This fund is focused on a stunning new bull market

A revolution in biotechnology has got investors excited. And this recent addition to Britain’s small-cap market is looking to cash in. Tom Bulford reports.

Today I want to tell you about one promising company looking to invest in and acquire exciting healthcare opportunities. This new fund has a mandate to invest in the UK healthcare sector and is run by a man who, at least from the investment standpoint, probably knows more about this sector than anybody.

A strong demand for innovative healthcare

Healthcare Investment Opportunities Plc (HIO) made a low-key debut on AIM at the end of last week, raising just £4m through a placing of shares at 10p, but it is a pretty safe bet that this market capitalisation will grow substantially as chairman David Evans pursues his ambitions.

Evans is a serial backer of healthcare companies. He has a proven track record and an array of contacts. He was chief executive of Shield Diagnostics when it merged with Axis and the combined group was subsequently acquired by the USA’s Alere for £235m.

He was chairman of BBA Holdings, a supplier of reagents and tests for point of care diagnostic devices. This, too, netted investors a tidy profit when it sold out to another American rival, Inverness Medical Innovations. He has been involved in two other companies, DxS and Sirigen, which attracted trade buyers.

And he is currently involved with EpiStem Holdings (EHP), which is commercialising stem cells in the areas of oncology and gastrointestinal diseases; Scancell Holdings (SCLP), which is working in the hot area of cancer vaccines; and EKF Diagnostics (EKF), which has recently acquired the Pointman diagnostic kit that can detect one mutant gene in 100,000 normal gene copies – 1,000 times better than the best competing technology today. So, Evans is a man to follow and his new fund looks well timed.

Innovation in healthcare is happening at an unprecedented pace. DNA sequencing, regenerative medicine, the extraordinary power of stem cells and diagnostic tests that can identify medical conditions from tiny samples of blood or even breath are all offering hope to an increasingly stretched health service.

As the prospectus for Health Investment Opportunities describes, “long-term demographic drivers such as the existence of an ageing population throughout the developed world, increasing spending power and demand for high-quality medical care in emerging markets mean that there is strong demand for new and innovative healthcare.”

 

Where will Evans put his money?

Driven by the new techniques of biotechnology, a revolution in medical treatment is unfolding. Pharmaceutical giants are sitting and watching, ready to pick off anything that looks especially promising. Only last week AstraZeneca snapped up AlphaCore Pharma which is developing a new type of cholesterol medicine. As Evans has already proven, small companies that offer genuine innovation can command a big price.

So, where will Healthcare Investment Opportunities invest? The first deal, investors are promised, will be a reverse take-over and can be expected within six months. The Board do not intend to create a portfolio of unconnected companies so we can expect a cohesive investment strategy to emerge.

Diagnostics, perhaps because of Evans involvement in EKF Diagnostics, is unlikely to feature, but there are some clues. One possible area of interest is in genetics research and biomarker solutions. This is right at the heart of personalised medicine, as treatment is tailored to the individual according to his or her DNA pattern or other recognisable physical trait.

A second investment possibility are “providers of products and services to life sciences, materials and high technology sectors”. That’s another hugely promising field given the investment in science-based industries that is gathering pace around the world.

A third possible investment clue is that Healthcare Opportunities mentions an “innovative company focused on the design, manufacture, validation and supply of polymerase chain reaction agents”, which enable researchers to copy strands of DNA.

Two hugely exciting biotech stocks

I am looking forward to seeing where Evans leads Healthcare Investment Opportunities. Who knows, he may even look in the same places as my Red Hot Biotech Alert! Genetic engineering, laboratory–made body parts, medical innovations that can crack the toughest diseases. I am already on the case!

My new report includes some remarkable companies. One has created a revolutionary new method of delivering drugs and could help save millions of people around the world – and save hospitals billions. Find out more here.

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