Clients of LGB Investments were invited to participate in the partially EIS-qualifying initial public offering (IPO) for Arecor Therapeutics Plc (LON:AREC). As part of the IPO, Arecor raised £20m at a price of 226p per share giving a market cap at IPO of £62.5m. The fundraise was significantly oversubscribed, with a large number of VCT funds participating. At 07:55GMT on the company’s first day of trading (3 June), shares were trading at 247p per share.
Arecor was originally a spin-off from Unilever, which retains a shareholding. It began as a contract research organisation creating so-called biosimilar drugs for generics manufacturers, offering them the opportunity to demonstrate superior performance, storage, manufacture or delivery characteristics. With the appointment of CEO Sarah Howell, Ph. D in 2015, the business transformed into a successful biotechnology company leveraging its proprietary technology platform and originating its own inhouse pipeline alongside its partnership pipeline.
The company’s business model fits LGB’s investment template in that it is a knowledge-based company with strong IP and know-how. The management team are impressive and the technology is widely applicable, particularly for specialty products, a £354bn market. For a drug developing company, we believe the investment proposition is significantly de-risked as the company is taking existing drugs and enhancing them, and therefore the clinical route is shorter and more secure. The business model has been proven as the company already has four licences, two with Hikma, one with Inhibrix and one with an undisclosed pharma company. These are expected to launch products from 2023, potentially making Arecor self-funding from 2025.
Sarah Howell, Chief Executive Officer of Arecor, said: “Today represents an important milestone for Arecor and we are delighted to be listing on AIM. This IPO will allow us to continue to grow the business through the development of our own proprietary diabetes and specialty hospital products whilst creating further value through our technology licensing partnerships. We were delighted by the support and interest we received during this transaction which is testament to the potential of our innovative proprietary formulation technology platform, Arestat™.”
If you are interested in becoming a client of LGB please get in touch for more information. Furthermore, we continue to work with companies in the digitisation, the new age consumer, the future of healthcare, and the decarbonisation sectors. We would be pleased to hear about compelling companies with validated business models in this space.
