Member Article

Investment in University spin-out develops super-bug treatments

Rivers Capital Partners Ltd have invested in Newcastle University drugs spin-out firm, in their first foray into the bio-technology industry.

Advised by Muckle LLP, Rivers invested an undisclosed sum in Demuris, which is developing antibiotics aimed at tackling problematic infections such as MRSA, E-Coli and Psudomonas aeruginosa.

The company was founded by cell and molecular biologist Professor Jeff Errington, Demuris’ Chairman and Director of Drug Development.

Professor Errington founded the Centre for Bacterial Cell Biology at Newcastle University; the world’s largest grouping of researchers working on fundamental studies of bacterial cells.

Peter Robinson, a partner and head of Early Stage and Private Equity Team at Muckle LLP, acted on behalf of Rivers Capital in the deal.

He said: “Rivers Capital realised the potential for growth in Demuris and approached us to use our experience and knowledge of spin out companies and financial models to provide insight into how they should be approaching this investment.

“We acted on behalf of Rivers Capital, but also worked closely with the University and its equity holding company, Newcastle University Holdings Ltd, which has a stake in Demuris.

“It was important that we provided the right framework for Demuris within the investment, so it had the appropriate financial platform, and realistic milestones to give it the best opportunities for success.”

The investment will enable the company to develop novel antibiotics, sourced from natural products.

Robin Lockwood, CEO at Demuris, said: “Drug development is extremely expensive as there is an exhaustive process which must be followed to ensure any drug is safe and effective. The investment from Rivers Capital will help us take our lead compounds through to the next stage of development.

“This will in itself increase the value of the company and is an incremental step in a process, which we believe will lead to the licensing of our novel compounds to large pharmaceutical organisations.”

Funds from the Finance for Business North East Angel fund, which is backed by the European Investment Bank and the European Regional Development Fund, were used in the investment.

Natalia Blagburn, Investment Executive who led the investment at Rivers Capital, said: “We are very excited about our first investment in the biotech industry and Demuris is well placed to expand and become a significant player.

“The company supplies a unique scientific resource to large pharmaceutical companies that has taken a worldwide search and over 40 years of academic study and research to obtain. It also carries out research seeking a cure for antibiotic resistant infections.

“The company’s founder Prof Jeff Errington is a world expert in his scientific field. Unlike other biotech start-up ventures, Demuris is already generating revenue at this early stage.

She added: “We received invaluable support from the team at Muckle to complete this investment. Their knowledge and expertise in working on projects like this played a major part in completing the investment smoothly and on time.”

This was posted in Bdaily's Members' News section by Tom Keighley .