Investment Policy and Strategy
The Company has delegated responsibility for day-to-day investment of its assets to the Investment Manager. Consistent with the Company’s investment objective, the Investment Manager makes the majority of its investments in biotechnology companies focused on drug discovery and development. A small number of investments is also made in related sectors such as medical devices or healthcare services.
The majority of the Company’s assets is generally invested in smaller and mid-capitalisation quoted companies, with a minority in larger capitalisation quoted companies. The Investment Manager seeks to invest up to 30% of the Company’s assets in unquoted companies, while allowing an upper limit of 40% as the point at which no investments would be made into new companies, though follow-on investments would continue to be made into existing portfolio companies to continue their development and/or protect an existing investment.
Investments are made in quoted public companies with an expectation that these companies will benefit from a significant re-rating in valuation when they achieve clinical trial success, receive regulatory approvals for their products or execute M&A or licensing deals. For unquoted investments, the Investment Manager seeks to generate gains that represent multiples of invested cost primarily through the sale of these unquoted companies to strategic buyers including major pharmaceutical companies or, in some cases, through a flotation.
The Investment Manager has made the majority of its investments in the US, which is the most mature and established market for pharmaceutical drugs, and as a consequence has the most established commercial biotechnology industry with the broadest and deepest community of biotechnology companies. However, the best investments are sought worldwide, so the Company will usually have some investments in Western Europe and occasionally elsewhere, such as Australia or Asia.
The Board has negotiated an overdraft facility. Borrowings are made on a relatively short-term basis to exploit specific investment opportunities, rather than to apply long-term structural gearing to the Company’s portfolio of investments.