can create enormous rewards for the biotech companies that have developed them, but it can be a long wait. And there are few immediate signs of that changing.
Drug development remains time consuming and laborious, despite the claims that Artificial Intelligence (AI) is transforming Research & Development (R&D). There is no way to avoid the need to move from in silico to in vitro then animal then human trials, whilst cash is drained along the way. Licensing deals with large companies can promise very substantial milestones and royalties but offer no assurance that development will proceed and the market will apply a very substantial discount rate to them. We have seen a few encouraging signs with milestone payments being unlocked in a few cases. FDA approval of Casgevy late last year is very positive for Maxcyte’s many strategic platform licences, for example, and C4X Discovery now seems to be well on the way to realising the potential of some of their developments, as does Scancell.
Sentiment in the US should have helped, as the Nasdaq Biotech index rebounded about 10% in Q4, but there was little follow-through and concerns around funding requirements against a background of outflows from AIM-specialist funds (i.e. meaning that there were no natural buyers for new shares) weighed the sector down. Having a “big brother” shareholder (as Scancell and Redx have with Redmile) can be helpful.
Companies across AIM are still generally trading at substantial discounts to the (already heavily discounted) valuations analysts are placing on their portfolios. Companies are being much more careful to conserve funds and to choose which projects to invest in than in previous years. They are seeking to prioritise “business development” (i.e. looking for partners) and we would hope to see some more evidence of consolidation in the sector.
There is huge potential for more sophisticated diagnostic tools to be used to catch disease earlier, and realise substantial savings to health systems, public or private. Many tests – e.g. the UK standard test to predict cardiovascular disease – are simplistic in the extreme. Companies working in this field are using machine learning (which they usually call AI) to crunch large datasets to improve prediction, and polygenic information to try to identify vulnerable patient groups. Interestingly, the ethical concerns on this which were heard a few years ago seem to have become less strident as the obvious health gains have become more obvious. As well as aiding prevention, tests can also be used to determine which patients will benefit from particular therapies.
As with everything in medicine, there are regulatory and bureaucratic hurdles to overcome. In the US, FDA approval is a necessary but not sufficient (as Angle found in 2022), and one whose timing cannot be predicted. Spending on building out marketing when the FDA is dilatory in granting permission can be cripplingly expensive, as Renalytix (now trading at 1% of its post Nasdaq-listing share price high) has found. Having substantial healthcare provider partners – as GENinCode has in Kaiser Permanente – is also not enough in itself. And when the hurdles are overcome, the ramp up of sales becomes a race against cash drain.
Finding affordable routes to market will be vital, and Verici’s deal with Thermo Fisher (who intend to run the Verici tests on their machines) may well be imitated by other companies in the sector.
Routes to market are key in this area- and as Optibiotix found five years ago when they signed up with Holland and Barrett, a large partner with limited commitment can make very little difference. On the other hand, Futura’s partnership with Cooper for Europe (and through them to Boots) seems (we have yet to see hard numbers) to be delivering, and Haleon looks to be a terrific partner for the USA.
Small companies can find themselves being the outsourced and unpaid R&D resources for larger ones. For example, Croda’s relationship with SkinBioTherapeutics for cosmetic use of SBTX’s lysates is very promising but Croda seems to be in no hurry to press on with it.
With mass advertising and the use of influencers and social media, it is easy to see how new consumer health products can grow. The markets are enormous and growing (obesity driving many), but accessing them can be difficult. We continue to keep an eye out for opportunities in this area and look for signs of commercial breakthroughs.
LGB & Co. Limited
Tintagel House, 92 Albert Embankment
London
SE1 7TY
Relationship Manager
Ellana joined LGB in March 2024 as a Relationship Manager for our investing clients. Prior to LGB, Ellana worked at Bellecapital, handling client relationships and supporting the portfolio management team. Ellana graduated with a First-Class in Mathematics from Cardiff University and has a Level 4 Investment Advice Diploma.
Adviser
Simon became an Advisor to the Board of LGB & Co. with a focus on business strategy and initiatives in March 2024. Simon has extensive experience debt capital markets and wealth management. He previously ran the client and then the investment business of Heartwood and became Chief Executive in 2008. He led its well-regarded acquisition by Handelsbanken in 2013. Simon subsequently became NED and Chair of AIM-listed WH Ireland Group PLC. He was also asked to represent the wealth management sector on the FCA Smaller Business Practitioner Panel from 2013-2016.
Finance Manager
Following a degree reading Chemistry at The Queen’s College, Oxford, Antonia trained to become a chartered accountant at a London-based audit firm. She then moved into the tax sector joining EY and completing the chartered tax adviser qualification. She then gained further experience working as a finance director within industry at a family office / hedge fund.
Founder and Chairman
Andrew founded LGB & Co. in 2005 and is the Chairman of the company. He has a particular focus on the development of strategic relationships with corporate clients and business partners. Prior to founding LGB & Co., Andrew was a Managing Director at Citigroup Global Markets, where he was responsible for its fixed-income business with private banks and retail institutions. Earlier in his career Andrew worked at Schroders in London and Tokyo. Andrew graduated from Oxford University with a degree in Modern History. He is a chartered member of the Chartered Institute for Securities & Investment.
Capital Markets Director
Fergus advises corporate clients looking to raise debt and equity capital. He is also responsible for the execution and ongoing management of LGB’s MTN Programmes. Fergus joined LGB in 2019 having started his career at Lloyds Banking Group on the graduate training programme, before moving to the Leveraged Finance division, where he focused on transactions with mid-market corporates and PE firms. Fergus holds an MSc in Petroleum Geology from the University of Aberdeen.
Adviser
Lisa has worked with LGB since 2015 in supporting the on-going cultural and organisational development of the firm, providing advice on strategic people matters. Since 2006, Lisa has been running her own consultancy and executive coaching business, People Possibilities Ltd. Her work is focused on supporting clients at an organisational, team and individual level to enable high performance,improve leadership capability and effect cultural and behavioural change. Previously Lisa has held senior HR leadership positions with Schroders, ABN AMRO and HSBC. Lisa graduated from the University of Birmingham with an honours degree in International Relations & French. She is a Fellow of the Chartered Institute of Personnel and Development (CIPD) and a qualified Executive Coach.
Adviser
Charles has played an important role in developing LGB & Co.’s investment approach by encouraging a focus on investing in businesses with strong IP or know-how with recurring revenue business models that can prosper throughout economic cycles. Charles brings over 30 years’ experience of investing in privately-owned and publicly-listed small and mid-market companies. He is a director of Larpent Newton & Co. and Hygea VCT plc. Charles qualified as a Chartered Accountant at Peat Marwick, now part of KPMG.
Programme size: £25m
Establishment Date: XX 2017
Number of issues: 20
Sector: Financial services
Focus: Loans and leasing
Programme size: £20m
Establishment Date: December 2017
Number of issues: 12
Sector: Marine tracking
Focus: Maritime surveillance and management
Associate
Ben joined LGB in October 2022 as an associate after spending three years as a credit analyst at 9fin, where he produced research on corporates in the European & US High Yield and distressed debt markets.Ben holds an MSc in Investment Management from Bayes Business School (formerly Cass) and is a CFA charter holder.
CEO
Cedric was appointed CEO in July 2022 after a period of 18 months as a COO. Cedric spent 15 years working on the energy and commodities sales and trading desks for global banks (BNP Paribas, BAML and MUFG). He gained extensive international exposure, being based in London and Singapore and covering transactions in all geographic regions. Cedric graduated from Global Executive MBA at INSEAD in 2018 and started working in the capital markets space for growth-stage companies. He is also a director of LGB.
Relationship Manager
Megan joined LGB in January 2021 as a Relationship Manager. She is responsible for all day-to-day transactions with investment clients and oversees the LGB Investments Platform and Deal Hub. Prior to LGB, Megan worked at Puma Investments, a tax-efficient investment provider, in the sales and investor services team. Megan graduated from the University of Bath with a Bachelor of Science degree in Psychology. Megan obtained the CISI Level 4 Diploma in Investment Advice in October 2021.
Investment Director
Ivan is LGB’s Investment Director: he is responsible for developing LGB’s investment proposition in the context of the broader market and economic developments. He regularly meets individual company management teams to seek out and monitor investment opportunities. Ivan has served as a senior adviser to the Equity Division of Société Générale, and was previously Managing Director in charge of equity sales for them in London. Earlier in his career, Ivan worked at Morgan Stanley, Lazards and Schroders. He has degrees in history from Cambridge University & London University, and an MBA from Cass Business School.
Managing Director
Simone is responsible for LGB & Co.’s business with investing clients, who include institutional investors, wealth managers and sophisticated private investors. Simone’s team provides access to a range of compelling investment opportunities with a particular emphasis on proprietary medium term note and equity transactions. Simone manages the portfolios of clients who have entered into advisory or discretionary investment agreements with LGB Investments, and advises the fund managers of the Guernsey-based LGB SME Fund. Prior to joining LGB & Co., Simone worked in the institutional fixed income department of Citigroup Global Markets. She began her career at Citigroup Private Bank in Geneva. Simone graduated from the University of Lausanne with a degree in HEC, Business Administration. She is a Chartered Member of the Chartered Institute for Securities & Investments.