Drug discovery firm e-therapeutics to quit London Stock Exchange following £29m fundraise
Medicines innovator e-therapeutics has told of its disappointment in the lack of interest from UK investors amid plans to raise £28.9m and become an unlisted company.
The Newcastle University spin-out, which has offices in Newcastle and Oxford, says it is exploring listing on New York's Nasdaq where it hopes to achieve a valuation closer to peers in the market. Boss Ali Mortazavi said the firm's board were "extremely disappointed" in a lacklustre response to fundraising efforts across February and March this year - prompting it to quit the UK market.
The proposals will go to a vote of shareholders at the end of the month before e-therapeutics expects to see trading of its shares stop on May 9. It comes 17 years after the firm, which has pioneer cancer and covid-fighting drugs, floated on the AIM market.
Read more: Beyond Digital Solutions snapped up by global tech specialist ZetaDisplay in undisclosed deal
Read more: Founder of hydrogen firm Lhyfe highlights UK as promising market
E-therapeutics said it will use the proceeds of its £28.9m fundraise, coming from key investors M&G Investment Management and Richard Griffiths, to invest in its AI-driven drug discovery platform, which uses computational power applied to biology. The sum will add to an £18m cash position.
Ali Mortazavi, CEO of e-therapeutics plc, said: "For over a year, the board has been contemplating delisting from the AIM market. However, given the dramatic rise in the US biotech indices in Q3 2023 which has seen record amounts of capital being raised, we decided to remain on the AIM market and embarked on a capital raise roadshow in February-March 2024. Despite the firm commitments given by our two largest shareholders, the board was extremely disappointed by the lack of institutional UK interest in our innovative, technology-driven value propositions.
"Importantly, ETX struggled to get sufficient engagement from the vast majority of the institutions who were approached, reflecting the risk appetite of the UK markets. This trend has been a consistent theme over the last four years and the company has primarily raised funds through the current two key shareholders, who continue to support the company irrespective of its listing status. As such, we believe that there is a limited available audience on the AIM market for companies such as ETX.
"The board believes that the current valuation of ETX in no way reflects the company's position as a leading techbio company, with powerful enabling technologies both on our computational and genetic medicines platforms, and a maturing pipeline of differentiated RNAi assets. ETX is active and has specialist expertise in the most disruptive and attractive areas in biotech. However, it is the board's view that there could be a far larger pool of capital available as an unlisted company as opposed to an AIM listed one and that this situation is very unlikely to change in the near future.
"We understand that there will be a short-term reduction in liquidity as a result of this decision but we are of the firm belief that it is in the best interest of all shareholders to delist from the AIM market, with a strong cash position of approximately £47m following this fundraise. We have also stated our willingness to explore relisting the company in the future on the US NASDAQ exchange where the large gap in the valuation of ETX compared to its US peers can hopefully be narrowed. I would also like to take this opportunity to thank both Richard Griffiths and M&G for their continued support and we look forward to regularly updating shareholders on our progress."