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Finance & Business Development The Importance Of Investment And R&D; In The Health Of Life Sciences By Mark Howard And Jodie Dennis T he AIM (formerly the Alternative Investment Market) IPO market has seen a number of significant listings recently in the life sciences sphere. Notably, the market appears to be strong for companies providing clinical services or medical devices, with a wide range of such companies coming to market in the last 12 months, including Clinigen Group (clinical trials supply and specialty pharmaceuticals) and Venn Life Sciences Holdings (consulting and clinical trial provision). For companies involved in drug discovery, the market remains challenging. But there are signs of interest from certain institutional investors in this part of the sector too, and the successful floatation of Retroscreen Virology Group's shares on the AIM market demonstrates a willingness to invest in businesses carrying out quality R&D;, albeit in this case counter-balanced by a novel clinical services business. Retroscreen is a virology healthcare business that provides preclinical analytical services and clinical services to large pharmaceutical and biotech companies. Last year it successfully raised £15 million ($23.5 million) from an AIM IPO to fund its R&D; and working capital requirements. In April 2013, the London Stock Exchange welcomed Electrical Geodesic, Inc. (EGI), a U.S.-based medical device company, to AIM. EGI made a strong debut, raising the £8 million ($12.5 million) before expenses on admission. EGI's successful floatation is not surprising, given the company's measured evolution, both in operational and 50 LifeScienceLeader.com financing terms, prior to coming to market. EGI has steadily advanced and developed its core technology over the last 20 years and has obtained regulatory clearance in the U.S., EU, and from a number of other major international regulatory bodies. EGI has an established revenue stream with around 500 customers internationally. EGI and almost all recent IPOs in the United Kingdom demonstrate that companies with a strong pathway to profit are seeing a lot of interest from institutional investors. Investors are also interested in strong management teams that have a proven track record of bringing life sciences companies to market and providing them with a profitable exit. For example, David Evans, chairman of Healthcare Investment Opportunities (which was admitted to AIM in April), has been part of a number of successful management teams in this area, including Venn. ALTERNATIVE SOURCES OF R&D; FUNDING Companies that are very early in their development are unlikely to be suitable investments for institutional investors. However, as Venn and Retroscreen (previously backed by private equity September 2013 houses Calculus Capital and Aquarius Equity, respectively) have shown, there are other sources of finance available to fund the earlier part of the life cycle. In addition to private equity/venture capital, alternative providers of finance, such as national development funds and mentoring initiatives (for example, Government's Biomedical Catalyst and the Growth Accelerator) and regional development funds, such as the Thames Valley EIS Fund, can be invaluable alternatives for early-stage, next-generation businesses. This is especially true in the context of an economy where traditional providers of debt finance remain relatively cautious. Companies early in their life cycle also may benefit from partnering relationships with universities, charities, or large corporations. Such partnerships can help smaller companies plug the funding gap and provide access to R&D; expertise and services critical to their long-term success. For those companies with established revenue streams, access to a public market, whether this is AIM or the main market, can offer many advantages. Recent admissions on AIM have raised