An 18 month-old saga finally came to an end with the appointment of Schroder Ventures Life Science Advisers to manage and advise the International Biotechnology Trust plc (IBT) in November. IBT was previously managed and advised by Rothschild Asset Management.
The move from Rothschild Asset Management appears to have come about following years of lacking performance for the fund and mixed messages from Rothschild Asset Management regarding its commitment to the IBT fund.
At one point Rothschild Asset Management talked of quitting the biotechnology space and merging its biotechnology interests, namely Biotechnology Investments Limited and International Biotechnology Trust, and selling the merged entity to 3i which had been running its own 3i Bioscience Trust. This proposed arrangement never got off the ground and there was also talk of a merger with Merlin Bioscience run by biotech investment guru Prof. Chris Evans.
Rothschild Asset Management’s position was to ultimately be affected by the acquisition of a 10.5 per cent stake in IBT by Millennium, the US arbitrage firm, which soon began talk of a return of cash to shareholders. Millennium also disputed the fact that Jeremy Curnock Cook should be allowed to benefit from the share options that he had been awarded in return for sitting on the board of 15 IBT companies. Millennium was insistent that these share options should benefit IBT shareholders instead. The board of Rothschild Asset Management noted that the options when awarded to Curnock Cook were worthless and in light of the pressure being applied by Millennium reversed its original decision and consequently Curnock Cook no longer profited from those share options.
Curnock Cook stood down from the board last summer for medical reasons. His departure meant Rothschild Asset Management was perceived to lack the necessary management skills to continue and at a subsequent EGM Millennium carried the day finally for a return of capital to shareholders.
While IBT has been working on the best way to handle this, it also held a beauty parade to select a new manager and adviser and Schroder Ventures Life Sciences won. IBT has negotiated an annual management fee of 1.35 per cent of gross assets. Incentive fee arrangements, which include benchmarks and hurdle rates in line with industry practice, have been put in place which are appropriate to the nature of the portfolio.
By mid summer this year Paul Manduca was appointed at Rothschild Asset Management which, with Manduca’s arrival decided it did want to be in the biotechnology investment arena.
IBT was formed in 1994 and issued shares for GBP1, which subsequently dropped to around the 45 pence per share mark. The share price stayed around this lower level for much of the time between 1994 and 1999 and the fund’s performance was in line with much of the rest of the biotechnology sector. At the time of IBT’s incarnation Rothschild was involved and Jeremy Kurnock Cook, who was the Rothschild Asset Management, (which was at that time appointed manager and adviser to IBT), managing director responsible for IBT’s investment.
Then at the start of 1999 biotechnology became a sought after sector for investment as publicity around the mapping of the human genome gathered pace. And IBT saw its price improve from 45 pence a share and move towards the circa 310 pence per share enjoyed today.
Schroder Ventures Life Sciences has a team of 17 professionals based in London and Boston. It has raised $400 million for investment in the life science sector, of which some
$280 million has been invested to date in approximately 100 companies in the US, Europe and Asia.