Research from the cream of British universities is proving to be a fertile hunting ground for Imperial Innovations (LON:IVO). Imperial found its roots in 1986 as the technology transfer office of Imperial College London (ICL), linking up promising projects with business gurus who could make them profitable. The company, which became a wholly owned subsidiary of ICL in 1997 and listed on AIM in 2006, has since taken that to the next level. Imperial now works within the so-called “Golden Triangle” that links ICL and University College London and Cambridge and Oxford universities.
Chief executive Russ Cummings believes the triangle could eventually rival Boston or Silicon Valley in the US for the quality of its technical innovation and its links with corporates. “We’re working in this incredibly rich seam of intellectual property from the universities and that’s part of our competitive advantage,” Cummings told Proactive Investors in an interview. Imperial is one of a number of investment companies that have sprung up in response to government attempts to help universities turn good research into sound business opportunities. It was created as a private company in 2005 and raised £10mln before generating a further £26mln in its IPO about a year later. Since then, the group has grown into a business with a market capitalisation of £585mln and a range of companies spanning sectors such as therapeutics, medtech & diagnostics, engineering & materials and information communications. This week, it announced it was raising £100mln to ramp up investment in its companies via a placing of about 23.5mln new shares at 425p apiece with institutional investors. ICL still holds about 17% of the share capital, but the company has brought other major investors on board including fund management guru Neil Woodford and his Woodford Investment Management.
Others include Invesco Perpetual and Lansdowne Partners. In the first five years, it worked exclusively with ICL and still has rights to the university’s intellectual property until 2020. It has a revenue-sharing agreement with the college which Cummings says incentivises its academics. But in 2011, having formed an experienced executive team, raised capital and established a track record of working with Imperial, the company “declared itself open for business”. Since then, Imperial has been working with academics at Oxbridge and UCL. One of the latest developments in that collaboration has been a £24.75mln investment in UCL’s new technology fund, matched by the European Investment Fund – part of the EU. A third of the companies it helps to create and back now come from Cambridge and ICL with the rest coming from the other two universities – and now it is upping the pace. In the first five months of this financial year, Imperial invested £21.2mln in its portfolio and added five new companies, compared to six in the whole of the previous year. In the last few weeks, the group stepped up its investment rate, committing a further £49.4mln in aggregate to the substantial new funding rounds for medical companies Inivata and Mission Therapeutics and the new UCL Technology and Apollo Therapeutics funds.
Earlier this week, Imperial said Mission had raised £60mln to advance a series of first-in-class potential drugs to treat cancer, neurodegenerative and other diseases. “Our portfolio reflects the strength of the UK science base and the reputation that the universities have in medical research and computer science,” Cummings said. The company matches up academics with business people who can commercialise their findings. While the business people may take the companies forward, academics often stay on board in senior technical or advisory roles. It is also careful to target its investments at areas benefiting from UK, EU and international research grants. Asked whether he supported the UK staying in the EU, Cummings stressed that the quality of UK scientific research would help maintain its international appeal. He added: “We currently benefit from being part of Europe. We see evidence of an amazing amount of co-operation and academics are interested in sharing that, not only between institutions in the UK but also in continental Europe and internationally. That collaboration will have to continue.”