BioCap 2024: key themes from the investment panel by RSM UK

At BioCap 2024, Graham Bond, RSM UK’s Co-Head of Life Sciences, chaired an IPO session featuring a panel of life sciences experts and investors. Below, Graham summarises key themes raised by the panel, including a more positive investment market, the need for regulatory reform and diversity of investments, raising money in the UK and the US, dual listing and top tips for life sciences businesses considering the IPO route.

As a long-term corporate sponsor of Bionow and founder of BioCap, Graham was delighted to chair the IPO session, joined by his fellow panellists: Marcus Stuttard, Head of UK Primary Markets at the London Stock Exchange (LSE); Mark Eccleston, CEO of ValiRx; Chris Yates, CEO of Abingdon Health; and Will Marshall, Senior Corporate Broker of Shore Capital.

The panel agreed that there has been a clear positive direction of travel in the investment market over the past 12 months. While both public and private markets have faced headwinds in the last couple of years, there’s been an increase in activity, with investors less concerned about redemptions due to more certainty on interest rates.

Marcus Stuttard from the LSE highlighted a range of statistics for activity in the last year:

• Over £20bn raised so far in London across the Alternative Investment Market (AIM) and the main market in all sectors.
• High-value sell-downs, including the Pfizer sell-downs in Haleon stock, which shows institutions have capital they are willing to deploy in big chunks.
• There have been five IPOs, including AOTI, a US life sciences business. And despite the narrative about UK companies looking to IPO in the US, three of the first IPOs on to AIM in 2024 were US companies coming to the UK, recognising the benefits of our small cap environment.
• For the first half of 2024, the FTSE healthcare index was up 13.5% in the UK compared to the S&P Healthcare index, which was at 8%. This demonstrates that healthcare, as a wider sector, has outperformed in the UK versus the US.

However, our life sciences panellists highlighted that the market remains challenging from a valuation perspective, with low valuations impacting shareholders where money is raised at a low price and share price is heavily discounted. Concerns were also expressed about the lack of specialist institutional investors at the small cap end of the market, particularly in terms of biotech.

Top tips for an IPO

To conclude, our panellists highlighted their top tips for life sciences companies on their IPO journey:

• Have a clear rationale, strategy and purpose.
• Consider alternative options which may be more viable or an easier path to follow given your stage of development, as an IPO is an intensive exercise.
• Review your business competencies and the strength of your finance function and board. Do you have the relevant skills and experience to IPO? With a long lead time involved, the earlier you can get those things into place for an IPO scenario, the better.
• Keep your options open. Preparing for an IPO early puts you in good stead for other types of transactions, such as private investment. Try to keep your capital structure relatively simple from the outset as this increases your options.
• Make sure that when you IPO, you have a realistic valuation. It is hard to recover from a drop in value after an IPO.

How we can help your life sciences business

We are a specialist team within the life sciences sector and have a significant and varied client portfolio, ranging from start-ups to global leading businesses. We partner with you at every stage of your growth journey. Our cross-functional team is made up of dedicated life sciences sector specialists with UK and international expertise who can support you in reaching your goals.

To discuss your life sciences business, please contact Graham Bond or Laragh Jeanroy.