Diagnostics is one of the fastest growing areas of medicine. It is increasingly becoming crucial to the approval of new drugs and to personalised medicine. Nobody in the UK knows more about diagnostics than David Evans, and I was lucky enough to meet him last week.
With a name like Evans I expected a twang of the valleys, so I was surprised to hear a soft Scottish accent. Having trained as an accountant, he started working life in Dundee, but found the environment a little too quiet for his taste.
“I am dangerous when bored,” he confessed, but I doubt that happens often. He regularly leaves his Scottish home at 4am to make the journey to his various business interests south of the border.
Today he is chairman of Omega Diagnostics (ODX), EpiStem Holdings (EHP) and Scancell Holdings (SCLP) and a glittering career has included roles as chairman of Immunodianostics Systems (IDH) and BBI Holdings and joint-managing director of Axis-Shield.
Early success with a cardiac test
Investors who have backed him have made a load of money, but his star billing has certainly not gone to this head. He sees himself as simply a hard-working bloke with enough experience of business to know the pitfalls.
Early in his career, a fund in which he was involved invested in a company whose founder died in a fire. Another boss had a nervous breakdown within four weeks of the fund’s investment. And a third investee business had its riverside factory in Perth swept away by freak floods.
“Expect the unexpected” is his mantra to which he might have added that “caution should be the watchword”. He told me of the early years of Shield Diagnostics, which had a new diagnostic test for urinary tract infection that could be used in a GP’s office.
Excited by the thought that this would capture a major share of a huge world market, investors plunged millions into the business. Unfortunately the test was not quite as accurate as hoped, and GPs were happy to send patients home with a dose of antibiotics instead.
Fortunately, Shield had better luck with a second product, a test for cardiac risk. It merged with Axis in 1999 and in 2011 shareholders were handsomely rewarded when the USA’s Alere (NYSE: ALR) bought the combined group.
Diagnostics key to a ‘golden age’ of medicine
Evans thinks that investors still bear the scars of the last biotechnology bull market in the late ’90s. Inspired by the ease of raising money on the Unlisted Securities Market – the forerunner to AIM – a host of companies, of which British Biotech was the poster boy, came out of the woodwork with extravagant promises of cancer cures and other medical revelations. They failed to deliver but Evans does have some sympathy.
In order to raise money from investors these companies had to spin extravagant stories. Had they not done so, they never would have been able to raise the money needed to further their medical research. The fault lies more with the credibility and unrealistic expectations of investors – and in this respect little has changed.
Today, Evans still sees instances of valuations that are “beyond sense” and reflects that US investors have a better understanding and tolerance for the risks involved in medical investment. And yet he believes that medicine could be on the threshold of a “golden age” with diagnostics playing a vital role.
Diagnosis from blood, tissue or increasingly DNA samples can spot disease early. Instant results mean that patients need not lie in a hospital bed for five days waiting for blood test results to come back from the lab. And accurate diagnosis of disease could lead to personalised treatment and lessen the indiscriminate use of antibiotics, to which a growing number of bugs are becoming resistant.
In underdeveloped nations where a hospital could be remote, portable diagnostic devices offer the best hope of helping patients and, in the new age of personalised medicine, new drugs must have a companion diagnostic test that can identify whether they are likely to work on individual patients.
Ultimately, says Evans, “better diagnostics means better therapeutics”. He fully supports the groundswell in favour of science and thinks that the UK government is doing its best to support it.
He reckons that the work coming out of UK universities is as strong as it ever has been, and as chairman of the new Healthcare Investment Opportunities (HIO) stock market vehicle, he is looking for his first deal. He is “inundated” with opportunities. It will be interesting to see what David Evans chooses to back. I know I will be watching closely…