Genghis Lloyd-Harris, Senior Advisor at life sciences investment firm Abingworth, and Jonathan Tobin, Partner at life science venture capital firm Brandon Capital, joined our Ventures team as investors in residence in November 2023. Our Investor and External Relations Lead, Tanya Hughes, spoke to them about the current market and how their new roles will fit into it.
Genghis Lloyd-Harris (left) and Jonathan Tobin (right)
GLH: The first thing is there's been a drop off in venture funding. The biotech sector reached its peak in 2021 and since then, we've been in a downswing. The Biotechnology Innovation Organization estimates that in 2023 there was $8.6bn globally that went into oncology venture deals, but in 2021 there was $18.1bn. The number of mergers and acquisitions (M&As) in 2021 was higher than at any time in the last ten years, and then it came down. M&A is picking up again now because valuations became cheaper. That was long predicted and it's finally happening.
One of the great things about Cancer Research Horizons' Seed Fund is that we're here in good times and bad times. The fact that it's a winter for biotech doesn't alter the fact that we're here and willing to stand by the academics who are innovating and trying to get their products through to the clinic.
JT: As a share, it’s probably down a bit, but oncology will always be interesting to investors because it's just such a big market. It affects one in two people in their lifetime. There are lots of great breakthroughs, but there are still massive medical needs. The areas in oncology that are attracting most attention are antibody drug conjugates (ADCs), where there's been over $100bn of M&A deals in the last two years, and the radioligand space, which was always thought to be logistically too complicated to become mainstream. But, ultimately, clinical data trumps everything else.
Cell therapy’s been really tough. It's been tricky to raise money in this funding environment for companies that need bricks and mortar. If you need to raise well over $100m to get clinical proof-of-concept, that's a tough place to be, especially in Europe.
GLH: And cancer vaccines are very hot. Because of the pandemic and people understanding messenger RNA vaccines, cancer vaccines are back in favour. We have a brilliant example in our portfolio, Infinitopes.
The fact that it's a winter for biotech doesn't alter the fact that we're here to stand by the academics who are innovating.
GLH: One of the things we do with our Seed Fund is invest in promising technologies that are just a bit too early or a bit too risky for traditional venture capitalists.
JT: The interesting thing the Seed Fund does is validate ideas, funding people who can turn scientific ideas into companies, and facilitating the work done internally in our Therapeutic Innovation (TI) labs to develop assets that have commercial potential. One of the best things that our Seed Fund and TI can do with all the ideas that come out of Cancer Research UK is validate them, taking them to a point where they’re attractive to firms that can invest tens of millions of pounds to get them all the way to the clinic.
GLH: One of the things is to try to help bridge the gap between traditional venture capital and this high-risk, earlier stage Seed Fund.
JT: That’s right. Everything that gets seeded, if it's successful, will need to raise larger amounts of money. Because Genghis and I have seen thousands of these pitches and know how investors think, we can help secure that financing.
Another thing we do is go on the boards of some of the companies we invest in, helping to guide that strategy and facilitate introductions to our network of co-investors. We also bring an external perspective in terms of benchmarking the quality of opportunities and ideas that come through the door.
Everything that gets seeded will need to raise larger amounts of money. Genghis and I can help secure that financing.
GLH: It’s still tough. There have been a few initial public offerings (IPOs) and M&A is picking up, but it's been biased towards late stage, so it’s a difficult time for what we're doing with the early stage. Venture funds are to some extent keeping their powder dry by adding to their existing portfolios rather than doing new deals. It's not a nuclear winter, but it is a winter.
JT: There are lots of companies that are going out of business, but some of them quite frankly shouldn't exist. Venture funding is very cyclical. It's feast or famine, and during the times of feast, there's an overabundance of companies that raise too much money, and in the times of famine, really good ideas can't raise any money. That swing isn’t the most efficient way to fund innovation, which is very serendipitous. Because our Seed Fund is non-profit, it’s relatively consistent, it’s sustained. The output of basic research is completely unpredictable, so having a facility that isn’t dictated so much by the market cycle is really important.
GLH: We’re willing to have an impact and support the highest risk situations even when the market is in a downturn and when there's a lot of pessimism among investors.
GLH: One of the things we’re keen to do is expand our network of co-investors through events like our investors’ breakfast series. We hope to host more things like that in the future.
JT: That’s right. We've seeded around a dozen very early-stage companies, some of which are now maturing. Part of our job is to help those companies get out there and meet investors.
Jonathan Tobin and Genghis Lloyd-Harris join Cancer Research Horizons’ Ventures team as investors-in-residence. Jonathan and Genghis will also join the Investment Committee for Cancer Research Horizons’ £30m Seed Fund, set up to support the formation of new companies that offer cutting-edge cancer-beating ideas and discoveries.
Accelerating high-potential, early-stage innovations into patient impact through seed funding, expert networks and business building support.
With a growing portfolio of start-ups, we're bringing together the community to spark the next breakthrough in cancer research.
