What Arix does
Arix Bioscience PLC (LON:ARIX) is a venture capital company that invests in disruptive growth companies with the potential to significantly increase in worth as they progress through clinical trials and conduct financing rounds at higher valuations.
It aims to provide more than just capital when it invests.
Arix will take a board seat and play an active role to support portfolio companies. It also brings to the party scientific and commercial experience to help navigate clinical and operational hurdles.
The firm’s PLC balance sheet enables it to take a longer-term view than non-listed peers that might have a set investment horizon.
It can provide investee businesses with the flexible, patient capital they require to grow.
Arix describes itself as being “unconstrained by institution, geography or stage of company development”.
It, therefore, has the ability to source the best life science innovation without restriction.
How it’s doing
In September, the biotech company backer revealed that its net asset value (NAV) had risen to £251.0mln by the end of June 2020 from £202.1mln at the end of 2019, while NAV per share jumped 24% to 185p from 149p.
The group’s gross portfolio value climbed to £203.4mln from £149.2mln at the end of 2019, driven by good clinical and financial progress by its portfolio companies.
Successful financing rounds that resulted in valuation increases were completed by Imara (+46%), VelosBio (+95%) and Quench Bio (+40%).
In addition, the share prices of portfolio companies listed on the Nasdaq generally performed well during the period, the company noted.
The venture capital company also said it had reduced net operating costs by more than 35% during the first half of the year, with the annual run rate of operating costs set to reduce to about £5mln by the end of 2021, compared to a run rate of £8.0mln in 2019.
What the broker says
Commenting on the results, Peel Hunt said of note was the progress that Arix had made in reducing net operating costs, which are now less than 2% of NAV; the strategic shift during the period including the establishment of a scientific advisory board and new senior management appointments; and the huge discount to NAV that Arix currently trades at.
“Lastly, Arix points to a number of upcoming catalysts in the next 18 months, which should drive value, including clinical data from Autolus (17% of NAV), Imara (14% of NAV) and Harpoon (12% of NAV), with additional progress expected from Artios (8% of NAV), LogicBio (8% of NAV), Aura, (4% of NAV) and Atox Bio (3% of NAV) as of September.
- Investee companies have many clinical trials underway
- Multiple results from these trials expected over the next 18 months
- Analysts rate the value of the portfolio way above market price