Guest blog: Post-pandemic investor sentiment and trends
James Wong is an Investment Principal at Oxford Sciences Innovation (OSI), where he focuses on life sciences businesses and represents OSI on the boards of portfolio companies Oxford Nanoimaging and SpyBiotech. Since we spoke with James in April last year, just a month into lockdown, the investment landscape for life sciences has shifted significantly due to COVID-19.
In this guest blog, James shares his perspective on post-pandemic investor sentiment, with a focus on the diagnostics sector.
A key trend that has emerged in life sciences post-pandemic has been the increased interest in diagnostics, from you and I, to academics, entrepreneurs and industry. So, it is timely to provide a snapshot of the sector with examples of innovators in the Oxford ecosystem.
Historically, diagnostics could be seen as an underserved area for investment, due to its capital intensity, route to regulatory approval and commercialisation, resulting in a risk profile that is considered challenging. By contrast, therapeutics, although carrying a binary risk profile, offer potential upside in blockbuster drugs, from small molecules to biologics.
The pandemic in the last 12 months has however put a spotlight on the significant need for diagnostics as a key part of healthcare, from rapid detection of infectious diseases to early detection of cancers. As a result of lockdown measures, where this detection takes place and how results are used to treat and manage patients have also been brought into focus.
Testing moves from central laboratory to point-of-care
One area within diagnostics that has been accelerated due to the pandemic has been rapid detection of infectious diseases, from centralised labs to the point-of-care of patients.
An example is Sense Biodetection, a MedCity alumnus with offices in Oxford, Cambridge and Boston. Since receiving UK angel and seed investment, the team has attracted a manufacturing partner and raised Series A and B investment from European and US investors to advance the commercialisation of its point-of-care molecular diagnostic test for COVID-19. Having worked with the CEO while I was at Mercia Asset Management, I’m really pleased to see them go from strength to strength, with the value of their instrument-free technology platform being recognised by the new investors. That’s also the level of international industry and investor engagement we should seek to have more of in the UK.
At OSI, we are proud to support Osler Diagnostics, which spun out of the University of Oxford Chemistry Department in 2016 to develop next generation point-of-care diagnostics based on a novel approach to biosensing, underpinned by over a decade of academic research. The portable device under development is designed to perform rapid, low-cost testing of a wide range of disease biomarkers with laboratory accuracy using pinprick blood as a sample. Since receiving UK seed investment, the team has successfully raised Series A and B investment, to help advance its next phase of product development and realise its vision to decentralise diagnostics.
New technologies make early detection of cancers possible
Despite the pandemic and the need for vaccines and diagnostics to combat COVID-19, cancer has remained a significant burden on healthcare systems worldwide – early detection is crucial to increasing survival rates. Companion diagnostics that stratify patients to select therapies that give the best chance of survival are also key to patient outcomes.
Focusing on these challenges, another example I would like to share from the OSI portfolio is Base Genomics, a life sciences portfolio company that was initially developed back in 2018 and launched in June 2020. With a new epigenetics technology in DNA methylation sequencing poised to set a new standard in early cancer detection from liquid biopsy, developed at the Ludwig Institute for Cancer Research at University of Oxford, the company was acquired within six months of its launch by Exact Sciences (Nasdaq: EXAS), a leader in early cancer detection, for $410 million. This M&A was a great outcome for the team and represents a major milestone for the Oxford ecosystem.
Tools enable deeper understanding of diseases and therapies
Another key trend is how access to previously inaccessible tools have enabled academic, clinical and industry researchers to develop a deeper understanding of diseases and therapies, and indeed unlock new solutions and generate new insights post-pandemic.
For example, Oxford Nanopore Technologies, another spinout from the University of Oxford Chemistry Department from 2005 and with an eagerly awaited IPO on the London Stock Exchange this year, has supported users around the world with its products to rapidly and affordably sequence the virus causing COVID-19, enabling continued genomic surveillance of the virus and understanding of the role genetic variation plays in infectious diseases.
With the world’s first desktop super-resolution microscope, the Nanoimager, Oxford Nanoimaging (ONI) has also been enabling users with its products to not only easily perform and standardise how they visualise extracellular vesicles (EV), but also to perform analyses and share results in real-time. Deeper understanding of their function in cell signalling will be valuable in the R&D of EVs for diagnostic and therapeutic applications.
Looking ahead – new opportunities for diagnostics innovators
The past 12 months has seen valuable opportunities created for academics, entrepreneurs, investors and industry to collaborate locally and globally and drive research, development, commercialisation and rollout of life sciences technologies and products, none more so than the incredible achievement of the race to find a safe and effective COVID-19 vaccine. This in turn has driven activity across company creation, investment, M&As and IPOs in the sector.
Within diagnostics, from new technologies enabling rapid testing to digital consults, it’s great to hear MedCity is supporting innovators with two new initiatives. The Diagnostics Growth Hub and the new Collaborate to Innovate: London Diagnostics programme together can catalyse the development and commercialisation of new diagnostics technologies by providing access to world-class academic and clinical partners as well as initial grant funding. This should then attract industry partners and onward investment from active UK and international investors.
Innovators should also seek out and leverage grants from Innovate UK to fund research and development, from those that were launched in response to COVID-19 last year, to new calls from established programmes such as Biomedical Catalyst (in partnership with MRC). The Department for Business, Energy and Industry Strategy (BEIS) has also announced the Medicines & Diagnostics Manufacturing Transformation Fund, which aims to increase manufacturing capacity across medicines, diagnostics and medical technology products.
This commitment to diagnostics is encouraging for UK life sciences and should in turn drive commercially driven research and entrepreneurial activity. In addition to traditional healthcare investors that invest across stages, economic cycles, and indeed during a pandemic, technology investors will also be more active in the sector. As lockdown eases further we can look forward to seeing this activity develop and new trends that emerge.
Oxford as a life sciences ecosystem – from vaccines and beyond
From these examples in just only the diagnostics sector, we see Oxford as a booming centre for life sciences and technology in the golden triangle. There are numerous more examples from the OSI portfolio, from safe and effective vaccines to advanced imaging analysis.
Find out more
Find out more about James Wong (@JamesCTWong) and Oxford Sciences Innovation (OSI).