The East of England: A Life Science region primed for growth

After all cash has always been, and remains, king or queen when it comes to enabling growth in sectors such as Life Sciences, writes Tony Jones, CEO of Life Science gateway organisation One Nucleus.

The first half of 2024 has been somewhat of a mixed bag for global life science sector funding. Clearly, value is being seen in the innovation and new product potential in the sector with $13.8 billion of investment being seen between January and June 2024 (Biotechgate Life Science Financing Summary, July 2024).

Investments in areas such as weight loss, AI and Cell & Gene Therapy Manufacturing, all areas in which the region has strengths, surged on the back of momentum started in the latter part of last year.

The markets have shown caution though with fluctuating investment values and rounds. As one would expect, the US dominates these numbers, receiving tow out of every three invested dollars.

Europe, with the UK still leading, secured a credible 22 per cent of the investment and moreover, interest in seed and series A rounds accounted for over half of the private equity deals which fits well with the distribution of opportunity in the UK, including the Cambridge region.

Challenges facing the desire to move some of our region’s cluster beyond early-stage and into scale-up remain. There is no doubt that the Eastern region is prolific in creating innovative opportunities, attracting some of the best scientists, innovators and entrepreneurs in the world.

Sustaining that innovation pipeline and start-up creation rate are key to long-terms success and scale-up cannot be at the expense of existing strengths.

Securing larger and later stage investment will require accessing crossover investors in the US and ultimately a route to exit, be that onto Nasdaq via IPO or through high value M & A.

It would appear the chances of either route are looking better than they have been for some time. We have seen the data about how important US investment is to UK life science companies, with around half of Series B and beyond capital into UK companies originating from US funders (cf: BIA UK BioFinance Report, January 2024).

As mentioned earlier, it has been something of a mixed bag of news for life sciences in the region as the funding environment returns. Disappointingly, not least for the excellent individuals involved, there has been significant turbulence.

Large changes at companies such as Sanofi (Kymab), Crescendo Biologics and InVox Pharma have illustrated that success is not always fully inclusive or evenly spread in such a global marketplace: Turbulence that is not a refection of the quality of the region’s R & D quality but challenging, nonetheless.

Change can bring opportunity to the fore, however. The number of displaced employees we hear of securing new positions quickly suggests there remains underlying confidence among the rising stars such as T-Therapeutics, Microbiotica and Alchemab, for example, who could benefit from the availability of experienced candidates.

We have witnessed the downsizing of some major players and slower than anticipated growth by others whilst financing has been tough and addition of the long-anticipated new laboratory space beginning to come to fruition has created a situation locally that feels very unusual.

It is hard to recall a time in recent years when there has been such an availability of lab space: A pattern experienced by the likes of BioMed Realty, IQHQ and their peers in other global hubs such as Massachusetts and California as a consequence of the economic situation.

Whilst this is unusual here and not desired among developers of such space, for occupier companies it does mean greater choice, negotiating leverage on terms and, vitally, a line of sight to growth accommodation when that time comes.

It likely does not shift the narrative that there is still unmet demand for laboratory space in the long-term which will continue to be true, so it is encouraging that the real estate sector is sustaining its confidence and appetite in the sector.

Adding to the optimism for many is the outcome of the recent UK General Election. Hopefully the political stability on offer from the Government will impact macroeconomic factors and reassure the City, leading to better investment conditions.

The implications of the policies proposed by the new government will be expertly analysed elsewhere and at length for sure, but early signs seem to suggest the new team are supportive of the Life Science sector; are keen to rationally join the dots between bio-innovation, NHS performance and economic growth; seek a better relationship with the EU; support attraction of global talent to the UK; wish to improve the planning processes to enable speedier building of labs, homes and infrastructure; and are committed to an agenda for growth by making the UK an attractive location for investment.

The One Nucleus experience of late when engaging with the world’s leading cluster in Massachusetts is that there is a real appetite from US investors, R & D partners and talent in working in and with the region.

Our collective responsibility is thus to deliver the environment and land of opportunity that will translate that interest into two-way deal flow. To that end, One Nucleus is already planning a UK Pitching Day during Biotech Week Boston, showing those deep-pocketed investors, Pharma companies open to deals and commercial leaders looking for opportunity that our region is their natural second home.

In summary, it seems the reasons to be optimistic are manifold. The underlying competitive advantage the region has always held in terms of attracting great scientists, entrepreneurs and investors has not changed.

Improvement in the financial market sentiment and regulation to free up investment capital along with a Government seeking to enable growth that sees our region as pivotal could trigger a rapid uptick in our companies’ fortunes from investors.

A collective effort among the region’s stakeholders such as One Nucleus, CUHP, Cambridge& and the Mayoral Office to ensure it is front of mind when global investors consider locations is well underway.

With greater investment will come demands for great talent and accommodation which is why it feels, perhaps more than for previous cycles, that the current availability of lab space and turbulence in employment places our region primed and ready to scale quickly with world-leading quality – a response to better conditions that may never be reversed.