To list or not to list (on a stock exchange) – that is the question
By Chris Wheal
July 18, 2024
![Man running from AIM towards a pot of money.](https://businessriver.s3.eu-west-1.amazonaws.com/articles/image/7pDwHBEqt1hxNJGKhLsGVy3tPOyBTklrhc2JovyP.png)
Differing AIM and objectives: more money away from AIM for private pharma firms
There’s much talk of Big Pharma facing a patent cliff and the likelihood of mergers and acquisitions filling our newstreams. But is listing on an exchange a hinderance to a little fish that wants to get fatter or even eaten?
We’ve seen the likes of Evaluate, Morgan-Stanley and E&Y suggesting the pharma pond will be a lot of big fish swallowing little fish in order to pick up the best new medtech, drugs and treatments.
They’re not wrong. This week Eli Lilly quietly gobbled up Aparito, a drug development and clinical trial software specialist based in Wrexham. Lilly issued no press release, investor statement or notice to the New York Stock Exchange (NYSE) where it is listed. Aparito really was small fry.
Aparito simply changed its website to say: “Aparito is now a wholly owned subsidiary of Eli Lilly and Company.”
Delisting is your Destiny
Elsewhere the small fish with the big ambitions are struggling. Destiny Pharma had to announce that it plans to delist from London’s Alternative Investment Market (AIM) as it reckons it has a better chance of attracting the much-needed cash injection as a private company. Destiny could sell a stake in itself as backers want equity.
AIM was designed to help small, risky, high-growth companies pocket cash from the public market. It was supposed to help companies raise between £1m and £50m.
Destiny wants to take its drug XF-73 Nasal, a new-style antibiotic that is claimed to prevent post‐surgical site infections even when MRSA is present, to stage three clinical trials. The company needs £25m. It only has £2.9m in the kitty.
A larger pool
Sir Nigel Rudd, chair of Destiny’s board of directors, said: “A larger pool of capital may be available to Destiny Pharma as a private company and therefore, the board has concluded that delisting from AIM and re‐registering as a private company is a necessary step to provide Destiny Pharma with a realistic chance of securing the capital required to progress XF‐73 Nasal through clinical trials and bring this important product to patients and health systems.”
The company statement said: “The board has explored the possibility of securing the quantum of funding (£25 million) it needs to execute on the phase three clinical trial programme from a very wide range of sources, including existing shareholders and public market investors, venture capital firms, specialist healthcare funds as well as from non‐dilutive sources, as it believes that by successfully completing the phase three programme itself, it will significantly increase the likelihood of securing a meaningful licensing deal in the future.
“Discussions with a limited number of potential funding partners continue but feedback received from those, and other, possible sources of capital has indicated that a possible funding proposal could only be forthcoming if Destiny was a private company.” Shareholders will meet at the end of the month to vote on the proposal.
Mass exodus?
Destiny is by no means the first pharma sector firm to decide that AIM does not meet its aims. C4X Discovery announced in March it was quitting AIM and its last day of trading was 25 April. RedX Pharma followed suit, announcing in April it was jumping and its final day on AIM was 30 April.
Dr Clive Dix, CEO of C4X Discovery, said at the time: "We believe that we can potentially access a larger quantum of future funding required to accelerate our strategy as a private company and therefore we believe that a cancellation of the company’s admission on AIM is in the best interest for shareholders and for the future of our business as a whole.”
Dr Jane Griffiths, chair of the Redx Pharma board, said of its delisting: "The board believes that as a private company we can access a broader universe of specialty investors and, accordingly, a larger quantum of future funding required to execute our strategy and maximise our value in the interests of all our shareholders.
There’s a lot less regulatory hassle buying – whether outright or an equity stake – in an unlisted private firm, and fewer strings to investing in, or lending to, a private firm. Is AIM’s time up?