134. Bull, Bear & Beyond – IP Group executive interview

Good to see you again, Dan. Thanks for having us. So there have been several announcements regarding the technical and commercial progress across the portfolio recently. A particular highlight there was FISA's acquisition of Metser. Can you explain the importance of that transaction? Yeah, so this is something that we highlighted in the half-year results for the first time. We haven't typically talked a lot about the licensing side of IP Group's business, mainly because for the past few years it's contributed a few hundred thousand of income to the group. And one of the transactions this year that was quite interesting was the IPO of a business called Metser, which has got a novel GLP-1, one of the anti-obesity drugs, and that was progressing through into phase two and they IPO, they raised a few hundred million, and so obviously we were quite interested because we licensed the fundamental technology behind their lead program and a number of their other programs to them on commercial terms. The fact that they had raised a few hundred million by way of IPO gave them the firepower to be able to develop that compound, which was big news, and at the time that we announced the results we flagged this to shareholders, and then a week after the results it was announced that FISA was acquiring the business for 4.9 billion cash up front plus another couple of billion in milestones. And so I think that to us really highlighted the degree to which there could be some really significant potential value here.

Yeah, we're quite excited by the news. We haven't put any financial information out there other than what we included in our RNS, but to say we do benefit from a low single-digit royalty. I think as always your analyst is close to the pulse and has picked up the scale of potential revenues that could come from the compound if it successfully gets through phase two and phase three and into the market. But yes, if those numbers come to fruition and that's just from the one lead compound, it's worth noting that we've got IP over a number of compounds that they're developing. So we're watching it significantly, and from your viewers' point of view, it's worth noting that this isn't something which is reflected in our NAV or our NAV per share. So the total value in our books at the half year was about 1.2 million or 1.5 million. It's a very small amount. So over the next six months, as hopefully the compound progresses through clinical trials, we will provide some further financial information, and already the analysts that cover us, Milos included, have started to give some indications of what the value could be for the group. But it's fair to say it could be quite significant for us, which would be great news for shareholders.

Yeah, thanks for picking that one up. That was one we thought it was important to set out a longer-term ambition for the amount of cash we could realize from the portfolio, and 250 million in cash is quite a meaningful proportion of our 500 million-ish market cap at the moment. So we're quite ambitious on this, but it wasn't with unfounded confidence, and I think the recent announcement of the acquisition of one of our portfolio companies in the AI space, Monolith to CoreWeave, one of the very big US NASDAQ listed businesses operating in that space, is hopefully a flavor of why we feel confident. Another transaction during the first half of the year, which I haven't spoken about for a long while, was an IPO of one of our businesses. We were very pleased for Dan and Gabe and the team that they had a successful IPO of Hinge Health on the New York Stock Exchange. That's a business that we backed right from the very beginning with our first investment of about £50,000. And we're already at the point, having taken a bit of cash off at the IPO, of having made a 50x type return on the amount we invested. We invested almost a million dollars in the business. So that's very interesting. It's trading well in the aftermarket, and our remaining balance, which was about £4 million of value or about 45p per share as at the half year, is currently under lockup. But of course it offers some opportunities for liquidity in the second half of the year and beyond. And there are other opportunities within the portfolio for realizations. And that's why we've got the confidence in saying that we can achieve that 250 million at least outside of our holding in Oxford Nanopore by the end of 2027.