Merlin and Rothschild Unit Form Global Bioscience Group –

LONDON – Merlin Ventures, the biotechnology venture group founded by Dr. Chris Evans in 1996, looks set to become the largest fund dedicated to bioscience development in the world. Merlin announced in April that Jeremy Curnock Cook, a director of Rothschild Asset Management and head of Rothschild Bioscience Unit (RBU), along with other key individuals from the RBU team, will join the group to form Merlin Bioscience.

The new group, subject to final negotiation and regulatory approval, will take over the management contract for the GBP57 million ($91.7 million) International Biotechnology Trust plc (IBT), an investment trust investing in mid-stage biotechnology companies formerly managed by RBU. Merlin also expects to assume responsibility for the RBU’s A$43 million ($27.9 million) Australian Bioscience Trust and its proposed C$40 million ($26 million) Canadian Bioscience Trust. Merlin already manages the GBP39 million ($62.8 million) Merlin Fund, an active incubator vehicle for seed-stage bioscience companies, and advises the GBP30 million ($48.3 million) Reabourne Merlin Life Sciences Investment Trust on unquoted United Kingdom investments.

Prior to the formation of Merlin Bioscience, Merlin Ventures already was working on plans for the Merlin Healthcare Fund, a GBP100 million ($160.9 million) vehicle for later-stage bioscience investments across Europe.

If it reaches its target, the Merlin Healthcare Fund will boost Merlin Bioscience’s funds under management to GBP250 million ($402.4 million). By bringing together Merlin and the RBU funds and team, Merlin Bioscience has secured itself the uniquely advantageous position of a quoted and non-quoted bioscience investment network covering Europe, North America and Australia with the capacity to fund companies from test-tube stage to the quoted markets.

Dr. Evans and Mr. Curnock Cook are among the leading figures in the bioscience industry. Dr. Evans is the founder of bioscience companies currently valued at more than GBP500 million ($804.7 million), including Chiroscience and Celsis, which have floated on the London Stock Exchange, and Enzymatix, which was successfully sold. He also founded Cerebrus, the U.K.’s first neuroscience research company, and Enviros, an environmental technology venture. Ventures formed by Dr. Evans have returned more than GBP200 million ($321.9 million) to their venture capital backers.

Mr. Curnock Cook founded International Biochemicals Group in 1975, and, following its sale to Royal Dutch Shell 10 years later, remained as managing director of the company until 1987, when he joined Rothschild Asset Management.

Dr. Evans will become chairman of Merlin Bioscience, and Mr. Curnock Cook will fill the position of chief executive; Merlin Managing Director Peter Keen retains his position and will have responsibility for the operational management of the group’s European activities.

The opportunity for Merlin to add the RBU-advised funds arose because Rothschild Asset Management, disappointed with the recent poor performance of biotechnology stocks, decided last year largely to withdraw from the bioscience sector.

Following the collapse of merger talks between IBT and Biotechnology Investments Ltd. (BIL), another biotech investment trust managed by RBU, BIL entered into negotiations with 3i Group. However, at press time, Merlin was considering a bid for the BIL management contract, possibly in conjunction with Domain Associates, BIL’s United States adviser.

Merlin Ventures has to date established 10 companies, including Cyclacel, Eurogene, KinderTec, Microscience, PanTherix, ReNeuron and Vectura, along with three more yet to be announced, and the Merlin Fund will reach full investment by this summer.

The planned Merlin Healthcare Fund might provide follow-on funding for a number of these companies but also will target later-stage bioscience investment opportunities throughout Europe. According to Dr. Evans, later-stage bioscience companies are encountering difficulties in raising capital similar to those experienced by their seed-stage counterparts. This phenomenon results, at least in part, from the disappearance of the IPO window for smaller bio-tech stocks across much of Europe.

Mr. Curnock Cook said Merlin’s U.K. market position and the RBU team’s international experience are complementary, while both groups have independently identified opportunities in continental Europe.