Resetting the stage

Arix Bioscience (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, sourced via its extensive network and partners. The company has announced a restructuring of its Board and executive team recently, which has resulted in a significant and sustainable reduction in its operating overhead, and greatly extended its cash runway.

• 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.
• Change at the top: ARIX has made two separate announcements recently that have greatly reduced the size of its Board, refocused the investment team, and resulted in a significant reduction in operating costs. This has greatly increased its cash runway, which is important in the current global economic environment.
• Reducing annual overhead: In fiscal 2019, ARIX reduced its administrative overhead by 17% to £9.7m. Recent changes to the management team and Board of Directors are expected to see this fall further, to ca.£7.0m (-28%) in fiscal 2020 and a normalised and sustainable £5.5m (-21%) in fiscal 2021.
• Autolus update: On a separate note, investee company Autolus (AUTL.OQ) announced that the US Food & Drug Administration (FDA) had accepted its investigational new drug (IND) application for AUTO1, its lead CAR-T product candidate for the treatment of adults with acute lymphoblastic leukaemia (ALL). This will allow Autolus to initiate a pivotal trial with AUTO1-AL1.
• Investment summary: ARIX shares are currently impacted by the global macroeconomics affected by COVID-19 and some negative sentiment towards biotech. This has resulted in some volatility in the share prices of some of its listed portfolio companies, which is likely to remain the case until there is greater clarity regarding the easing of the global lockdown. Meanwhile, the market responded very favourably to ARIX’s reduction in operating costs, with its share price rising ca.40%.