A life sciences firm that has received millions in funding from the Welsh Government has been put into administration.
Alternative Investment Market listed stem cell development firm ReNeuron, based in Bridgend, received a £5m equity investment from the Welsh Government’s £50m Wales Life Sciences Investment Fund (WLSIF) back in 2013 – as part of a £25m equity round also supported by institutional investors Abingworth and Invesco.
At the same time Welsh Government also announced a £7.9m grant package to support its relocation from Guildford to Pencoed to establish a cell manufacturing and development facility. The Welsh Government has been asked to clarify whether all the grant offer was drawn down by ReNeuron and if any other subsequent support was also provided.
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Last year, the Welsh Government’s flagship life sciences investment fund was forced to write off £27m and its performance was dubbed a national embarrassment by the Welsh Conservatives. Read more on that here.
While ReNeuron was actively seeking to raise new investment, in its interim results last November the company said it only had a cash runway, with bank deposits of £5.1m, up until April this year.
Without being able to raise new investment that scenario has now materialised with Stephen Cork and Mark Smith of Cork Gully LLP having been appointed joint administrators. Loss-making ReNeuron employs 19.
In a statement to the City ReNeuron said that despite the appointment of administrators it was still exploring fundraising options, as well as being acquired. However, it added: “There is no guarantee that such negotiations will successfully conclude, and should they not, any residual value to transpire from the administration process will be distributed to the agreed creditors and, should funds permit, the company’s shareholders with the company being dissolved thereafter.”
There is a huge swathe of pre-revenue life sciences in the UK seeking much need capital investment to get them through clinical trials and regulatory approvals, on the long road to commercialisation.
The now fully investment WLSIF was championed by Port Talbot-born life sciences investor and serial entrepreneur Sir Chris Evans and then Economy Minister Edwina Hart, went live in 2013.
In a procurement process overseen by Finance Wales (now the Development Bank of Wales, the contract to manage the fund was awarded to a company called Arthurian Life Sciences, which was chaired Sir Chris. It was subsequently managed by Arix Capital Management following the acquisition of Arthurian by Arix Bioscience.
One of the companies it invested in was ReNeuron which Sir Chris had been “intimately involved with the creation and development of” and of which he bought a £600k stake in in 2013 when he also became a non-executive director. Fund managers and funders in the close knit life sciences investment community often invest in a personal capacity to boost investment rounds.
Last year the management of the fund’s remaining investments came under the Development Bank of Wales as part of its winding down, after £27m worth of investment had been written off. Its performance was labelled a “national embarrassment” by the Tories.
The fund’s biggest hit came with the collapse in 2022 of proton beam cancer treating centre business, Rutherford Health, in which it had invested £10m in equity as part of a £100m investment round in 2015.
There was one notable success for the fund with its equity investment into Merthyr-based drug trial specialist Simbec Orion. Having invested more than £8.75m into Simbec, its subsequent acquisition through a private equity financed management buyout in 2019 generated a £20m capital return to the Welsh Government – after the proceeds from the exit where passed back to it by Development Bank of Wales.
There was no requirement for the fund manager to match fund the £50m, but the 11 investments into nine firms made by the WSLIF leveraged a further £200m of private sector investment.
The remaining four live investments in the fund, based on external assessments, had a value of just £2.5m.
In its latest accounts the development bank said the fund reached the end of its life in February last year and a liquidation process had commenced. It added: “This has caused a previously unrealised loss of £27.1m to be become realised.”
