We have sub-categorised the companies we follow under the theme of the Future of Healthcare in one of the following sub-categories:
The big story this year has continued to be the increase in spending on and interest in the use of GLP-1 agonists previously used purely for diabetes treatment for weight loss, with both Novo Nordisk and Eli Lilly having now had their lead drugs approved for this large problem. Smaller companies are trying to find niches but so far we have not seen any clear contenders in this category. Arecor, and the AIM-listed Irish company Poolbeg are both working on oral delivery of semaglutide as an alternative to injection, but they will need big company funding to make progress.
US sentiment has stabilised, and the Nasdaq Biotech index rose a little over 4% in Q3 and is up 17% from its spring low. AIM quoted stocks with potential funding demands are however far more affected by the lack of liquidity in the AIM market and any company with near- or medium-term requirements for more equity will have seen its share price suffer. Companies across AIM continue to trade at substantial discounts to the (already heavily discounted) valuations analysts are placing on their portfolios. We are aware of at least one proposed equity raise (not for a company we have been involved with) intended to support a phase 1 trial that has been aborted.
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. The UK company Exscientia which went directly to Nasdaq in 2021 with a $2.9bn valuation was taken over this year in a $668m merger. Nasdaq is a bigger and deeper market but US investors are a tough crowd and listing there does not work for smaller companies.
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 some encouraging signs with milestone payments being unlocked in a few cases, though share prices have not always responded as much as might have been anticipated.
The claims made for the Lilly and Novo Nordisk’s weight loss drugs have if anything negatively affected the broader medtech sector in the USA: if there are going to be fewer obese people there will be fewer joint replacements, less of a requirement for diagnostics for kidney problems and for complications of diabetes. However, one of the leading companies in the sector, the $22bn market cap Illumina, which had run into anti-trust issues, recovered 25% in Q3, and competitor Thero-Fisher rose 14%.
FDA approval and then the time taken to commercialise in the US are exhausting of time and cash, and companies consistently seem to underestimate the challenge.
The diagnostics company Renalytix delisted from Nasdaq and AIM is once again its lead market, after having burned through c. $150m. Verici, another EKF spin-off has admitted that FDA/Medicare coverage approval is taking longer than anticipated. Spectral AI which moved entirely to Nasdaq is also awaiting decisions though in their case grant income is easing the path.
Intelligent Ultrasound concluded that they could not afford to continue to develop all their product lines and sold the AI-powered ultrasound diagnostics software to partner General Electric, leaving a rump business which may not stay independent for long. CEO Stuart Gall expressed his regret about UK technology being sold across the Atlantic just as it had been proven.
Futura’s US launch, in the hands of the healthcare giant Haleon (ex GSK) was about to happen at the end of the quarter. Sceptics seem to ignore the possibility that Haleon might have done its due diligence on the product, and that it would not be spending a reported $50m plus on a launch (including big enough milestones and orders to Futura to move it into profitability) without considerable confidence of success. If Eroxon does succeed in the US market, a bid for Futura from Haleon looks very plausible.
It is symptomatic of the current state of the AIM market that Futura’s move into profitability has left the shares lower.
Skinbiotherapeutics continues to wait for Croda to make a decision on whether to press on with cosmetic use of SBTX’s lysates, and continues to look for acquisitions.
And despite increasing consciousness of the importance of gut health, Optibiotix is still a very small company. The company has historically been profligate in announcements but revenues remain small. At quarter end it was embroiled in an unresolved dispute with former subsidiary Probiotix which has managed to grow revenues and raise enough cash to appear sustainable. We would urge investors to vote in the forthcoming GM.
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.