NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN OR TO THE UNITED STATES, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE OF THIS ANNOUNCEMENT WOULD BE UNLAWFUL. PLEASE SEE THE SECTION ENTITLED "IMPORTANT NOTICES" TOWARDS THE END OF THIS ANNOUNCEMENT.

This announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the prospectus published by Conviction Life Sciences Company Limited (the Prospectus) (and in any supplementary prospectus) and not in reliance on this announcement. A copy of the Prospectus is, subject to certain access restrictions, available for inspection on the Company's website: www.clsc.uk and at the registered office of the Company. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase, investments of any description, or a recommendation regarding the issue or the provision of investment advice by any party.

LEI: 984500E67FC2F039E894

25 November 2022

Conviction Life Sciences Company Limited

(CLSC or the Company)

Initial Public Offering on the Premium Segment of the London Stock Exchange

 Intermediaries Offer Launch

Conviction Life Sciences Company Limited announces the launch of its initial public offering (IPO) including an Intermediaries Offer. The Company is seeking to list on the Premium Segment of the Official List of the FCA and to begin trading on the main market of the London Stock Exchange.

The Company is targeting gross proceeds of up to £100 million through the issue of up to 100 million Ordinary Shares by way of the Initial Placing, the Offer for Subscription, Direct Subscriptions and the Intermediaries Offer at 100 pence per Ordinary Share (the Initial Issue). The Company is also undertaking a placing programme for up to 250 million Ordinary Shares (less the number of Ordinary Shares issued pursuant to the Initial Issue) (the Placing Programme).

The Company is pleased to announce that Interactive Investor, AJ Bell, Equiniti, PrimaryBid and Jarvis Investment Management have been appointed as intermediaries and any additional Intermediaries appointed following the date of this announcement will be included on the Company's website: www.clsc.uk.

Key Information and Investment Highlights

·    CLSC is a newly established closed-ended investment company managed by Plain English Finance Limited. The Initial Issue will raise funds for the Company to deploy in the compelling structural investment opportunity that the Directors believe is presented by the global life sciences and medical technology markets.

·    The Board and the Investment Manager have more than 200 combined years of financial markets and relevant life sciences experience.

·   The Company's investment objective is to deliver capital appreciation to Shareholders over the long-term by investing in a conviction portfolio of life sciences and medical technology businesses, based primarily in the UK, Europe and Australasia.

·    The Company will invest in both Publicly Traded and Private companies - c. 70% and c. 20% of the total portfolio value respectively.

·    The Company will target an annualised Total NAV Return of 20 per cent over the long-term.*

·    The Company expects to hold minority equity positions in between 20 and 40 businesses with effect from the date falling six months from Initial Admission.

·    The portfolio will seek exposure to a diverse set of technologies, including (but not limited to) diagnostics and therapeutics, as well as pharmaceutical services businesses. Platform technologies (where the intellectual property has the ability to address multiple diseases or otherwise create multiple assets) will generally be preferred.

·    The Investment Manager will look to invest in businesses that address a very sizeable market or which have products with scope to be first or best in class.

·    The Investment Manager will seek to construct a portfolio of investments such that there will be a number of clinical and commercial inflection points within the portfolio as a whole in any given quarter.

The Opportunity

·    Life science companies serve large and high growth markets with powerful tailwinds. At the end of 2021, the top 701 biopharma companies in the world had grown in value to US$5.5 trillion, while global pharmaceutical revenues for 2021 were US$1.42 trillion.

·   Notwithstanding this market size and growth potential, the Investment Manager believes there are a large number of life sciences and medical technology businesses which are structurally undervalued, particularly in the United Kingdom, Europe and Australia.

·    The Investment Manager believes that the most important drivers with the potential to unwind this structural undervaluation will be: (i) tangible commercial delivery from the companies themselves; and (ii) increasing interest in the sector as an understanding of the pace of scientific progress becomes more widespread.

·   Growth in the life sciences and medical technology sector is being driven principally by scientific and technological progress.  Since the 1990s, the cost and time required to sequence a human genome has fallen from approximately US$3 billion and about thirteen years, to US$200 billion and a few hours.   This reality has far-reaching implications for the life sciences market. This is a sector where science can create significant economic value.

·    The unwinding of this structural undervaluation and tangible commercial delivery from portfolio companies has the potential, in the view of the Board and the Investment Manager, to deliver significant value to shareholders over the long term.

*This is intended to be a target only and reflects the Board's and the Investment Manager's expectations of the potential returns that can be generated from investing in a portfolio of life sciences and medical technology businesses which have the potential to generate substantial returns for their shareholders over the long-term, recognising that not all portfolio holdings will achieve their potential and that some may fail in their entirety. The actual return generated by the Company over any period will depend on a wide range of factors including, but not limited to, the performance of its portfolio holdings, the terms of the investments made, general economic and market conditions, fluctuations in currency exchange rates and the other risks described in the section of the Prospectus headed "Risk factors". Accordingly, prospective investors should not place any reliance on the target return referred to above in deciding whether to invest in the Ordinary Shares.

Participating Intermediaries Offer

The following entities have been appointed by the Company as Intermediaries pursuant to the Intermediaries Offer. The names of any additional Intermediaries who may be appointed by the Company following the date of this announcement will be published on the Company's website (www.clsc.uk):

·    AJ Bell: https://www.ajbell.co.uk/

·    Equiniti: https://eqi.co.uk/ and https://www.shareview.co.uk  

·    Interactive Investor: https://www.ii.co.uk/

·    Jarvis Investment Management: https://www.sharedealactive.co.uk/ and  https://www.x-o.co.uk/

·    PrimaryBid: https://primarybid.com/uk

ISAs, SIPPs and SSASS

Shares which are bought pursuant to a public offer (which should include the Offer for Subscription) or in the secondary market should be eligible to be held in a stocks and shares ISA, subject to applicable annual subscription limits (£20,000 in the tax year 2022/2023). An intermediaries offer may be regarded as a public offer for these purposes provided that any member of the public is able to apply for shares using the named intermediaries (as opposed to an offer made by, or on behalf of, a company to intermediaries for them to allocate to their own clients, which would not be a public offer). The Company expects that the Intermediaries Offer (which is available to any member of the public in the UK) should therefore be regarded as a public offer for these purposes and Ordinary Shares bought in the Intermediaries Offer should therefore be eligible to be held in a stocks and shares ISA.

Offer for Subscription

Under the Initial Issue, Ordinary Shares will be made available by the Company under the Offer for Subscription at a price of 100p per Ordinary Share, subject to the terms and conditions of application under the Offer for Subscription set out in Part 10 (Terms and Conditions of Application under the Offer for Subscription) of the Prospectus. Investors wishing to apply for Ordinary Shares in the Offer for Subscription should visit https://clsc.nevilleregistrars.co.uk/.

Geoff Miller, Chairman of CLSC said:

"Conviction Life Sciences is seeking to provide investors with exposure to a broad portfolio of exciting, fast-growth companies where the Investment Manager believes there is evidence of significant undervaluation. With more than 200 combined years of financial markets and life sciences experience between the Board and the Investment Manager, the Directors of CLSC have confidence that we have established a well-positioned team to capitalise on this opportunity.  We intend to invest in up to 40 companies serving very sizeable markets which are addressing global issues relating to more than just healthcare. Biotech can and will have a huge impact on agricultural production and clean energy generation for example, which could go a long way to addressing environmental degradation and climate change."

Andrew Craig, Founder of Plain English Finance Ltd, Investment Manager of CLSC, said:

"We believe that the opportunity to invest in life science companies, particularly in the UK, Europe and Australia, is compelling. This is because we believe that there is a structural opportunity which has led to numerous businesses being significantly undervalued.  

"As a result, CLSC has been created to provide investors with a vehicle through which to capitalise on this opportunity to invest in undervalued life sciences companies in these geographic markets.  We have a team of highly experienced life science and financial services experts who are unified in this belief and well-positioned to execute against this investment strategy.  

"We believe that biotech is a burgeoning theme, primarily due to the exponential pace of scientific progress and because many of our biggest remaining challenges as a species concern biological systems.

"With this in mind, we plan to invest in a portfolio of Publicly-Traded and Private businesses. In doing so, we aim to help drive improved patient outcomes and wealth creation, and with the potential for multiple value catalysts across our intended portfolio, we believe we can deliver compelling returns over the long-term."

Prospectus

A copy of the Prospectus has been submitted to the National Storage Mechanism and is available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The Prospectus is also available on the Company's website at http://www.clsc.uk.

Any capitalised terms used but not otherwise defined in this announcement have the meaning set out in the Prospectus.

Expected Timetable

*Underlying Applicants who apply to Intermediaries for Ordinary Shares under the Intermediaries Offer will not receive share certificates. 

The dates and times specified are subject to change without further notice. All references to times in the Prospectus are to London time unless otherwise stated. Any changes to the expected Initial Issue timetable will be notified by the Company through a Regulatory Information Service.

Initial Issue Statistics

* Assuming Gross Issue Proceeds of £100 million. The number of Ordinary Shares to be issued pursuant to the Initial Issue, and therefore the Gross Issue Proceeds, is not known as at the date of the Prospectus but will be notified by the Company via a Regulatory Information Service prior to Initial Admission. The costs of the Initial Issue to be borne by the Company have been capped at 2 per cent. of the Gross Issue Proceeds (that is £2 million assuming Gross Issue Proceeds of £100 million). To the extent that the costs and expenses of the Initial Issue exceed 2 per cent. of the Gross Issue Proceeds, such excess (including any VAT) will be reimbursed to the Company by deducting such amount from the management fee to which the Investment Manager is entitled.

Share Issuance Programme Statistics

Dealing Codes

For further enquiries please contact

About Conviction Life Sciences Company Limited (CLSC or the Company)

Investment Objective and Policy
CLSC is a newly established investment company with an investment objective of delivering capital appreciation to Shareholders over the long-term by investing in a high conviction portfolio of both Publicly Traded and Private life sciences and medical technology businesses, based primarily in the UK, Europe and Australasia.

The portfolio will seek exposure to a diverse set of technologies, including (but not limited to) diagnostics and therapeutics, as well as pharmaceutical services businesses.

With effect from the date falling six months from Initial Admission, the Company expects to hold minority equity positions in between 20 and 40 businesses. The Company may also invest in debt or debt instruments issued by such businesses, up to a maximum aggregate amount of 10 per cent. of the Company's NAV measured at the time of investment.  The aggregate holding in any individual business will not represent more than 15 per cent. of the Company's gross asset value, measured at the time of investment.

Platform technologies (where the intellectual property has the ability to address multiple diseases or otherwise create multiple assets) will generally be preferred.

The Company expects to invest approximately 70 per cent. of its capital in Publicly Traded companies and 20 per cent. in Private businesses, retaining approximately 10 per cent. of its capital as cash for follow-on investments.  This allocation may change over time to a certain extent depending on market conditions and where the Board, in conjunction with the Investment Manager, perceives value. No further investments (excluding follow-on investments) will be made in Private businesses if the total exposure of the Company to private investments exceeds 40 per cent. of the gross asset value of the Company measured at the point of investment. There is no such restriction on the proportion of Publicly Traded investments that can be held.

In normal circumstances, the Company expects to allocate approximately 65 per cent. of its capital to holdings that are registered in, or whose principal business is in, the UK and Europe and approximately 25 per cent. of its capital to holdings that are registered in, or whose principal business is in, Australasia. On a case by case basis, the Company may allocate up to 10 per cent. of its capital which would otherwise be allocated to holdings that are registered in, or whose principal business is in, the UK, Europe and Australasia, to holdings that are registered, or whose principal business is, outside that region. In each case, the size of the investment as a percentage of the portfolio as a whole will be measured at the time of investment.

Leverage and Borrowing Limits
Although the Company does not intend to use structural gearing to enhance returns on investment, the Company may, from time to time, use short-term borrowings to manage its working capital requirements, for efficient portfolio management purposes and for follow-on investments in portfolio businesses where the Company does not have ready cash available to fund such follow-on investments in the short term. In any event, borrowings will not exceed 10 per cent. of the Net Asset Value, calculated at the time of drawdown.

Hedging and Derivatives
The Company's portfolio is expected to include holdings with a functional currency other than sterling.  Nevertheless, the Board does not intend normally to employ currency hedging in relation to either the Company's portfolio or cash flows. The Company may, however, use hedging for specific short-term risk management purposes if and when the Board deems this appropriate. Derivatives, such as swaps, may be used for currency hedging in such circumstances.

Investment Restrictions
The Company will at all times invest and manage its assets in a way that is consistent with its objective of spreading investment risk and in accordance with its published investment policy and will not at any time conduct any trading activity which is significant in the context of the business of the Company as a whole.

No more than 10 per cent., in aggregate, of the value of the total assets of the Company will be invested in other closed-ended investment funds. This restriction does not apply to investments in closed-ended investment funds which themselves have published investment policies to invest no more than 15 per cent. of their total assets in other closed-ended investment funds.

Attractive Target Returns
The Directors intend to manage the Company's affairs to achieve capital growth rather than income.

The Company will target an annualised Total NAV Return of 20 per cent. over the long-term. This is intended to be a target only and reflects the Board's and the Investment Manager's expectations of the potential returns that can be generated from investing in a portfolio of life sciences and medical technology businesses which have the potential to generate substantial returns for their shareholders over the long-term, recognising that not all portfolio holdings will achieve their potential and that some may fail in their entirety. The actual return generated by the Company over any period will depend on a wide range of factors including, but not limited to, the performance of its portfolio holdings, the terms of the investments made, general economic and market conditions, fluctuations in currency exchange rates and the other risks described in the section of the Prospectus headed "Risk factors". Accordingly, prospective investors should not place any reliance on the target return referred to above in deciding whether to invest in the Ordinary Shares.

Distribution Policy
Given the capital return nature of the Company's investment objective, it does not have a dividend target and the Board does not anticipate providing Shareholders with a particular level of distribution (if any). However, should the Company realise assets significantly in excess of the amount that can be allocated into further investments, the Board will consider the optimum way to return capital to Shareholders including by way of a special dividend, a buyback of shares or a tender offer.

Continuation Vote
The Company has been established with unlimited life. However, Shareholders will have the opportunity to vote on an ordinary resolution on the continuation of the Company at the annual general meeting of the Company to be held in 2028, and every fifth annual general meeting thereafter. If any such ordinary resolution is not passed, the Directors shall draw up proposals for the voluntary liquidation, unitisation, reorganisation or reconstruction of the Company for consideration by the Shareholders at a general meeting to be convened by the Directors for a date not more than six months after the date of the meeting at which such ordinary resolution was not passed.

Investment Opportunity
The Directors believe that the global life sciences and medical technology markets offer a compelling structural investment opportunity.  This market includes novel therapeutics (both large- and small-molecule), medical technology (including devices and diagnostics), pharmaceutical services and digital health, all of which are large and, the Directors believe, high-growth markets.  The Company seeks to capitalise on the central thesis that, notwithstanding this compelling market opportunity, there are many materially undervalued life sciences and medical technology businesses, particularly outside of the United States.

Scientific and Technological Progress
Growth in the life sciences and medical technology sector is being driven principally by scientific and technological progress.  Since the 1990s, the cost and time required to sequence a human genome has fallen from approximately US$3 billion and about thirteen years[i], to US$200 and a few hours[ii].   This reality has far-reaching implications for the life sciences market. This is a sector where science can create significant economic value.

The technology industry has been responsible for very significant value creation in the last few decades.  The Directors believe that the biotechnology industry can and will continue this into the next few decades, since many of the most intractable remaining challenges for humans concern biological systems.  This is most obvious in the healthcare setting, but biotechnology can also have a key role to play in clean power generation, improving agricultural productivity and environmental stewardship, and even in the development of processing power. The explosion of gene editing and delivery tools, visualisation methods and computer-powered data analysis have allowed scientists to tame biology in ways that were not possible just ten or even five years ago[iii].

It has been estimated that up to 60 per cent. of the world's physical inputs could, in principle, be made using biological means, while up to 45 per cent. of the world's disease burden could be addressed using science that is conceivable today, leading to US$2-4 trillion globally of annual direct economic potential using biological applications by 2030-40[iv]. 

Over and above scientific and technological progress, the Directors believe there are a number of other compelling structural drivers for the sector, as set out below.

Demographics and global growth
The global population is ageing, which increases the rates of many diseases, particularly cancer[v], and demand for healthcare overall.  Humanity is also increasingly suffering from many "diseases of modernity" including, but not limited to, debilitating allergies such as hay-fever, nut-allergies and eczema, asthma, autism, diabetes, epilepsy, inflammatory bowel disease and irritable bowel syndrome, and a raft of other autoimmune diseases including rheumatoid arthritis, coeliac disease, myositis and lupus. In addition, rates of depression, other mental illnesses and obesity are also on the rise all over the world.  These are all significant market opportunities for businesses working in the sector.

The world's rising population and growth in GDP are also drivers of healthcare spend.  Wealthier populations spend more money on healthcare than poorer ones, principally because they can afford to. Rapidly changing demographics mean populations that, until very recently, had no access to healthcare, now have functional healthcare services and drugs available to them. In 2021, India announced plans to double healthcare spending as a percentage of GDP, for example[vi].  The Chinese healthcare market is already the second biggest in the world, having grown rapidly for many years. Some market commentators believe it will overtake the US market within the next few years[vii].

Improving regulatory and political environment
In addition, the regulatory and political environment for life sciences and medical technology has been improving across the world.  Regulators are better funded and politically empowered, and arguably more so than ever as a result of the COVID-19 pandemic, which has resulted in governments looking at ways to increase the speed at which important products are able to gain market access by removing or easing some of the regulatory burdens[viii].  The global response to the COVID-19 pandemic has also demonstrated the potential for innovation and science to overcome major health challenges.

Increasing support from the public sector
Over and above increased funding for regulators, the life sciences and medical technology sector has also been identified as a key strategic sector by governments in many parts of the world.  The sector creates significant economic value and average wages are materially higher than in many industries[ix]. 

The portfolio businesses in which the Company is seeking to invest are developing products which have the potential to be of relevance globally.

US
The US has long supported the life sciences and medical technology sector given its strategic importance and economic value. President Biden's budget for the 2023 financial year included a sum of US$62.5 billion to be allocated to the National Institutes for Health, the primary federal agency in the US responsible for conducting and supporting medical research[x].  There are numerous federal, state and city programmes, which support the sector[xi] over and above high-profile private sector organisations such as the Bill & Melinda Gates Foundation[xii], Chan-Zuckerberg Initiative[xiii], Salk Institute[xiv], The Broad Institute[xv], Schmidt Futures[xvi] and many others that are a source of several billion dollars more in funding for life sciences research and development.

Europe
The EU is similarly supportive of the sector, noting that healthcare expenditure was more than eight per cent. of its GDP in 2019[xvii] and by 2020 the European Investment Bank had provided total financing of close to EUR35 billion for healthcare-related projects worldwide[xviii].

UK

In December 2017, the UK government committed £500 million for the sector in its "Life Sciences Sector Deal". In July 2021, the UK government published the "UK Life Sciences Vision" strategy and announced the launch of a "Life Sciences Investment Programme", increasing the funding available to £1 billion. Whilst these have been encouraging steps, in the context of an economy worth more than £2 trillion annually and which spends more than £40 billion per annum on defence, for example, the Directors believe that the UK sector remains underfunded and there is therefore significant opportunity to deploy further capital in this market.

India
India has the largest public health insurance scheme in the world, providing 500 million people with free healthcare. In its 2021 budget, the Indian government increased spending on healthcare and well-being by 137 per cent. from the previous year's allocation, which represents 1.8 per cent. of its GDP[xix].

China
China's government health expenditure has more than tripled since health reforms began in 2009, increasing from ¥482 billion (US$68.4 billion) in 2009 to ¥1,640 billion (US$232.8 billion) in 2018[xx].

In October 2016, President Xi Jinping announced the Healthy China blueprint, a declaration that made public health a precondition for all future economic and social development. It aims to expand the size of the health service industry to ¥16 trillion (US$2.35 trillion) by 2030[xxi].

Australia
In 2015, the Australian government set up its Medical Research Future Fund ("MRFF").  In 2019, it published its first 10-year investment plan which committed to spending AUD$5.1 billion (US$3.5 billion) on twenty initiatives between 2019 and 2029[xxii].   By July 2020, the MRFF had grown to approximately AUD$20 billion (US$13.5 billion)[xxiii].  The plan was updated in March of 2022 with a second 10-year plan[xxiv].

A large and high growth market in aggregate
As a result of these various structural drivers, the top 701 biopharma companies in the world were valued at more than US$5.5 trillion by year end 2021[xxv]  and global pharmaceutical revenues had grown to more than $1.42 trillion in 2021, up from US$390 billion in 2001[xxvi].  

Worldwide cancer drug sales reached US$176 billion in 2021 and are forecast to grow to more than US$320 billion by 2026, a CAGR of 12.7 per cent.

There are even higher growth rates in key high technology sub-sectors such as cell and gene therapy and gene editing, and robust growth in a broad range of disease treatments including, but not limited to, cancer, diabetes and many autoimmune diseases and mental health conditions.

The Investment Manager believes that key areas of scientific innovation and value-creation include gene and cell therapy and immunotherapy, gene editing/CRISPR, tissue engineering and 3D printing, precision and personalised medicine, synthetic biology, liquid biopsy, surgical robotics, artificial intelligence as applied to drug design, microbiome therapeutics & novel anti-infectives and cell-cultured meat.  There is also significant structural growth in a number of pharmaceutical services businesses, driven by an increasing trend for large pharmaceutical and biotechnology companies to outsource non-core activities, including to contract research organisations (CROs) and contract development manufacturing organisations (CDMOs). It has been estimated that the global CRO services market will grow from approximately US$73 billion in 2022 to approximately US$163 billion by 2029, a CAGR of 12.1 per cent. Similarly, it has been estimated that the global CDMO market will grow to nearly US$280 billion by 2026, a 10 per cent. CAGR annually[xxvii]. 

The cost of drugs
One of the criticisms levelled at the life science industry is the high cost of innovative drugs, particularly cancer drugs.  However, it is important to note that drugs comprise approximately 15 per cent. only of overall healthcare spend on average globally[xxviii].   Crucially, their use tends to drive down costs overall.

Prescription drugs can significantly reduce the need for expensive emergency room visits, surgeries, hospitalizations, and long-term care. A US Congressional Budget Office estimate found that an increase in the use of prescription drugs decreased spending on medical services. For example, barely a decade ago, 20 per cent. of people with hepatitis C would develop cirrhosis, a complex and expensive condition that can necessitate a liver transplant. Today, there are once-daily medications that can cure up to 95 per cent. of cirrhosis cases with few to no side effects. In the USA, a course of one of those medicines costs US$24,000, one-twenty-fifth the cost of a liver transplant, which costs US$600,000 on average in the US market[xxix]. 

Financial strength of the sector
The healthcare sector also enjoys an extremely large balance sheet.  In November 2020, it was estimated that the combined global biopharmaceuticals and medical technology "firepower" (being the ability of companies to implement merger and acquisition transactions based on the strength of their balance sheets) was US$1.466 trillion[xxx].  By December 2021, it was estimated that biopharmaceutical firepower alone (excluding medical technology) had grown another 14 per cent. to US$1.174 trillion[xxxi]. 

ESG
The life sciences and medical technology sector is also often ranked as the top-rated sector for environmental, social and governance ("ESG") investing[xxxii].   In the last three years, ESG funds worldwide attracted US$285, US$542 and US$649 billion of investment capital respectively.  This represents nearly half of all new investment flows for the last two years in Europe[xxxiii].

In 2019, it was estimated that 77 per cent. of wealthy millennials have made an "impact" (ESG) investment[xxxiv]. It has also been estimated that one third of such investors would make healthcare their number one priority were they to make an impact investment[xxxv].  

Taken together, it is clear that there is a great deal of capital seeking to support innovation, whether this is found on large pharmaceutical and biopharmaceutical company balance sheets, in the specialist private equity and venture capital communities, in the public sector, or in the ESG market.

Equity market momentum
The first half of 2022 was challenging for the biotechnology sector globally, yet the S&P Biotechnology Select Industry Index delivered a 17 per cent. CAGR in total shareholder return from January 2012 to 2020 and 14 per cent. CAGR from 2012 to the end of 2021[xxxvi].

Biotechnology companies which deliver commercially typically enjoy strong cash generation, high margins, high barriers to entry and long product cycles as a result of their long duration intellectual property (usually by way of patent protection).

The Directors believe that these sorts of long-run double-digit growth rates can continue in the future given the structural drivers already mentioned, with scientific progress being arguably the most important driver of all.

Structural undervaluation
Whilst the global sector remains a convincing investment opportunity, the Investment Manager believes that there are a large number of life sciences and medical technology businesses which are undervalued, particularly in the United Kingdom, Europe and Australia.

In these markets, there are specific structural and historical reasons for this undervaluation which the Investment Manager believes result from the way in which capital markets and the investment industry functions rather than from the potential commercial trajectory of many of those businesses. 

Earlier stage, innovative life sciences companies are usually "smaller" companies.  They are also viewed as "specialist" investments given the complex nature of their products.  The Investment Manager believes this can be problematic for two key reasons.

First, smaller company investors are invariably generalists.  Such investors have not, in the Investment Manager's experience, felt confident investing in life sciences companies which they have often viewed as outside of their area of expertise.  Life sciences companies are also hard to value using the conventional valuation metrics which are normally employed by generalist investors, such as profit multiples, given such businesses can be several years away from profitability. 

This means that, in the Investment Manager's experience, historically generalist smaller company investors have tended to avoid the sector to a great extent, particularly in the UK and Australia. 

Secondly, specialist investors tend, in the Investment Manager's experience, to be looking to invest relatively large amounts of capital.  These large position sizes make it difficult for them to give serious consideration to smaller companies; they need to be making large investments in mid- or large-cap companies given how much capital they have available to deploy.  Furthermore, most of that specialist investment capital sits in the United States.  There are several hundred companies listed in the US market which those specialist investors need to follow, and which are available to them as potential investments.  Biotechnology and healthcare analysts at these specialist investors will also be required to monitor a large number of global large-cap companies.  Taken together, the Investment Manager believes they suffer from too much capital and from insufficient human resource to justify spending time looking at smaller life sciences businesses from outside of their domestic market.

This means that, in the past, many smaller companies outside of the United States have struggled to attract the interest of domestic smaller company generalist investors in their home markets and were too small and illiquid to be visible to large specialist healthcare investors, many of whom are based in the United States and have hundreds of companies to follow in their domestic market.

This has made funding for small, innovative companies outside of the United States challenging.  In the Investment Manager's opinion, it is also the reason that those companies which can navigate these very particular structural challenges can be some of the best performing companies in their respective stock markets in the fullness of time.

Ultimately, the Investment Manager believes equity value is created by commercial delivery and the development of quality intellectual property, which is of relevance globally (a cancer asset is valuable to global healthcare markets wherever it is invented, for example).  Whilst small companies in countries such as the UK and Australia may not attract global specialist capital in the earlier phases of their commercial development, if they can survive and fund themselves long enough to demonstrate they have valuable intellectual property, they can finally attract that interest.  The Investment Manager believes this can result in very significant share price and valuation moves in a reasonably short space of time. Crucially, the Investment Manager believes that there are considerably more companies close to this inflection point than was the case in the past.

Share price and valuation trajectory
The Investment Manager believes that there is a clearly discernible set of steps in that potential share-price and valuation trajectory.  A small company which announces material positive news such as a successful clinical trial, approval for its medical device or a licencing or other commercial deal, can attract the interest of private investors and small institutions such that the share price moves up significantly.  This can make the company visible to large specialist investors as the company has reached sufficient size and/or critical mass to merit their attention.

Should those investors then decide to make an investment, the company can then appreciate in value still further.  This upward trajectory can be compounded still further by indexation, should a company enter the FTSE 250 or an Australian company the ASX 300, for example.

This, in the Investment Manager's experience, results in large specialist investors investing in companies once they have reached critical mass rather than any earlier and, ultimately, paying a materially higher price for reasons which have little to do with the underlying commercial trajectory of a given business.  This, in the Investment Manager's opinion, provides an attractive opportunity for patient investors who can see the potential value in earlier stage companies.

Potential to become acquisition targets
Some companies may also then reach sufficient size to become visible to business development professionals at large pharmaceutical companies looking for acquisition targets to bolster their therapeutic programmes or medical technology divisions.  The Investment Manager believes that such large companies cannot commit human resource to the consideration of small companies for the same reasons that their specialist healthcare investment peers cannot.

The Investment Manager believes that, taken together, these factors mean that companies which succeed in the life sciences sector can create a great deal of equity value in a relatively short period of time as compared to companies from most other sectors. The Investment Manager also believes that value creation can be particularly pronounced for UK, European and Australian companies which succeed commercially given their valuations can be held back for some time for the structural reasons outlined above.

Reasons that this structural undervaluation unwinds
The Investment Manager believes that many of these structural challenges confronting small life sciences companies may recede in the near future.  Whilst there are a number of compelling tailwinds for the sector (which have been outlined above), the Investment Manager believes that the most important drivers of all will be: (i) tangible commercial delivery from the companies themselves; and (ii) increasing interest in the sector as an understanding of the pace of scientific progress becomes more widespread. The Investment Manager believes that many smaller life sciences companies are on the cusp of delivering key clinical inflection points but that this potential is not yet reflected in valuations. 

Over and above commercial delivery, the Investment Manager also believes that the sector will gain further interest from investors as those business which do achieve success are likely to attract meaningful press coverage, leading to increased awareness of the potential benefits of investing in the sector as well as a greater understanding of the biotech and medical technology industry as a whole. The combination of companies delivering significantly improved and high-profile new diagnostic technologies and therapeutic products for a wide range of diseases, and those companies reaching profitability should raise the profile of such companies over time, thereby starting to remove many of the causes (outlined above) of the existing structural undervaluation in the sector.

Taken together, the Investment Manager believes the structural undervaluation of these companies may unwind in the near future.

Portfolio approach
Given the clinical and commercial risk confronted by businesses in this industry, the Directors believe a portfolio approach is appropriate to capitalise on this opportunity.  At present, the Directors are not aware of any collective vehicle available which provides investors with pure exposure to this specific opportunity.

The Company intends to build a portfolio of 20-40 businesses to capitalise on this perceived structural undervaluation and the possibility that it may unwind.

Investment approach
The Company will look for the following characteristics in potential portfolio businesses:

a)    Addressing a very sizeable market.

b)    Scope to be first in class, best in class or garner significant market share as a result of another structural reason (lower cost of goods, excellent sales and marketing partner).

c)    Evidence that the current valuation does not reflect this potential.

d)    Validation, which may include some or all of the following: 

i.      an existing on-market product which can fund earlier stage pipeline;

ii.     strong data and intellectual property;

iii.    a high-quality scientific advisory board and/or the involvement of Key Opinion Leaders (KOLs);

iv.   partnerships with large and well-established pharmaceutical companies; or

v.    pre-existing investment from leading specialist healthcare investors.

e)    Sufficient financial resources (or access thereto) to achieve clinical and/or commercial inflection points. 

f)     Strong and demonstrably ethical management, board and other stakeholders, ideally with equity ownership and a track record of creating value.

g)    Credible commercial plan and route to market.

h)    ESG:  Focus on patient outcomes and stripping cost out of healthcare systems.

The Investment Manager will seek to construct a portfolio of investments such that there will be a number of clinical and commercial inflection points within the portfolio as a whole throughout each quarter.

Particular focus will be given to the balance sheet strength of portfolio businesses.

The Company does not expect to have a controlling or majority position in any holding but, given the sector knowledge and advisory experience of the Board and the Investment Manager, the Company expects to have value-adding engagement with a number of its portfolio holdings on a case-by-case basis.

Portfolio businesses may be Private or already Publicly Traded, primarily on AIM, the London Stock Exchange and the ASX.  Given the nature of the holdings, the Company will adopt a long-term, buy and hold approach with limited portfolio turnover.  The Directors expect value to be created via positive clinical trial results, regulatory approval, commercial deals, initial public offering, or trade sale.

Investment process
The Company and the Investment Manager have formed an Investment Committee, which will report to the Board. The Investment Committee will be chaired by Geoff Miller and will consist of Andrew Craig, Dr Luke Zhou and Roderick Collins on behalf of the Investment Manager, and Dr Victoria Gordon and Geoff Miller on behalf of the Board.

Andrew Craig and Dr Luke Zhou will present all potential portfolio businesses to the Investment Committee which will determine which investments to approve. Only such approved investments may be purchased.

The Company intends to realise long-term value through exiting its investments over time. Accordingly, minimal portfolio turnover is expected but a partial or full exit will be considered in each of the following scenarios:

a)    The portfolio business has achieved its key clinical or commercial goal or failed at a key inflection point.

b)    The portfolio business has transitioned from primarily a research and development-driven business to a cash-generative business. 

c)    An initial public offering of the portfolio business has been achieved (for Private holdings).

d)    The portfolio business has relisted on another exchange:  e.g., on Nasdaq, the Hong Kong Stock Exchange or the Singapore Exchange.

e)    A value objective of the portfolio business has been achieved.

Management Fees
Under the Investment Management Agreement, the Investment Manager is entitled to a management fee of 1 per cent. of Net Asset Value per annum, payable monthly in arrears.

The Investment Manager is also entitled to receive from the Company a performance fee (the Performance Fee) calculated by reference to the Adjusted Net Asset Value per Ordinary Share plus the Distributions per Ordinary Share. The Performance Fee is payable at the rate of ten (10) per cent. of the amount by which the Adjusted Net Asset Value per Ordinary Share plus the Distributions per Ordinary Share paid since the last Business Day in the previous Performance Period in respect of which a Performance Fee was earned to the Calculation Date exceed the Performance Hurdle, if positive, in each Performance Period. The Performance Fee is subject to a High Watermark. Full details of the Performance Fee are set out in Part 3 of the Prospectus.

Plain English Finance
The Company has appointed Plain English Finance Ltd (the Investment Manager) to provide certain services in relation to the Company and its portfolio, including portfolio management, sourcing investments for acquisition by the Company and due diligence in relation to proposed investments.

The Investment Manager is regulated in the conduct of investment business by the FCA.

The core management team of the Investment Manager (whose details are set out below) is supported by a team of administrative and support staff. The key individuals responsible for executing the Company's investment strategy at the Investment Manager are:

Andrew Craig (Founder and Portfolio Manager)
Andrew is a finance author and former partner at London's leading specialist life sciences boutique investment bank, WG Partners LLP. He acted for more than 60 life sciences companies in his time at WG Partners LLP. Andrew began his finance career at SBC Warburg in the late nineties. His first book, "How to Own the World" has been No.1 rated on Amazon in categories such as Pensions, Investments and Personal Finance for much of the last few years and currently enjoys more than 3,000 reviews across Amazon, Audible and Goodreads. Since founding the Investment Manager in 2011, Andrew has appeared in many national and financial publications including: The Mail on Sunday, The Mirror, CityAM, The Spectator, Shares and MoneyWeek.

Dr Luke Zhou (Portfolio Manager)
Luke is an experienced cancer-research scientist and sector investor with expertise in cell-biology and gene-therapy. His work has been published in leading journals and has been recognised by Cancer Research UK and Children's Tumour Foundation (US). Luke is also an experienced entrepreneur and angel investor in the sector and has co-founded several companies in the UK and China. Luke is from China originally but has been based in the UK ever since completing his undergraduate and postgraduate studies at UK universities.

Roderick Collins (Portfolio Manager)
Roderick has had a long and distinguished career in financial services and wealth management. He held senior management positions with NM Rothschild and James Capel and was the chief executive of the private banking activities of Matheson & Co from 1985 to 2000. He has particular expertise in closed-end fund management. Roderick has undertaken various non-executive directorships in his career and was previously a director of the J.P. Morgan Income & Capital Trust plc.

Board of Directors
All of the Directors are non-executive and will meet as a Board at least six times a year. The Company has also established an Audit Committee that will meet at least twice a year.

The Directors are as follows:

Geoff Miller, Non Executive Director
Geoff has over 20 years' experience of working in financial services, both as an equity analyst covering investment banks, asset managers and investment companies and as a senior fund manager. Geoff was formerly the non-executive chairman of Globalworth Group, a quoted international property business with a market capitalisation of approximately €1 billion. He is currently chairman of AIM-quoted MJ Hudson, a director of several private companies, and a principal in a venture capital business based in Guernsey, focussed on financial and technology sectors.

Grant Cameron, Non Executive Director
Grant has been a director of Ninety One Asset Management Guernsey Limited ("Ninety One"), previously Investec Asset Management, since 1997. Prior to joining Investec in South Africa, he trained as an accountant at KPMG. Grant is a director of a number of investment funds and was previously chairman of the Guernsey Investment Funds Association. During his tenure, Ninety One grew roughly 50-fold in assets under management, including the successful merger with Guinness Flight Asset Management in Guernsey.

Dr Victoria Gordon, Non Executive Director
Victoria is managing director and chief executive officer of QBiotics Group. Her additional board experience includes as a non-executive director of Biopharmaceuticals Australia, and a non-executive director and non-executive chairman of the Australian Rainforest Foundation. She has served two consecutive terms of the Queensland Government Biotechnology Advisory Council, Federal Government Expert Forum on Biomedicine, Federal Government Expert Forum on Environmental Biotechnology, and the Queensland Government Science Education Taskforce. Victoria holds a PhD in Microbiology, Bachelor of Applied Science in Chemistry and Biology (Honours), and Diplomas in Human and Animal Health.

John Whittle, Non Executive Director
John is a Fellow of the Institute of Chartered Accountants and holds the Institute of Directors' Diploma in Company Direction. He was formerly chief financial officer of the precursor to Vodafone Retail and has been an independent non-executive director since 2009. He is currently a non-executive director of £3 billion market cap FTSE 250 constituent TRIG plc, non-executive chairman of Starwood European Real Estate Finance Ltd, non-executive director of Sancus Lending Group Ltd and audit committee chair of Chenavari Toro Income Fund Limited. Prior to these roles, John was senior independent director and audit committee chair at FTSE 250 company International Public Partnerships Ltd and audit committee chair of Globalworth Real Estate Investments Limited.

As the Company is a self-managed AIF under the EU AIFM Directive and the UK AIFMD Laws and there are no employees of the Company, the Board performs certain management functions, which include the overseeing of the Company's investment objective, policy and strategy, the supervision of any delegated responsibilities to third-party service providers (such as the Investment Manager, the Administrator, the Custodian and the Transfer Agent), and any necessary risk management functions.

The Board has delegated portfolio management to the Investment Manager.

IMPORTANT NOTICES

This is a financial promotion and is not intended to be investment advice. The content of this announcement, which has been prepared by and is the sole responsibility of the Company, has been approved by Plain English Finance Limited solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 (as amended).

This announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the Prospectus published by the Company (and in any supplementary prospectus) and not in reliance on this announcement. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description or a recommendation regarding the issue or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase shares in the Company.

The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The material contained in this announcement is given as at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment. In particular, any proposals referred to herein are subject to revision and amendment.

Each of Shore Capital & Corporate Limited (the "Sponsor") and Shore Capital Stockbrokers Limited (the "Placing Agent") is authorised and regulated in the United Kingdom by the FCA. References in this document to "Shore Capital" are references to either the Sponsor or the Placing Agent or both of them, as appropriate. Shore Capital is acting exclusively for the Company and for no-one else in connection with the matters described in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the clients of Shore Capital, nor for providing advice in relation to any of the matters referred to in this announcement.

The Ordinary Shares have not been and will not be registered under the United States Securities Act of 1933 (as amended) (the "US Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold within the United States or to, or for the account or benefit of, US Persons (as defined in Regulation S under the US Securities Act ("Regulation S")), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction in the United States. In addition, the Company has not been and will not be registered under the United States Investment Company Act of 1940, (as amended) (the "US Investment Company Act"), and recipients of the Prospectus will not be entitled to the benefits of that Act.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. No public offering of securities is being made in the United States.

The offer and sale of Ordinary Shares has not been and will not be registered under the applicable securities laws of any Member State of the EEA, Canada, Japan or the Republic of South Africa. Subject to certain exemptions, the Ordinary Shares may not be offered to or sold within any Member State of the EEA, Canada, Japan or the Republic of South Africa or to any national, resident or citizen of any Member State of the EEA, Canada, Japan or the Republic of South Africa. Neither the Company nor Shore Capital, nor any of their respective representatives, is making any representation to any offeree or purchaser of the Ordinary Shares regarding the legality of an investment in the Ordinary Shares by such offeree or purchaser under the laws applicable to such offeree or purchaser. Each investor should consult with his or her own advisers as to the legal, tax, business, financial and related aspects of a purchase of the Ordinary Shares.

The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. Figures refer to past performance and past performance should not be considered a reliable indicator of future results. Returns may increase or decrease as a result of currency fluctuations.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "might", "will" or "should" or, in each case, their negative or other variations or similar expressions. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed investments and objectives, are forward-looking statements.

Forward-looking statements are subject to risks and uncertainties and, accordingly, the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These factors include but are not limited to those described in the Prospectus. These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. Subject to their respective legal and regulatory obligations (including under the Prospectus Regulation Rules), the Company, the Investment Manager and Shore Capital expressly disclaim any obligations or undertaking to update or revise any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required to do so by law or any appropriate regulatory authority, including FSMA, the Listing Rules, the Prospectus Regulation Rules, the Disclosure Guidance and Transparency Rules, the UK Prospectus Regulation and UK MAR.

None of the Company, the Investment Manager, Shore Capital, or any of their respective affiliates, accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, the Investment Manager, Shore Capital, and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

Information to distributors

Solely for the purposes of the product governance requirements contained within: (a) the UK's implementation of EU Directive 2014/65/EU on markets in financial instruments, as amended ("UK MiFID II"); (b) the UK's implementation of Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing UK MiFID II, and in particular Chapter 3 of the Product Intervention and Product Governance Sourcebook of the FCA (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Ordinary Shares have been subject to a product approval process, which has determined that the Ordinary Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in UK MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by UK MiFID II (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, distributors (such term to have the same meaning as in the MiFID II Product Governance Requirements) should note that: the market price of the Ordinary Shares may decline and investors could lose all or part of their investment; the Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Initial Issue and/or the Share Issuance Programme. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Shore Capital will, pursuant to the Initial Placing and any Subsequent Placing, only procure placees who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of UK MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Ordinary Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the Ordinary Shares and determining appropriate distribution channels.

Key information document

In accordance with the UK PRIIPs Regulation, the Investment Manager has prepared a Key Information Document (the "KID") in respect of the Ordinary Shares and made it available at www.clsc.uk. The UK PRIIPs Regulation requires that the KID is made available to "retail investors" prior to them making an investment decision in respect of the Ordinary Shares. If you are distributing Ordinary Shares, it is your responsibility to ensure the KID is provided to any relevant clients.