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MIDAS SHARE TIPS: Why life sciences start-up could be a wealth booster

Targeted: British and Australian biotech companies are much cheaper than their American rivals

In 2010, Andrew Craig was a 35-year-old stockbroker working in New York and feeling increasingly yellowed by the trappings and parodies of Wall Street. He returned to the UK and wrote How To Own The World: A Plain English Guide To Thinking Globally and Investing Wisely. The book became a bestseller, making Craig’s name in financial circles.

But writing books doesn’t feed many mouths. So Craig took a job with WG Partners, a life science and biotechnology company in town. Diving deep into this world has exposed Craig to a plethora of innovative and exciting businesses in the UK. He also made a very clear point: most struggle to get the recognition and funding they need.

The landscape has further hardened over the past year as investors have pulled back from life science and biotechnology companies, fearing they are too risky in the current economic climate.

Targeted: British and Australian biotech companies are much cheaper than their American rivals

Targeted: British and Australian biotech companies are much cheaper than their American rivals

Craig disagrees – so much so that he launches the Conviction Life Sciences Company, a venture that will invest in carefully chosen businesses in the UK and Australia.

The group, known as CLSC, intends to go public, with trading due to begin on December 16.

Shares will be offered at £1 each, either directly through the company’s website or through intermediaries such as Hargreaves Lansdown, AJ Bell, Interactive Investor and Primary Bid.

The company name is sharp, reflecting Craig’s belief that British and Australian life sciences companies are grossly undervalued. He is even more convinced that his selection of companies will generate substantial growth of 20% or more.

Life sciences is a broad church, spanning all kinds of healthcare companies, including pioneering drug developers, medical device makers, smart digital health companies, and companies that test or manufacture products. for third parties.

The industry is huge, valued at over £4.5 trillion worldwide. But most of the big companies are in the US, where investors seem happier funding life sciences companies than their counterparts in the UK and Australia.

Different perceptions have led to a substantial disconnect, with US companies often valued at ten times their UK counterparts.

This comparative undervaluation is ripe for change. Big investors in the US and Asia are eyeing the UK, acknowledging there is good business to be had. This interest could turn into stock purchases or outright acquisitions.

Equally important is the fact that many small life science companies are at an advanced stage of development. The drugs are in advanced stages of testing. Devices become regulated. Commercial success is near.

Many of these companies have suffered in the wake of the Neil Woodford debacle, which made investors big and small suspicious of the biotech industry as a whole.

Woodford held senior positions in private companies, which were difficult to exit, and his fund was structured in such a way that he became a forced seller when the tide turned against him.

The CLSC is very different. The group structure avoids forced divestitures and the company will mainly invest in listed companies which can be bought and sold much more easily. Craig also intends to invest in more than 40 companies. Some are already making money. Some should become profitable in the short term. Some appear to be poised to grow and could increase significantly in value over the next five years.

Above all, Craig knows almost all of them from his time at WG Partners. This gave him a real understanding of the sector, a network of contacts and close relationships with key players.

Potential investments will become clearer over the next few months, but favorites include a company that appears to have found a way to cure certain cancers, using exotic fruits from the Australian rainforest.

It may sound like science fiction, but the group is already making a product that kills tumors in dogs with one or two simple injections – and human trials are underway.

Another company has developed a device capable of extracting live cancer cells from the body and diagnosing their makeup – a boon for genetic medicine.

Craig also loves Oxford Biomedica, which shot to fame when it started making the Covid-19 vaccine for AstraZeneca.

Recognized globally as a specialist in cell and gene therapies, the group was a stock market darling during the pandemic, but shares have fallen 72% in the past year to £3.75.

Midas verdict: Newcomers to the IPO have had a tough time this year, and many IPOs have been pulled before they even reached the finish line. Conviction Life Sciences Company, however, should be up to the task.

Britain’s life sciences sector has been neglected and underfunded for years, but it’s full of fascinating companies doing everything they can to find cures and treatments for some of the world’s most pernicious diseases.

Craig hopes to raise between £50m and £100m initially, growing to over £200m.

Having worked in the industry for over seven years and gained a strong reputation in the investment community, his ambition seems well within reach.

The CLSC should provide long-term rewards and help a struggling industry find the money it badly needs. There may even be special dividends along the way. At £1, shares are a buy.

To be negotiated on: main market Teleprinter: CLSC Contact: clsc.uk or 020 3884 9955

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