# Arix Bioscience With high risk can come high reward

- Link: https://www.directorstalkinterviews.com/arix-bioscience-with-high-risk-can-come-high-reward/412805908
- Published: 2020-02-19T07:24:00+00:00
- Author: Amilia Stone

**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 its expert investment team and with portfolio diversification, sourced
via its extensive network and partners. An experienced board protects the interests
of Arix’s shareholders. Arix’s latest published Net Asset Value (NAV) of £232m (
1H’19) includes 17 portfolio companies (PCs) into which Arix has invested ca.£135m
since launch in 2016. The net cash position at 31 December 2019 is forecast at ca.
£48m.

 * **Business model:** Arix provides capital, operational expertise and network 
   access to entrepreneurs and companies from the seed stage through to undervalued
   public companies. As a listed company itself, and unlike traditional VC models,
   Arix is not constrained by exit timelines, and its investors can trade shares
   at will.
 * **Strategy:** Sourcing benefits 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 inherent
   to biotech investments. Value is realised when Arix exits its investments.
 * **Performance:** Arix is relatively young, and its performance cannot yet be 
   assessed through its exit returns. However, other value-accretive events validate
   the strategy, including the IPOs of four PCs. Since its float in 2017, Arix’s
   reported NAV/share has increased from 150p to 170p (at 1H’19).
 * **Risks:** Value inflection points include PC progression through clinical, regulatory,
   partnering and financial milestones. Given that 29% of the portfolio value is
   pre-clinical, much of the risk lies in the investment team’s skill in identifying
   innovation with clear commercial potential – allowing it successful exits.
 * **Investment summary:** Arix Bioscience stock is currently suffering from a market
   overhang and some negative sentiment towards biotech that is affecting its share
   price, and the share prices of some of its PCs have fallen following IPO. Although
   the portfolio’s fundamentals are unchanged, investors should ensure that they
   understand the basis of the NAV and its discount before seizing the opportunity
   to participate in the basket of well-chosen biotech.

[DOWNLOAD THE FULL REPORT](https://www.hardmanandco.com/wp-content/uploads/2020/02/ARIX-Initiation-19-February-2020.pdf)

Share on: