IP Group plc (LSE: IPO), the developer of intellectual property based businesses, today issues its Interim Management Statement in accordance with FCA Disclosure and Transparency Rule 4.3.
This statement provides an update on the Group’s progress for the period from 30 June 2013 to date.
Alan Aubrey, Chief Executive of IP Group, said:
“There has been significant progress since the half year results with the Group completing a strategic investment in Cambridge Innovation Capital as well as signing a Memorandum of Understanding to share information on investment and co-investment opportunities in the Cambridge Cluster. In the portfolio, Oxford Nanopore announced that it will open registration for its ‘MinION Access Programme’ and that it had completed a £40m fundraising, while Applied Graphene Materials plc has announced its intention to float on AIM. This progress, combined with an excellent pipeline of opportunities and activity, reinforces our confidence in delivering significant shareholder value.”
As at 30 October 2013, the fair value of the Group’s portfolio was £258.2m compared to £191.9m at 30 June 2013, representing a net unrealised fair value increase of £52.7m excluding the investments and realisations described below. This overall increase was largely driven by the £33.3m fair value gain as a result of Oxford Nanopore Technologies Limited’s October financing and increases in the share prices of a number of the Group’s quoted portfolio companies during the period totalling £19.1m. These were partially offset by decreases in the fair values of the Group’s holdings in AIM-quoted Modern Water plc (£0.5m) and Evocutis plc (£0.6m), as a result of share price decreases.
During the period from 1 July 2013 to 30 October 2013, the Group provided incubation, seed and development capital totalling £14.2m to 18 portfolio companies, including £5m into Cambridge Innovation Capital plc as described below. Last year, during the period covered by the Group’s Q3 IMS, a total of £5.6m was provided to 16 companies. Investments for the year to date now total £25.0m (Q3 2012 IMS: £21.4m). The Group generated proceeds of £0.6m (Q3 2012 IMS: £16.2m). The Group’s portfolio now consists of holdings in 72 companies, compared to 70 as at 30 June 2013.
Significant developments in the Group’s unquoted portfolio companies since 30 June 2013 have included:
· In October, Oxford Nanopore Technologies Limited (“Oxford Nanopore”), a spin-out company from the University of Oxford that specialises in nanopore-based electronic molecular analysis systems, announced that it would open registration for its ‘MinION Access Programme’ in late November with a substantial number of selected participants due to receive a MinION Access Programme package for a refundable $1,000 deposit. Earlier in the month, Oxford Nanopore announced it had raised £40m in new funding via a private placement of ordinary shares, bringing the total funds raised by Oxford Nanopore since its foundation to £145m. IP Group has a 19.6% undiluted beneficial stake in Oxford Nanopore, valued at £104.3m.
· Applied Graphene Materials plc (“Applied Graphene”), a spin-out from Durham University that has developed a proprietary process for the manufacture of high specification graphene, announced in October its intention to raise funds and seek admission of its shares to trading on AIM. Applied Graphene will utilise the funding to scale up production and accelerate commercialisation with blue chip partners. The Group currently holds a 22.1% undiluted beneficial interest in the company.
Significant developments in the Group’s quoted portfolio companies since 30 June 2013 have included:
· In September, Retroscreen Virology Group plc (“Retroscreen”), a spin-out from Queen Mary, University of London, that has pioneered the commercialisation of the Viral Challenge Model which enables research into viral infection and enables pharmaceutical companies to accelerate and reduce the cost of bringing antiviral therapeutics and vaccines to market, announced its half-yearly results. The announcement noted that Retroscreen had increased revenue 237% to £12.01m, increased gross profit 286% to £3.4m, completed the largest RSV challenge study ever performed with an investigational drug, which was also Retroscreen’s largest VCM study to-date, and that it had conducted the largest ever investigation into influenza transmission, in collaboration with the University of Nottingham and funded by the United States Centers for Disease Control and Prevention. Retroscreen announced in July that it raised £25.5m before expenses, with the Group, together with its managed funds, contributing £1.5m of the placing. The Group’s 18.3% interest in Retroscreen was valued at £31.5m at 30 October 2013.
· In October, University of Leeds spin-out Tissue Regenix Group plc (“Tissue Regenix”) announced that full trial results into the effectiveness of DermaPure? in healing treatment resistant chronic wounds had been published in the peer reviewed journal “Wound Repair and Regeneration”.The paper shows 60% of patients with chronic wounds were completely healed and patients treated saw an average 87% reduction in the size of their wounds. The group also announced that it had successfully undertaken a technology transfer and the first productionof its dCELL® human dermis application in the United States. This technology transfer now allows Community Tissue Services to produce DermaPure? from decellularised human biological scaffolds for patients suffering from acute and chronic wounds. The company commented that it remains on course for commercial launch of DermaPure? in the US during the first half of 2014. The fair value of the Group’s 13.8% holding in Tissue Regenix was valued at £10.6m at 30 October 2013.
· Avacta Group plc, which develops detection and analysis technology and services, announced that it had raised gross proceeds of £4.7m primarily to develop its Affimer technology of which the Group, together with its managed funds, contributed £1.0m. Avacta subsequently announced its first licence deal for Affimers with Blueberry Therapeutics, a private UK biotechnology company. Avacta’s full year results to 31 July 2013 saw a small decrease in revenues to £2.7m (2012: £3.1m) and an increased loss before tax of £1.9m (2012:£1.6m). The Group’s 27.6% interest in Avacta was valued at £9.4m at 30 October 2013.
· Ceres Power Holdings plc (“Ceres”), a developer of clean, efficient, cost-effective fuel cell technology,announced that it had appointed Philip Caldwell as its new CEO; signed a commercial agreement with Korea’s largest boiler manufacturer KD Navien in a landmark deal in support of its new strategy; found commercial traction in Japan with a number of global OEMs in technology validation and test activities and that it had signed a collaboration agreement with the University of Connecticut to showcase Ceres’ technology and facilitate access to US OEMs and the Department of Energy programs to drive product development in the US. The fair value of the Group’s 24.7% holding in Ceres was valued at £11.1m at 30 October 2013.
In October, the Group completed a strategic investment of £5m in Cambridge Innovation Capital plc (“CIC”), alongside the University of Cambridge Endowment Fund, ARM Holdings plc (“ARM”), Invesco Perpetual and Lansdowne Partners. CIC, which has raised £50m to date and in which the Group has an 8% stake, will support the growth of innovative businesses based in the ‘Cambridge Cluster’ by investing long-term equity finance to help companies bridge the critical middle stage of commercial development. The University of Cambridge will support CIC through its commercialisation office, Cambridge Enterprise. In addition, the Group and CIC have entered into a Memorandum of Understanding to share information on investment and co-investment opportunities in the Cambridge Cluster and, where practicable and alongside other co-investors, to provide each other with access to such co-investment opportunities.
Balance sheet update
At 30 October 2013, the Group had cash of £23m, a diversified portfolio valued at £258m and net assets of £312m, representing 83p per share. Excluding intangible assets and the Oxford Equity Rights asset, the Group’s “hard” net assets were £290m or 77p per share.
For more information, please contact:
|IP Group plc|
|Alan Aubrey, Chief Executive Officer||+44 (0) 20 7444 0050|
|Greg Smith, Chief Financial Officer|
|Liz Vaughan-Adams, Communications||+44 (0) 20 7444 0062 / +44 (0) 7979 853 802|
|FTI Consulting||+44 (0) 20 7831 3113|
|Ben Atwell, John Dineen|
This statement is intended to give an indication of material transactions and events that have taken place since 30 June 2013 and their impact on the financial position of the Group. These indications reflect the Board’s current view, are subject to a number of material risks and uncertainties and could change in the future. Factors which could cause or contribute to such changes include, but are not limited to, the general economic climate and market conditions, as well as specific factors relating to the financial or commercial prospects or performance of individual portfolio companies with the Group’s portfolio. Unless otherwise stated, the Group’s holdings in portfolio companies reflect the undiluted beneficial equity interest excluding debt.
Notes for editors
About IP Group
IP Group is a leading UK intellectual property (“IP”) commercialisation company, developing technology innovations primarily from its research intensive partner universities. The Group offers more than traditional venture capital, providing its companies with access to business building expertise, networks, recruitment and business support.
The Group’s portfolio comprises holdings in over 70 companies including Oxford Nanopore Technologies, the DNA sequencing development company, Revolymer, best known for its removable chewing gum and Xeros, which has received many accolades for its revolutionary clothes washing techniques with a much reduced requirement for water.
The portfolio includes early-stage to mature businesses and has exposure to five main sectors – Energy & Renewables, Medical Equipment & Supplies, Pharma & Biotech, IT & Communications and Chemicals & Materials. To date, fifteen of the portfolio companies IP Group has backed have listed on the AIM market of the London Stock Exchange and one on ISDX.
Founded in 2001, IP Group listed on AIM in October 2003 and moved to the Official List in June 2006.