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Arix Bioscience - venture capital firm flies under the market's radar

Snapshot

Here we take a closer look at Arix Bioscience PLC (LON:ARIX), a listed venture capital company that doesn’t appear to be receiving the recognition it deserves

test tubes

Quick facts: Arix Bioscience PLC

Price: 113.9 GBX

LSE:ARIX
Market: LSE
Market Cap: £154.39 m
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  • Invests in potentially disruptive life sciences businesses
  • Provides more than just funds
  • Multiple inflexion points

What Arix does

Arix is a venture capital company that invests in disruptive growth companies with the potential to significantly increase in worth as they progress through clinical trials and conduct financing rounds at higher valuations.

It aims to provide more than just capital when it invests. Arix will take a board seat and play an active role to support portfolio companies. It also brings to the party scientific and commercial experience to help navigate clinical and operational hurdles.

The firm’s PLC balance sheet enables it to take a longer-term view than non-listed peers that might have a set investment horizon. It can therefore provide investee businesses with the flexible, patient capital they require to grow.

Arix describes itself as being “unconstrained by institution, geography or stage of company development”. It therefore has the ability to source the best life science innovation without restriction.

How it's doing

Arix portfolio companies raised  US$283 in the first half of 2019 with 28 clinical trials live at the end of June.

Net assets were worth £231.8mln or 171p per share, with value affected by a sharp drop in the value of Nasdaq-listed Autolus.

What the brokers say

In October, Arix was initiated as a ‘buy’ by analysts at stockbroker Shore Capital, in a note highlighting that the growing biotech investor has “multiple shots on goal”.

The venture-capital style firm, which invests in potentially disruptive life sciences businesses, plays an active role in the companies it backs and a number of those are now advancing high potential opportunities.

Specifically, according to Shore Capital, the firm’s core investments are across twelve companies giving investors exposure to a £168mln portfolio – plus, Arix’s own £60mln of cash in the bank.

“The biotech portfolio is invested across 12 core companies, focused on cancer, immunology & inflammation, rare diseases/gene therapy and anti-infectives and a ‘Discovery’ portfolio of earlier stage assets,” Shore Cap analyst Dr Tara Raveendran said in the note to clients.

Jefferies, meanwhile, reiterated a“buy” recommendation and set the price target at 229p.

“The current 31% discount is cheap in our view and allows no value for Arix's private assets,” said the broker.

Inflexion points

  • Investee companies have 28 clinical trials underway
  • Multiple results from trials expected over the next 18 months
  • Analysts rate the value of the portfolio way above market price

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