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Wellcome Trust Creates $317M Life Sciences Investment Fund

By Cormac Sheridan
Staff Writer

The Wellcome Trust is setting up a new for-profit investment firm that will have £200 million (US$317 million) on hand to pursue opportunities in health care and in life sciences in the UK and other parts of Europe.

Codenamed "Project Sigma" for now, the new entity has named Martin Murphy, former partner at venture capital firm MVM Life Science Partners LLP, as its CEO, and Nigel Keen, an entrepreneur and investor, as its chairman.

The initiative is motivated by profit rather than by any philanthropic considerations about advancing the UK's biotech industry.

"The primary goal of Sigma is to deliver successful and attractive investment returns to the Wellcome Trust," Murphy told BioWorld International.

"The Wellcome Trust is a pretty thoughtful organization, and they considered there was a shortage of this kind of capital available to the market," he said.

Murphy will hire a team of four to eight investment professionals, who will invest in companies directly. Sigma will not provide any funding to venture capital firms, but it does expect to invest alongside them.

It also will invest in earlier-stage ventures that may not yet be ready for a full-scale venture capital round.

Sigma's scope – both geographical and sectoral – is broad. Although the UK will be an obvious focus for London-based Sigma's investments, the initiative will be pan-European. "Over time, we will look at opportunities beyond that," Murphy said. "I don't think there is a particular preference for the UK."

The initiative is by no means limited to biotechnology – it will also encompass medical devices, tools, health care IT and services. "It will make diverse investments in small companies developing interesting and attractive technologies," Murphy said.

The initiative is, obviously, a welcome addition to the UK funding environment.

"You always want it to be better than it is," Glyn Edwards, interim CEO of the BioIndustry Association (BIA), told BioWorld International.

"We've still got fantastic VC funds here, but not enough," he said. "We've got some other institutional investors who are active, but not enough."

Edwards, who was speaking on the UK's budget, noted also that the UK's tax regime "is reasonable" without being "fantastic." Share options are taxed quite heavily, he said, although the current rules are more lenient on founders' equity.

BIA is attempting to influence government policy on tax relief for what Edwards termed "mid-net-worth individuals" investing in innovative, privately held companies. A "citizens innovation fund" would enable private investors to back a portfolio of promising companies rather than be limited to a single shot with one firm.

Such an approach would enable investors to spread their risks while also obtaining the benefit of a professional investment team.

BIA has taken a cue from a similar initiative in France. "It's raised about €8 billion [across all sectors] for the 10 or more years it's been on the go," Edwards said.

The conversation in the UK remains at an early stage. "We've been talking to government for six to eight months about this, and it's being taken very seriously," Edwards said. "Our target would be to get it considered for the next budget."