November 2023 shareholder update presentation

JH: As we’ve seen over the past year or so, we need to be able to support our existing portfolio companies as well as to find new ones.

RM: We are cognizant of cash drag as a feature when running a fund, but in terms of pound notes it isn’t a vast number with an investment portfolio of 26 companies who from time to time require support. We also have a healthy pipeline of WIP opportunities to deploy that capital. We’re happy with our position but equally as we execute on some of the opportunities in our WIP pipeline, I would expect to see that cash balance reduce in terms of pound notes and as a percentage of NAV as we continue to scale the VCT which I think is the true measure.

MC: It’s a good question and it does jump off the page that the recovery in Q3 is to a large extent down to Oxford Biodynamics. Whilst unique in the sense of the price movement in the last couple of months, it’s very much reflective of the makeup of a lot of those AIM listed businesses (with a diverse portfolio of assets and the types of commercial deals you see in these businesses tend to be transformational).

One that I would pull out that is in that general shape of opportunity would be Poolbeg, an exciting infectious disease treatment development business whose lead asset is approaching those partnership conversations and a potential game changer in that space across oncology and inflammatory diseases.

Similarly Celadon Pharmaceuticals, a medicinal cannabis investment that is now approaching its first revenues in a well-publicised and quite exciting arena that is the medicinal cannabis space.

A couple more that follow this size and shape of opportunity are Evgen and Arecor that are sat in the portfolio where the share price has suffered in the last 18 months along with the wider market. The value of the underlying assets that sit within these businesses has been enhanced following encouraging results from clinical trials and in Evgen’s case a commercial deal. Despite the share price movements over the last couple of years, those businesses are arguably worth more than 12-18 months ago. I think the types of commercial deals that we can see in this space could be transformational for a few of these businesses.

MC: It probably links back to some of those points we spoke about on the key movers in the first half of the year, there are a blend of company specific and market driven issues. Looking at Gelion, which took a typical route through its pathway to commercialising its technology, this fundamentally requires access to capital as it progresses through the pathway. Some of this movement in the share price is driven by a requirement to raise money when the market is not necessarily firing on all cylinders which can impact the longer-term share price as investors expect those fundraises to take place at a discount to the market price.

Aptamer is probably one which has been impacted by a blend of both company and market specific factors, but predominantly company specific issues such as an element of underperformance, revenue has slipped and there was a dispute across the management team. As you’d expect, when there are macro drivers and the market as a whole isn’t operating in an efficient manner, these events tend to impact the share price more so than if the market was flying.

Looking forward, Aptamer is more challenging because it has raised money at a lower price. On Gelion, we are still very much buying into the technology and today it announced a fundraise and an acquisition. There are exciting developments within the business albeit now with an element of additional dilution as those funds come in but one we remain supportive of.