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Oxford Biotherapeutics

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“Cancer is one of the leading causes of death worldwide, with an estimated 27.5 million new cancer cases worldwide each year by 2040.”*.

The global burden of cancer is significant. Statistics forecast that 50% of people born after 1960 will most likely contract cancer in their lifetime*; and the cost of cancer care is set to exceed $156 billion by 2020. Successful drug medicines can therefore be enormously valuable to both patients and the owners of the drugs.

Oxford BioTherapeutics (“OBT”) is a well-established international biotechnology company, developing innovative, targeted anti-cancer medicines. Originally spun out of Oxford University’s Department of Glyco Sciences in 2004, it now employs 40 people and has offices in Milton Park, Oxfordshire and San Jose, California. It is widely considered one of the leading companies developing next generation cancer therapies, including Antibody-Drug Conjugates (ADC) and Immuno-Oncology (IO).

Immunotherapies discovered via OBT’s platform have potential to improve patient outcomes for a very wide range of cancers, and in a way which uses the body’s own immune system to deliver the drug, creating a treatment whereby only cancer cells are killed, whilst sparing normal cells. OBT can do this by leveraging its world leading proprietary cancer protein database to identify series of antennae which are unique to cancer cells, allowing the antibody to locate these receptors and deliver the cancer killing medicine.

The company has been capital efficient, having raised only £19m of venture funding to date, leveraged by £35m of partnership revenues which have been reinvested to develop its pipeline of exciting cancer drugs. The company has now reached a significant milestone in its development by securing an €800m non-dilutive investment from a major Italian Pharma, to take five identified OBT drugs through Phase I and Phase II clinical trials. The programme is already well advanced with the first drugs progressing in human clinical trials.

This current round of investment into OBT reflects a pre-money valuation of $100m. Market analysis shows that some small companies with only one lead product in early clinical trials have previously been acquired at valuations in excess of $500m by the major pharma, potentially representing a value uplift for investors should its cancer molecules show sign of anti-cancer activity in humans.

*Source: Cancer Research UK, 14th Nov 2018

 

Estimated reading time: 2 min

 

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    1. If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
  2. You are unlikely to be protected if something goes wrong
    1. Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.
    2. Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
  3. You won’t get your money back quickly
    1. Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
    2. The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
    3. If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
  4. Don’t put all your eggs in one basket
    1. Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    2. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. https://www.fca.org.uk/investsmart/5-questions-ask-you-invest
  5. The value of your investment can be reduced
    1. The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
    2. These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

 

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.