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134. Bull, Bear & Beyond – IP Group executive interview
6 Plays2 months ago
In this interview, IP Group’s CEO, Greg Smith, highlights the potentially transformational implications of Pfizer’s acquisition of Metsera (for up to $7.3bn, of which $4.9bn is in upfront cash), whose MET-097 anti-obesity drug is progressing through Phase II. IP Group is entitled to low single‑digit royalties from a number of Metsera compounds, including MET‑097. EvaluatePharma forecasts that MET-097 could generate $9.2bn in non-risk-adjusted revenue by 2032, implying significant royalty streams to IP Group if commercialisation is successful. Greg reiterates confidence in management’s target of achieving at least £250m of exits by end‑2027 (excluding Oxford Nanopore), citing Monolith’s sale to CoreWeave and Hinge Health’s NYSE IPO (where IP Group achieved roughly a 50x return) as evidence. Greg also discusses progress on securing third‑party capital through UK pension funds and Mansion House initiatives, with management expecting to announce a new mandate by full‑year results, while highlighting portfolio momentum across AI, genomics, quantum and cleantech sectors.
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About ‘Bull, Bear & Beyond’
Bull, Bear & Beyond': features candid conversations with senior executives and from our own team of experts from across industries, exploring strategy, innovation, and the opportunities shaping their markets and 60-second pieces are a compressed summary of content designed to convey our message in a single, easily shareable hit.
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Original interview published on 27/10/2025 and reposted as a podcast
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Transcript
Introduction of Greg Smith, CEO of IP Group
00:00:07
Speaker
Hello and welcome to Edison TV. Today I'm joined by Greg Smith, Chief Executive the Officer of IP Group. IP Group are a yeah UK listed investor in science-based companies across cleantech, deep tech and life sciences.
00:00:25
Speaker
Greg, thanks for joining me again. Good see you again, Dan. Thanks for having us.
Impact of Pfizer's Acquisition of MetSera
00:00:29
Speaker
So there have been several announcements regarding the technical and commercial progress across the portfolio recently. a particular highlight there was Pfizer's acquisition of MetSera.
00:00:40
Speaker
um Can you explain the importance of of of that transaction? Yeah, so this is something that we highlighted in the half year results for the first time. i haven't typically talked a lot about the the licensing side of IP Group's business, mainly because for the past few years, it's contributed ah you sort of a few hundred thousand of income to the Group. um And one of the things that, one of the transactions this year that was quite interesting was the the IPO of a business called Metcera, which has got a novel GLP-1, so one of the anti-obesity drugs, and that was progressing through into phase two. And they IPO, they raised a few hundred million. And so obviously we were quite interested because and we licensed the fundamental technology behind their lead program and a number of their other programs. to them um on you know sort of interesting commercial terms.
00:01:30
Speaker
The fact that they had raised a few hundred million by way of IPOs gave them the firepower to be able to develop that that compound, and which was which was big news. And at the time that we announced the results, we we flagged this to and to shareholders.
00:01:43
Speaker
And then a week after the results, it was announced that Pfizer was acquiring the business um for 4.9 billion cash up front, plus another couple of billion in milestones. And so i think that to us really sort of um highlighted that the degree to which there there could be some some really significant potential value here. And this this could be very significant, couldn't it? We've we've actually just produced a ah report on this, but...
Revenue Projections for Met 97 Drug and Royalty Implications
00:02:09
Speaker
just to check the figures. So the consensus estimates are for the Met 97 drug to generate around 9.2 billion of revenue by 2030.
00:02:19
Speaker
And if we take ah a royalty of that of 1%, which I think is a baseline, that that would imply that it could be generating around 90 million plus of annualized royalties for for IP groups. So if that's right, that could be a ah game changer, couldn't it? Yeah, I mean, we're we're we're um quite excited by the news. and we We haven't put any um financial information out there other than what we included in our R&S, but to say we do you know we do benefit from um a low single-digit royalty. um I think, as always, your analyst is um is is is close to the pulse and has has picked up the scale of and potential revenues that could come from the compound if it successfully gets through phase two and phase three and into the market. um But yes, I mean, if if those numbers
00:03:04
Speaker
come to fruition and that's just from the one lead compound. It's worth noting that we've got IP over a number of compounds that that they're developing. So yeah, we're we're watching it significantly. And I think from from your viewers' point of view, it's worth noting that this isn't something which is reflected in our n NAV or our NAV per share. So I think that The total value um yeah in our books at the half year was about 1.2 million or 1.5 million or something. It's a very small amount. So over the course of the next six months, as hopefully the compound progresses through clinical trials, we will provide some further financial information.
00:03:42
Speaker
And already and the analysts that cover us, Milos included, and have started to to give some indications of what the value could be for the group. but I think it's yeah it's fair to say it could be um quite significant for us, which would be great news for for shareholders. Yeah, obviously. so we we need to discount that back. But equally, it's not fully in your NAV at the moment.
IP Group's Cash Realization Targets for 2027
00:04:01
Speaker
So one of the notable messages in your H1 results was the continued focus on delivering exits and that 250 million um exit target by, I think, year end 27. Can you can you discuss that and what's and in particular, what's driving that confidence and in hitting that target? Yeah, thanks thanks for picking that one up. That was one um we thought it was important to set out a sort of ah you know a longer term ambition for the amount of cash we could realise from the portfolio and 250 million in cash is is quite a meaningful proportion of our sort of 500 million-ish market cap at the moment. So were we're quite ambitious on this. But it wasn't with and unfounded confidence. And I think the recent announcement of the acquisition of one of our portfolio companies in the AI space, Monolith to CoreWeave, one of the very big US and NASDAQ listed businesses operating in that space, um is is is hopefully a flavor of of of why we feel confident. um Another and transaction during the course of the first half of the year, and which I haven't spoken about for a long while, was an IPO of one of our businesses. And we were very pleased for Dan and Gabe and the team that they had a successful IPO of Hinge Health um on the New York Stock Exchange. and That's a business that we backed right from the very beginning with sort of ah our first investment was about £50,000 or something in the business.
00:05:24
Speaker
um And we're already at the point, having taken a bit of cash off at the the point of the IPO, of having made 50x type return on um the amount that we invested. We invested almost a million dollars in the business. and So that's that's very interesting. It's trading and well in the aftermarket and our remaining balance, which was about £40 million pounds of value or about 4-5p per share um as at the half year, is currently under under lockup. and But of course, it it offers you know some opportunities for liquidity.
00:05:58
Speaker
in the second half of the year and beyond. And there are there are other opportunities and within the portfolio for realisations. And that's why we've got the confidence in in saying that we can achieve that 250 million um at least outside of our holding in Oxford Nanopore by the end of 2027.
Balancing Capital Return and Reinvestment Strategies
00:06:15
Speaker
And that equates to around about half your current market capitalisation, right? um Looking outside of exits, are there any other particular things going on in the portfolio that we should be aware of?
00:06:25
Speaker
Yeah, i mean, the the the the balance we've had to strike over the last couple of years is the return of capital to shareholders from exits and the reinvestment in the portfolio. And and though the exits that we've had to date have enabled us to retire about 15% of our shares in issue over the course of the last couple of years, so made ah know quite a meaningful difference um and hopefully will sort of supercharge the returns available to um shareholders in the future. And then, of course, ah the the focus, a little bit of management is now shifting to that and medium to long term opportunity and and what we're investing in to to deliver the returns of the future.
00:07:03
Speaker
there's There's lots to be excited about in the portfolio. We've had a capital markets event in the last couple of months and we had a few of our really interesting companies presenting. There's some content on YouTube that that people can watch. and Genomics PLC i would I would particularly draw attention to. That's a a business that's using and some AI and machine learning to do and data analysis around the genetic code of of humans, lots of um samples. and and And what it does is rather than looking for very niche diseases,
00:07:35
Speaker
It's giving people a and what's called a polygenic risk score that that that ranks how likely you are to get very well-known diseases like diabetes or cardiovascular disease. And of course, those diseases, if picked up early, can be treated very effectively. And so this is ah this is really interesting and as as ah as a concept.
00:07:55
Speaker
And I think over the last year or two, they're starting to show evidence of hitting that hockey curve of revenue. So that's that's very interesting. And then another one I draw out is... um a sustainable airline fuel business. So as you as you probably know, there's a huge amount of regulatory pressure to and bring some sustainable airline fuel into the mix of fuels used by and airlines. It's a huge contributor to um the the the climate emissions and a business called OxyCU, which is an Oxford spin out, just recently completed ah a Series B financing that we were a significant contributor to alongside people like um International Airlines Group, the parent company of British Airways, um and a number of major players in in the fuel space. So that's another one which looks really interesting. And if you happen to be passing um Oxford Airfield, you can see a big OxyCU facility where they're producing SAF from literally from sort of carbon dioxide in the air um over ah over a novel catalyst. So it's, you know, sort of another great example of some some future value. I was lucky enough to meet a couple of those companies at your recent event, both fascinating, really exciting
Pursuit of Third-Party Capital and Confidence Building
00:09:05
Speaker
opportunities. um Moving on a bit, can we discuss about the discuss discussions about securing third-party capital?
00:09:11
Speaker
Yeah, we've I would say the whole you know this so opportunity in the UK that was brought about um and particularly had a light shone on it by the the Mansion House Compact and then the Mansion House Accord, and there's that has sort of bought about two three years worth of of discussions um i would say the discussions we're having with with sort of potential funders has moved from very high level conceptual to in ah in a small number of cases much more practical and and you know how might we construct a portfolio and and and what how could that look in terms of investing into some of our portfolio businesses? um i I said at the time of the half year results that and we would be confident in um having announced a ah new mandate by the time of the full year results and and stand by that by that commitment. And IP Group's been very lucky. We benefited from investment from a number of the leading pension funds in the UK over our history. Railpen is our largest shareholder, one of the most active
00:10:17
Speaker
DB schemes um in the country and Phoenix provide our debt, one of the biggest and DC providers. So I think the the confidence that we've got already some big pension fund financial partners is also enabling us to have some quite constructive conversations with with others. so yeah um look out for that one between now and the the full year results. Interesting.
NVIDIA CEO's UK Visit and Recognition of IP Group's AI Portfolio
00:10:38
Speaker
And we can't have an interview without talking about AI. um lot going on in that area across the board, but we've recently had NVIDIA's chief exec visiting the UK and in particular highlighting a number of companies in your port portfolio. Can you discuss that?
00:10:53
Speaker
Yeah, it's good for the UK to have that sort of profile and recognition around our our AI um and technology opportunities. and And from an IP group point of view, um a number of our portfolio companies were lucky enough to have engagement with um Jensen, he visited um one of our AI software businesses, Oxa, um and there's plenty of content on LinkedIn. um He was also generous enough to say, we've got to qui one of our quantum businesses, Oxford Quantum Circuits. He he um said, this business will be the next NVIDIA, which of course is quite a good endorsement from from Jensen. So, um Yeah, no, that's, that's, it's good to get the, you know, the kind of um the profile and the recognition. It's also worth saying um there was a ah business um envoy that went down to India with a number of technology businesses. Many of our companies were represented there as well, both and current and past. So Seres Power, which was a very successful business that we had from the portfolio of old um and Oxford Nanopore were going and, and, and, Again, just good to see the scale of opportunity being reflected in some of these um sort of international events. So, yeah, no, we look forward with them with confidence. And I think with the you know the NAV returning, NAV per share returning to and hopefully positive growth, and there's ah there's ah there's a lot to look forward to.
00:12:14
Speaker
Certainly it seems as as if there's a lot of really interesting things going on. Greg, many thanks for joining me today. Thanks, Dan.