Saturday, July 10, 2021

A prized UK biotech firm looks to Wall Street, much to Rishi Sunak’s dismay

A glowing, Deliveroo-style tribute from Rishi Sunak will not be required for this flotation. Vaccitech, the Oxford-based firm that owns some of the key biotechnology behind the AstraZeneca Covid vaccine, is off to New York for a public listing. One can almost hear the groans from the Treasury. For a chancellor trying to encourage “even more high growth, dynamic businesses to list in the UK”, Vaccitech is a high-profile one to let slip.

Sarah Gilbert and Adrian Hill, the professors who founded Vaccitech, have yet to explain their choice of the US, but one can speculate. The listed biotech sector in the US is enormous and companies tend to command higher ratings. The path is also well-trodden in recent years, including by Immuncore this year. Nor are UK biotechs alone in Europe in looking to New York. CureVac, the German firm that is also working on Covid vaccines, listed on Nasdaq last year.

All the same, London’s hopes of kick-starting a tech flotation boom sounded most credible in the area of biotech and life sciences in general. It’s a prized area of the economy, links with universities tend to be close and pre-IPO venture capital flows freely. It is territory where political arm-twisting ought to yield results.

Vaccitech itself is a spin out from University of Oxford and is backed by Oxford Sciences Innovation, the university’s commercialisation fund. So, in theory, London ought to have been the natural pick. Indeed, the Wall Street Journal reported last month that the university was pressing for London, but the executives were insisting on Nasdaq.

The board clearly won that little scrap and, in Sunak’s shoes, you would want to understand why. Oxford Nanopore, the gene-sequencing firm that also grew out of the university, said last week it would opt for a London float later this year. It’s the bigger firm and so could be considered more of a catch. But Vaccitech, on paper, looked an easier pitch.

Dimon’s euphoric forecasts

Jamie Dimon’s annual economic forecasts should be taken with a pinch of salt. A year ago the chief executive of JP Morgan was predicting “a bad recession” more severe than the one that materialised.

This year he has swung to the other extreme. There will be a boom in the US that could last until 2023 as excess savings, stimulus spending and a successful vaccine rollout combine with “euphoria around the end of the pandemic”. The latest plot is entirely possible, of course – but so was the one he described a year ago.

The greater infuriation in Dimon’s annual letters, however, is the blurry nature of his prescriptions of how to address the glaring social inequalities he identifies. Acres of text are devoted to how JP Morgan is “a responsible citizen at the local level – just like the local bakery”. But you will struggle to find a clear view on whether large Wall Street banks should pay tax at a much higher rate than the local bakery to fund more government spending.

This is a burning issue in US politics and, in principle, Dimon seems to be in favour. A version of a “Marshall Plan” for the US “may very well mean higher taxes for the wealthy”, he wrote. On the other hand, it may not: Dimon is also in favour of keeping US companies competitive, which he think means tax rises should be “reasonable and moderate”.

You can see what the IMF is up against when it calls for a “solidarity” tax on pandemic winners to boost recovery. It’s a good idea – but the lobbying backlash will be fearful if hard numbers appear.

Pining for the fjords

“Customer demand remains strong, with evidence of significant pent-up demand from customers ready to travel,” says Saga, a statement that is clearly true because the first cruises this summer involve customers swapping their usual tour of the Mediterranean for all-British packages. Limited choice has not undermined demand.

Strictly speaking, one tour includes a look at a Norwegian fjord but the closest passengers will get to setting foot in Norway is the Orkneys and the Shetlands. The novelty of British tours might wear off if they became annual affairs. But, yes, the popularity of a cruise trip seems undimmed.

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