QMB's successful breakfast briefing

12//07//11

QMB Innovation Centre's successful breakfast briefing

Biotech: Public or Private?

QMB Innovation Centre

(“QMB” or “the Innovation Centre”)

Biotech: Public or Private?

QMB Innovation Centre’s breakfast briefing discusses the pros and cons

Queen Mary BioEnterprises (QMB) Innovation Centre, London’s newest high-specification incubator facilities for start-up and early stage life science businesses, yesterday hosted its first in a series of Breakfast Briefings, in conjunction with leading international law firm, Fasken Martineau. The briefing, entitled Biotech: Public or Private? was chaired by Charles Waddell, Partner in Fasken Martineau life sciences practice, and covered the fundamentals a CEO would need to consider when deciding whether or not to take a company to the public markets, including access to capital, the Board and exit options.

The panellists, Shawn Manning, Biotech Analyst at Singer Capital Markets, Andy Richards, a biotech entrepreneur and Investor Dean Slagel, discussed the idea that availability of finance seems to be easier for private companies, particularly if they are at an early stage of development. Although the City rumours are that there is little money available, a lot of these private fundings simply happen under the radar and actually the vast majority of money raised in the sector over the past two years has been for private companies. While some are asking if there will be an IPO window coming up, the panel suggested that it looked more like an “IPO cat flap”, with a reduced appetite for biotech in public markets and a lack of specialist investors in the sector. One of the key things for CEOs to do, they said, was to identify the right investors to approach for the type of company it is and its ongoing strategy.

One of the key issues for biotechs on public markets is communicating with investors to ensure the share price remains buoyant and often CEOs are limited in what can be disclosed, while private companies are able to be more open with investors. The consensus was having “old City hands” on the Board of public companies can add real value in terms of helping to stabilise the share price but Non-Executive Directors must have a vested interest in the Company and understand the business to contribute to and help develop the strategy.

After the panel quickly touched on remuneration (in 11 public companies whose share price dropped an average of 79% during the last year, remarkably the CEOs were paid on average £381,000) the discussion moved onto exits.

In general, it was considered that the exits on private markets are sometimes preferred when fewer licensing deals are in place. The public CEO can be put under pressure by shareholders to sign deals, which will certainly improve the share price in the short term but might reduce the value in the Company, while Angel investors are often considered able to support longer term investment in private companies’ products.

Whether it is better to be public or private depends very much on the stage of the Company and what it is seeking to achieve. While the public markets certainly have their place, particularly for certain areas such as speciality Pharma, the issue of communication is key, and many public biotech company CEOs have in the past failed to effectively communicate how the company will deliver shareholder value, denting existing confidence in the sector. Although there was a tendency towards private markets, the panel were mixed in their conclusions leaving scope for discussion that choosing the public or private route for a biotech is not yet a clear cut decision.

*See image gallery from the event at the bottom of this release

The next Breakfast Briefing will be held in November. If you would like to receive an invitation please email a.miszczuk@qmul.ac.uk.

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About Queen Mary Bioenterprises Limited

The QMB Innovation Centre provides state of the art, customisable laboratory and office space within minutes of The City of London.

QMB provides business incubation support for new ventures and aims to become a hub for science and technology entrepreneurs in London. It provides all its clients with access to the wide range of professional services required when spinning a company out of academia and supports them through the critical phases of their development. The Innovation Centre’s proximity to the City of London means that it is well placed for clients to meet with the UK investment community and other advisers.

The 39,000 square foot facility comprises three floors of high specification work space for start up science and technology businesses. Lab designs are based on varied write up / laboratory split, and have been designed with a sophisticated air filtration system to house both microbiological safety cabinets and chemistry fume cupboards. This makes QMB an ideal location for both very early stage start ups as well as more established companies looking to expand. The Innovation Centre has a 120 seat lecture theatre and regularly hosts seminars and conferences which aim to promote the growth of the biotechnology industry in the UK.

QMB’s keystone tenant is Retroscreen Virology Ltd, a virology contract research organisation, whose bespoke facilities in the Innovation Centre include laboratory space and capacity to run clinical trials.  QMB has recently signed its second tenant, iGene which will be housed on the first floor. The QMB Innovation Centre has 39,000 square feet of building capacity.

Image gallery from the event: