In 2010, Andrew Craig was a 35-year-old stockbroker working in New York and feeling increasingly jaundiced about the trappings and travesties of Wall Street. He came back to the UK and wrote How To Own The World: A Plain English Guide To Thinking Globally and Investing Wisely. The book went on to become a bestseller, making Craig’s name in financial circles.
But writing books does not feed many mouths so Craig took a position with WG Partners, a City firm specialising in life sciences and biotech. Delving deep into this world exposed Craig to a plethora of innovative and exciting businesses in the UK. It also made one point abundantly clear: most are struggling to gain the recognition and the funding they need.
The landscape has become even tougher over the past year, as investors have withdrawn from life sciences and biotech firms, worried that they are too risky in the current economic climate.
Targeted: UK and Australian biotech firms are far cheaper than their US rivals
Craig disagrees – so much so that he is launching the Conviction Life Sciences Company, a firm that will invest in carefully chosen businesses across the UK and Australia.
The group, known as CLSC, intends to float on the stock market, with trading set to start on December 16.
Shares will be on offer at £1 apiece, either direct via the firm’s website or through intermediaries such as Hargreaves Lansdown, AJ Bell, Interactive Investor and Primary Bid.
The company’s name is pointed, reflecting Craig’s conviction that UK and Australian life sciences firms are materially undervalued. He is even more confident that his selection of companies will deliver substantial growth of 20 per cent or more.
Life sciences is a broad church, covering all kinds of healthcare businesses, including pioneering drug developers, medical device makers, smart-thinking digital health firms and companies that test or make products for third parties.
The industry is huge, valued at more than £4.5trillion worldwide. But most of the large firms are in the US, where investors seem happier to fund life sciences firms than their counterparts in the UK and Australia.
Different perceptions have led to a substantial disconnect, with US firms frequently valued at ten times their UK equivalents.
This comparative undervaluation is ripe for change. Big investors in the US and Asia are eyeing up the UK, recognising there are bargains to be had. That interest could turn into share purchases or outright acquisitions.
Of equal importance is the fact that many smaller life sciences businesses are at an advanced stage in their development. Drugs are in late-stage trials. Devices are becoming regulated. Commercial success is close.
Many of these firms have suffered in the wake of the Neil Woodford debacle, which made investors large and small wary of the entire biotech industry.
Woodford held sizeable positions in private firms, which were difficult to get out of, and his fund was structured in such a way that he became a forced seller when the tide turned against him.
CLSC is very different. The structure of the group avoids the need for forced disposals and the firm will invest primarily in listed businesses that can be bought and sold far more easily. Craig also intends to invest in more than 40 companies. Some are already making money. Some are set to become profitable in the near term. Some seem to be on the cusp of greatness and could increase in value materially over the next five years.
Importantly too, Craig knows almost all of them from his time at WG Partners. That has given him a real understanding of the sector, a network of contacts and some close relationships with key players.
Potential investments will become clearer over the coming months but favourites include a business that appears to have found a way to cure certain cancers, using exotic fruits from the Australian rainforest.
This may sound like science fiction but the group is already making a product that kills off tumours in dogs with one or two simple injections – and human trials are ongoing.
Another company has developed a device that can extract live cancer cells from the body and diagnose their make-up – a boon for genetic medicine.
Craig is also keen on Oxford Biomedica, which sprung to fame when it started making the Covid-19 vaccine for AstraZeneca.
Globally acknowledged as a specialist in cell and gene therapies, the group was a stock market darling during the pandemic but the shares have tumbled 72 per cent over the past year to £3.75.
Midas verdict: Stock market newcomers have had a rough time this year and many flotations have been pulled before even reaching the finish line. Conviction Life Sciences Company should make the grade, however.
The UK life sciences sector has been overlooked and underfunded for years but it is packed full of fascinating companies working their utmost to find cures and treatments for some of the most pernicious diseases in the world.
Craig is hoping to raise between £50million and £100million initially, building up to more than £200million.
Having worked in the sector for more than seven years and built up a strong following across the investment community, his ambition seems entirely within reach.
CLSC should deliver long-term rewards and help a beleaguered industry to find the cash that it sorely needs. There may even be special dividends along the way. At £1, the shares are a buy.
To be traded on: Main market Ticker: CLSC Contact: clsc.uk or 020 3884 9955