Shares of Arix Bioscience PLC (LON: ARIX) rallied 5.4% after the venture capital firm that invests in biotech firm announced that the value of its assets had risen 62% to £328 million in December 2020 compared to the £202 million reported in 2019.
Much of the additional value was derived from the sale of its stake in VelosBio to US pharmaceutical giant Merk, which netted it £139million in tax-exempt cash. The company also revealed that its portfolio firms had some promising clinical trials on the way that could generate future returns.
Arix recently launched Twelve Bio, a biotech company developing novel engineered Cas12a nucleases for therapeutic gene editing.
Twelve Bio was spun off from the Novo Nordisk Foundation Centre for Protein Research at the University of Copenhagen and Creation House programme at BioInnovation Institute (BII), an independent biotech incubator.
Analysts were pleased when Arix exited its investment in Quench Bio after a review of initial pre-clinical work was not very promising, which they say was a strong sign that the fund is prepared to “fail quickly”.
One of the keys to successful venture capital investing is to cut losing investments quickly and to focus on portfolio companies that are doing well and could create commercialise their products and services in future.
Naseem Amin, Arix Bioscience’s executive chairman, said: “This has been a period of outstanding achievement for our company. We have begun the journey of turning our promises to shareholders into delivery – realising £158m during the year while at the same time refocusing the portfolio, restructuring and reducing our costs and laying the foundation for the next wave of investments.”
Investors will be watching the company closely to see if some of its portfolio companies make significant breakthroughs that could boost its future earnings.
Arix Bioscience share price.
Arix Bioscience shares rallied 5.4% to trade at 195p after rising from Monday’s closing price of 185p.