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Hardman & Co

Arix Bioscience 1Q’20 portfolio update

Arix Bioscience PLC (LON:ARIX) is a listed global venture capital (VC) company that presents an opportunity for institutional and retail investors to participate in the high risk-return profile of early-stage biotech investing. ARIX minimises risk through a combination of an expert investment team and portfolio diversification. The company announced recently a restructuring of its board of directors and executive team, which has resulted in a significant and sustainable reduction in its operating overhead, and greatly extended its cash runway. Meanwhile, all of ARIX’s listed investments have updated the market with their quarterly reports.

  • Strategy: ARIX sources investments from an established network and a strong scientific reputation. The portfolio is diversified by therapeutic area, treatment modality, stage of discovery/development and geography to balance the risk-reward profile. Value is realised when ARIX successfully exits its investments.
  • 1Q’20 results: All the listed companies in ARIX’s investment portfolio have released results in the past two weeks. Significant progress has been made during the quarter and announcements have highlighted that most portfolio companies have good cash runways.
  • Iterum: Portfolio company Iterum is expected to announce results from its Phase III trial with sulopenem in complicated urinary tract infections (UTIs) imminently, with data from uncomplicated UTIs by the end of 2Q’20. In the event of positive outcomes, Iterum is likely to strengthen its balance sheet with an equity raise.
  • ASCO: Given that over 50% of the investment portfolio is in companies working in the field of oncology, there is likely to be a plethora of portfolio company announcements during the next two weeks, at the American Society of Clinical Oncology (ASCO) 2020 meeting, which is being held using a virtual scientific programme. News has already started with the release of abstracts.
  • Investment summary: Global macroeconomics, affected by COVID-19, have resulted in some share price volatility among some of ARIX Biosciences’ listed portfolio companies; in turn causing volatility to the ARIX share price. However, while positive quarterly statements have been reflected by favourable share price movements for some portfolio companies, this has not followed through to ARIX’s share price. Although the market did respond very positively to ARIX’s sustainable reduction in operating costs, the shares have much further to go.

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