23rd April 2008
CAT122
BFM (Biotech feature)
The Biotech market is widely regarded as a sector offering investors major money making opportunities which, at the same time, are counterbalanced by the downside of substantial risk.
Jonathan Earl, investment director with Catapult Venture Managers, takes a look at three well-managed companies with a great future ahead of them - all operating out of BioCity in Nottingham.
Innovation is key to the biotech sector and there are some of the country’s most talented scientists working within this arena. However, substantial sums are needed to stand a chance of bringing the products to market.
Therefore, potential investors need to be very diligent prior to backing any such venture. It’s not just a question of how good a product appears to be – a sound management team needs to be in place.
Increasingly, such companies evolve out of University ‘spin outs.’ However, one of the major challenges for such enterprises is putting in place a team of people that can actually commercialize what they have. It’s not uncommon to find an academic that has developed a very good potential technology or product, but does not have all the business skills to make a success of it.
The route to a successful, profitable business requires different team strengths. Therefore, funders will want to look at the skills base in place, and endeavour to help fill any gaps such as a new CEO or financial director. However, they will not want to recruit an entire team!
Two East Midlands University ‘spin-outs’ that we have invested in - alongside the Lachesis Fund - are Monica Healthcare (foetal monitoring equipment) and Haemostatix (artificial blood products).
Both Monica Healthcare and Haemostatix fitted our investment criteria including good management teams and high growth potential. Very often such companies need assistance in their early stages in terms of shaping their structure and we have introduced non-executive directors where appropriate to assist in this process.
Haemostatix was created out of the University of Leicester and is now based at BioCity. Catapult has just completed its third investment into the company bringing our total funding to £500k since December 2005.
It is developing an artificial blood platelet called Haemoplax™ which is driven by an urgent need to find a safer, virus-free and most cost-effective alternative to platelet transfusion. Haemoplax™ has been designed to be stable for a year, whereas the transfusion of platelets has a shelf life of just five days.
The market for this product is estimated to be over a billion dollars globally.
Monica Healthcare, a ‘spin-out’ from the University of Nottingham in May 2005, is led by managing director Dr Carl Barrett.
This enterprise has developed a new breed of revolutionary fetal monitoring equipment. We made our first investment into the company in 2005 and have invested a total of £700k over three years, helping to fund the development and testing programme, as well as bring the product to market. In addition, we introduced Paul Harper to the board as non-executive chairman.
Monica is starting to make initial sales of the product through distributors in the UK and Europe and the company is hopeful of achieving regulatory approval in the US in the coming months.
The third company is R5 Pharmaceuticals, one of the most exciting new biotech/pharmaceutical services companies in the UK. Catapult backed R5 as a start-up with £250K of investment to help fund the development of facilities and the initial growth phase of the project. Alongside the funding from Catapult there have been investments from the R5 management team and BioCity.
R5 delivers appropriate solutions for the development of safe and effective pharmaceuticals materials to be used in clinical studies. R5’s state-of-the-art facilities include one of the very few cleanrooms in Europe, ensuring the highest level of sterile product development. This is absolutely essential in clinical development to ensure that the final product will provide therapeutic benefits to the patient whilst maintaining its safety in humans.
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For further information please contact Jonathan Earl at Catapult Venture Managers on 0116 238 8200 or 07980 974422; or Paul Shrimpton at PSPR Ltd on 0121 3543 7311 or 07979 505322.
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