Hello and welcome to Edison TV. Today I'm speaking to Greg Smith, chief executive officer at IP Group, a leading investor into science-based and deep tech companies with a portfolio spanning healthcare, deep tech, and next generation computing. Craig, many thanks for joining me today.
Good to see you, D. So you've just reported during H1 results, you've seen NAV per share move up by 3.2% to 1.14p, alongside nearly 67 million pounds worth of realizations. Can you discuss the key highlights of the period for the investors?
Yeah, I think you're right. The NAV per share increase up to 114p was, I guess, the single metric which is easiest to get your head around and demonstrates progress over the long term. I think for us as a business, it was the breadth of the progress that was encouraging. So, you mentioned the realizations. We made very good progress on realizations. That's been one of our medium-term targets that we have put out there to the market and we're making good progress against it. We saw some de-risking of our Fiser asset. I'm sure we'll have a bit of time to talk about Oxford Nanopore, which made good progress in the period. And I think encouragingly, some of the things that we talked about in the half year were around the progress in some of those companies that are outside of the top five or 10 holdings that make up a big proportion of their value now, but that hopefully will be the drivers of value in the future. So I think it was the breadth of the progress as well as the NAV per share increase that was encouraging and I think gives investors confidence that the business is moving in the right direction.
Thanks, and we'll turn to some of the progress there later on. Just in terms of the realizations, you've now generated 154 million pounds of realizations since the start of 2025. If you've got the goal of reaching 250 million by 2027, what should we read into that? Should we read into this that your portfolio is now reaching a more mature, sustainable phase?
Yeah, I think that's the right conclusion to reach. As you say, we're making good progress against that 250 million. I remember the process of setting that, what we consider to be quite a stretching objective, back at the beginning of 2025, and at that point it was getting on for more than half of our market cap at the time. So we set ourselves an ambitious target to try and monetize some of that NAV value into cash, and shareholders can really then see that proving out in cash terms. The portfolio has definitely matured. If you roll back 5, 10 years, I would say there were more companies that were more heavily weighted towards technology risk than commercialization risk. And I think that balance has shifted a bit more in favor of the commercialization risk. And as companies get further through their commercialization journey, we as an investment team, as a management team, it gives us more opportunity and more options when it comes to realizing that value into cash for shareholders. And I think again, it was the diversity of sources of realizations that was encouraging in the first half and beyond. So, we had a couple of public market companies. One was selling down in Hinge Health, which listed at the back end of 2025 onto the New York Stock Exchange. There was a full acquisition of another public business by Lily. And we also had an outright private sale acquired by a strategic. So, three sort of different sources. And again, I think that's what's giving us confidence, that breadth of potential realization opportunities is what gives us confidence around delivering that 250 million cumulative by the end of 2027.
Thanks. And now turning towards your exposure to FISA's anti-obesity program, that was one of the key drivers of NAV uplift over the period, and that was driven by de-risking of the asset. Can you talk about that and also what the next key milestones are which would enable you to de-risk that further and write that valuation up?
Yeah. So that again was a story of more clinical progress. So as viewers and shareholders will be aware, we've got exposure across a number of different programs that FISA are taking forward. I mean, incredibly, they're running 10 phase three programs across the lead compound berabenide. And during the period, in fact just after the period end for our results, Albert Bowler, the chief executive of FISA, came out and said of the three programs that are actually running, there's three phase three programs, all three of those are now almost fully recruited, which is as we look forward to the next milestones, which of course are successfully completing those trials on time, getting the readouts, and then seeing what the next commercial point of progress is for the businesses. That's a pretty key statement from them because often the thing that drives the timing of those clinical trial outputs is being able to recruit the patients onto the trial. So that was very encouraging. The thing during the period which had the biggest impact on our valuation was actually progress in the second program, which is a combination of berabenide with an amaline, so another compound that's used in the same treatment area, and that moved into a phase 2b. And so the risk that we apply to those future cash flows just reduces a bit, and so that is what led to the uplift. As we look forward for the rest of this year and into next year, obviously progress on those two areas is important. There are also a number of other compounds that we've licensed to FISA that they're developing. A couple of those are in phase one. So there's a thing called a prod drug which could potentially be quarterly dosing, so very long distances between dosing. And those very early programs, we've got little to no value on those at all in our current valuation. So I think as they hopefully progress successfully through phase one and out, that could be another value driver. So it's encouraging to see it, but it's important for our shareholders to recognize it's not like we've got a single program and we're waiting on the results of a single program. It's a breadth of different compounds moving through the clinic in different indications, and that's why we like the risk-reward profile of that asset.
Yeah, very interesting. Looking elsewhere in the portfolio, you talked a little bit about Oxford Nanopore, the exit from Mitser. Can you talk about the key interesting developments elsewhere in the portfolio for the business?
Yeah, I mean Oxford Nanopore, which you picked up there, is an obvious example. That is a business that is reaching a good stage of maturity now. We've been holders for a long time. Our thesis over the last sort of 12, 18 months has been around that business successfully moving to break even. I think we were maybe a bit more confident than the rest of the city that they would achieve that on the timetable that they set out, and I think the half-year results and particularly the very significant improvement in their EBIT loss has led to increased confidence across the community. I think that our investment thesis there will play out over the next 12 to 18 months, and again back to this, that gives us some more options for thinking about liquidity and realization. We had some good progress on the clinical side. So for example, Enterprise Therapeutics, which is another one of our clinical stage development therapeutics businesses, they had a very interesting readout in cystic fibrosis, a very difficult to treat area and can hopefully be very valuable commercially because it's a very difficult to treat disease. On the clean tech side, very encouraging to see Arta, so our next generation hydrogen electrolyzer business. They achieved their first commercial megawatt, 1 megawatt plant order, which is obviously a milestone in itself, and now they need to go on and deliver that in the field during the first half of next year. And then sort of straddling deep tech and also clean tech, Oxer, which is our self-driving autonomous vehicle software business, now very much focused on off-road applications. So things like ports and airports where you're having to tow stuff around. Not only did that company complete a $100 million funding round that we announced in January, they also entered into a very interesting strategic joint venture with Dubai Future Foundation, and that is to put a number of vehicles into Dubai's logistics system and could be hopefully the gateway into scaled deployment. So a very important commercial milestone for the business. So yeah, coming back to that theme that we started with, it was encouraging to see that sort of breadth of progress across the portfolio.
