Is London doing enough to fund UK life sciences?

James Clark, Head of Tech & Life Sciences at the London Stock Exchange, recently reported a total of £2.4 billion raised in IPO and follow on capital in the UK-listed life sciences sector in 2017. This represents a 20% increase compared to 2016. It is interesting to note that the bulk of this funding was raised by companies returning to the market. Over £2.1 billion was raised in follow on capital in 2017, a six fold increase on the previous year.

The positive picture for UK life science funding is supported by the BioIndustry Association’s January report on the biotech sector. But the report identifies some interesting trends. At the IPO end of the spectrum much of the appetite seems to be international. Although UK biotech company IPOs raised more than twice as much in 2017 (£234m) compared to 2016 (£105m), 90% of that financing came through Nasdaq rather than the LSE or AIM. The two AIM launches (Destiny Pharma and SkinBioTherapeutics) reportedly raised £19.5m while three Nasdaq IPOs (Nightstar Therapeutics, Verona and NuCana) accessed investment of around $267m. While AIM did provide follow on funding for previously listed companies, the LSE main market did not provide substantial support.

Venture capital investment in UK bioscience remained fairly strong at £515m, although falling well short of the 2015 and 2016 totals.

It is unsurprising that there is uncertainty in the UK market. Arrangements post-Brexit for financial regulation, medicines regulation and market access, and research collaboration are still very unclear.

The UK Government’s plans to support patient capital will, if followed through, help to make a difference. Permitting pension funds to allocate some of their funds to high growth innovative companies could greatly expand the supply of capital to the sector, for example, as could a new British Business Bank subsidiary focusing on patient capital.

The support offered to UK biotech internationally is certainly encouraging. But it seems that more needs to be done to mobilise home-grown investment in the sector.

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