Imperial Innovations raises £30M loan from European Investment Bank

The loan, which is specifically to support biotech and healthcare companies, will be made in two tranches of £15 million, with the first due to be drawn down shortly. The decision to take out the loan was “opportunistic”, with the EIB making the approach to Imperial Innovations at a meeting organised by the UK government’s Department of Business, Innovation and Skills, according to Susan Searle, CEO. “We got it at a low interest rate, opening up a long-term relationship with the EIB,” she said.

“There’s no shortage of deal flow and we have lots of opportunity to invest this cash,” Searle told Science|Business. “Many businesses take on a small amount of debt and the rate [of interest] is so low; it allows us to utilise shareholder funds without keeping a cash buffer.”

While EIB does participate as an investor in venture funds, providing loans to finance companies with risky technologies and no turnover – the typical profile of a biotech start-up - is not usual. Jonathan Taylor, vice president of the EIB said the loan demonstrates the bank’s commitment to supporting leading innovation and research in globally competitive fields. “Imperial Innovations has set a benchmark for transforming cutting edge research into commercially successful innovation, he said.

Individual start-up companies have been turning to debt for equity financing in the face of a dearth of venture or other sources of capital. For example, in June, London-based Immupharma plc agreed a US$75.7M equity financing facility to fund a Phase III clinical trial of a treatment for lupus.

However, Searle noted that the EIB loan is not dilutive for existing shareholders. “It provides more funding to grow the portfolio. We didn’t need shareholder approval, though of course we did talk to them about it,” she said.
While Imperial Innovations invests in all areas of technology, the EIB loan is for biotech and healthcare companies only. But there will be no change in investment strategy, and there is no requirement to broaden investments to companies spinning out of other universities in the UK, or elsewhere in Europe.

The first tranche is about to be drawn down, but Searle was not able to say when the first investment from the loan will be made, or over what time frame the money will be put to work. “It’s going to be lumpy, because how you invest depends on where you are in terms of maturity of individual companies and of [investor] syndicates,” she said.

In total Imperial Innovations has 78 companies in its portfolio, with the most advanced including Circassia, which has an allergy treatment in Phase III development, and Nexeon, which is developing novel lithium-ion batteries.
Imperial Innovations raised £140 million in January 2011, and in the financial year ending July 2012 invested £37.9 million, including eleven investments in new spin-outs.