“Science, money and people; that is what is needed”
Joe, congratulations on a busy and successful year – company launch, private round and Main Market IPO – what is your vision for Arix?
Thank you. There has never been a more productive time for the emergence of new ideas in the life sciences and their development into marketable products. We see a sector full of innovation and opportunity, yet it has been a relatively closed world for most investors. Cutting edge medical science has been the preserve of specialist venture capital and these investment opportunities have been difficult to access. By taking Arix public, we hope to bring true innovation in healthcare closer to a much broader range of investors. Innovation is where we believe the real value is in healthcare right now, and in the years ahead. It is interesting to note that the average ten-year IRR on biopharma VC at the end of 2016 was 22.5% compared to 11.8% for the NASDAQ Biotech Index, so of course more people want to gain exposure to that.
There is some fantastic science being discovered and developed in universities and research institutes; where are the gaps in developing these, and what can we do about it?
Science, money and people; that is what is needed and the sector is now producing ideas which can generate breakthroughs and returns. Availability of capital for innovation has improved, but it is still not good. The supply of capital to small companies in our sector remains sporadic and is subject to market volatility. This is why we set up Arix as a source of permanent capital, and the ability to access public markets is a key part of this. With stable funding comes the ability to hire serious talent and we see no shortage of this but it is a competitive market and there is global competition for skills.
How do you think the model of patronage from Big Pharma can, should and will change? Do you think that companies like Arix can support a better R&D opportunity than big pharma?
There’s no doubt that an increasing number of drugs are being developed in smaller, specialist discovery and R&D companies. Against this backdrop we see increasing appetite for Big Pharmas to grow their own venture funds, externalise R&D and to invest in companies like Arix. We have already had the privilege of reaching co-operation agreements with UCB and Takeda in our short history, enabling us to draw upon their specialist experience and provide them access to our pipeline of ideas to explore opportunities to grow companies together. We have an exceptional team at Arix with experience in business building and have already acquired direct interests in seven outstanding companies in our short history. Of course the funding is important, but we are also able to provide a significant amount of hands-on advice to help grow these businesses to get new and in-demand therapeutics to market. This can be make or break for a promising drug in development.
Are there any areas of healthcare that you’re particularly interested in, or that you think will produce the greatest successes?
We are agnostic as opposed to following particular therapeutic areas, but we’re looking for quality science with the potential for significant patient benefit which is reaching an inflection point. Our early deals have been in oncology, respiratory, ophthalmology and infectious diseases. In oncology, we see huge potential in Autolus, Artios and Harpoon. In infection, we are excited by the potential for Iterum to bring important new medicines into an environment where we are seeing dangerous levels of drug resistance in bacteria. With Verona we see a potential breakthrough for COPD and, with Optikira, a novel approach to tackling retinitis pigmentosa. Depixus is developing a completely novel approach to gene sequencing which has significant potential in epigenetics – an important area that is helping us understand gene regulation – the subject of how and why diseases develop. In each case, we need to see clear ability in the leadership teams we back and on this count we are fortunate to have proven, world-class entrepreneurs, scientists and business leaders involved in the companies we are helping to grow.
