Investor details
Paradigm shift in the diagnosis of multiple sclerosis
Successful development of novel contrast agents, from both a regulatory and commercial perspective, hinges on a well defined target indication with a clear clinical utility. This is certainly the case in multiple sclerosis as our technology has the potential to create a paradigm shift in diagnosis. The current guidelines (the McDonald Criteria) recommend two gadolinium brain MRI scans to prove the existence of lesions that are disseminated in time and space. This could be replaced by a single MRI scan using our smart diagnostic.
Commercial strategy
Oxford Contrast will target critical diseases where earlier diagnosis will change clinical practice and where pre-clinical trials for our products indicate results superior to current technology.
We will prove the concept initially in multiple sclerosis, already a major Western disease that affects nearly 1.3 million people, and brain metastasis which is thought to be the end-stage of 20% of all cancers. In both indications, earlier diagnosis could greatly improve clinical outcomes. In brain metastasis in particular there is an opportunity to introduce routine screening to diagnose brain tumors before there are neurological symptoms, thereby offering scope for early intervention.
Financial requirements
The £4.0m sought in the first funding round is calculated to be sufficient to reach Oxford Contrast’s first major milestone, which is the completion of Phase I for the first product (OCMD1001) two years after funding. Approximately 10% of the initial funding will be directed towards research into the second product (OCMD1007), which will commence pre-clinical trials for the early detection and screening for brain metastasis after this milestone.
£8.0m will be required in a second funding round to complete Phase II for the multiple sclerosis product and Phase I for the brain metastasis product.
An opportunity to exit is expected 3½ years after initial investment.
Forecast sales revenue
The graph shows the revenue potential from our agent’s use in the diagnosis of multiple sclerosis and the diagnosis of and screening for brain metastasis – our Expected Case.
Graphic by Graham Jeffery
There is additional upside potential if Oxford Contrast’s product can prompt a paradigm shift in the management of multiple sclerosis with regular staging scans, and if Oxford Contrast technology can become the new “Gold Standard” and take a share of the rest of the market for MRI contrast agents.
Investor return
Oxford Contrast will realise a return for investors by trade sale following the completion of the first Phase II clinical trials.
We expect Oxford Contrast’s multiple sclerosis (OCMD1001) and brain metastasis (OCMD1007) products to be worth a risk-adjusted net present value (NPV) of US$ 600m at the end of the first Phase II trial in 2013. Assuming that half of that value will come to investors who participate in the first and second funding rounds, the return to investors is set out in the following table.
The example below demonstrates our Expected Case as based on the following assumptions:
| Risk-Weighted Enterprise Value | £376m |
| US$/£ FX Rate | 1.60 |
| Exit Value Captured by Sellers | 50% |
| Exit Value to Sellers | £188.2m |
| Uplift in Value at 2nd Round | 1.5 |
Expected Case
| Pre Funding | After 1st Round | After 2nd Round | Value on Exit (£m) | Investment (£m) | Exit Multiple | IRR for Investor | |
| Founders | 85% | 60% | 43% | 80.0 | |||
| Option Pool | 15% | 11% | 8% | 14.1 | |||
| First Round Investors | 30% | 21% | 40.3 | 4.0 | 10.1 | 94% | |
| Second Round Investors | 29% | 53.8 | 8.0 | 6.7 | 256% | ||
| 100% | 100% | 100% | 188.2 | 12.0 |
The management team and the Founders firmly believe that Oxford Contrast Molecular Diagnostics is well positioned at the global forefront of molecular imaging and represents a highly attractive investment opportunity.