Aparito EIS

Offer now closed (19 Feb 2019)

This offer has now reached capacity – it filled in seven days. Any applications already submitted will be processed on a first come, first served basis.

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As many as 42% of paediatric clinical trials end up in failure and inconclusive results. Poor quality or insufficient data is usually one of the reasons.

But what if clinical data could be constantly monitored and gathered, in a similar way to a smartwatch or fitness tracker? Aparito Limited ("Aparito") has developed such patient-centric technology.

So far, Aparito's technology has been successfully used in nine studies. It has been backed by Bayer AG and Development Bank of Wales. Now it aims to raise up to £1 million under EIS to support its next phase of growth.

Highlights 

  • Proven technology to support clinical trials and monitoring via smartphone apps and wearable devices
  • Already deployed in nine clinical trials by leading hospitals and research centres
  • Backed by pharmaceutical giant Bayer AG alongside Development Bank of Wales
  • Highly experienced and passionate management team
  • Scalable low-cost growth model
  • Potential for strong EBITDA margin and cash generation if successful
  • Advance assurance received
  • Mid case target return of 6.9x pre-tax relief (9.9x post-tax relief) after three years – high risk, not guaranteed
  • Attractive pre-money valuation of £4.5 million
  • Private single company EIS offer for experienced investors only 
  • Planning to allot shares this tax year – not guaranteed
  • Minimum investment £20,003.73

Important: The information on this website is for experienced investors. It is not advice nor a research or personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value, so you could get back less than you invest.


The offer

Typically a new drug costs around $2.5 billion and takes up to 15 years to get to market. However, despite the continuing significant investment – of time, money and resources – in new drug development, the number of new drugs being released is dropping. Currently only one in 5,000 makes it to the market.

One of the main challenges is controlling research and development costs whilst aiming to bring safe and effective drugs to market more quickly. Clinical trials play a vital role in this. 

Why do so many clinical trials fail or lead to inconclusive results? Data is often part of the problem. 

Traditionally data is collected at the hospital or research facility, which trial participants are required to attend at set times. This can be onerous, so many participants drop out. Moreover, even when patients remain in the trial, the data collected is a snapshot at a particular point in time and unlikely to give the full picture.

Aparito has developed technology that aims to reduce the cost and time it takes to conduct a clinical trial by enabling patients’ remote monitoring through smartphones and wearables. 

A wearable sensor records patient data 24/7. A mobile device (e.g. the patient’s own) links to the clinical research study. The patient can input data, including medication times and dosage, and how they are feeling. Clinicians can see and speak to the patient via secure video conference. The technology can generate real-time warnings if it detects side effects or an unexpected deterioration in the patient. You can read a patient's story at the bottom of the page

Aparito EIS – how it worksSet up in October 2014, the Company was awarded its first clinical trial contract in its first year, allowing it to immediately become revenue generating. In 2017 the Company was selected by Bayer AG (“Bayer”) – one of the world’s largest pharmaceutical companies – for its Accelerator program. Aparito works closely with the Bayer team to develop its business, with the view to potentially achieve a contract with Bayer.

As of today, Aparito has been involved in nine trials with leading hospitals, research centres and pharmaceutical companies. Most of them are ongoing and have generated over £400k in revenue. The Company also has a well developed pipeline of customers for 2019 and expects turnover of £540k this year (some of this is already under contract), growing to £2.4 million next year and just under £14.5 million by 2023. These are forecasts and not guaranteed. 

Aparito is looking to raise £1.296 million to support its growth. Existing investors, including DBW, Bayer and Bethnal Green Ventures have so far invested £843k and DBW has committed a further £196k to this latest round, with an additional £100k from another or the original private investors. 

The remainder – approximately £1 million (£999,999.84) under EIS – is exclusively available for Wealth Club investors. 32,144 new EIS-qualifying Ordinary A shares are being issued at £31.11 per share. This reflects a pre-money valuation of £4.5 million, which is attractive in our view, and a post-money valuation of £5.796 million - note returns and valuations are not guaranteed.

Watch a video interview with Aparito founder Elin Haf Davies:

Recorded 29 January 2019

A patient’s story

In 2007, at the age of two, H. was diagnosed with Niemann Pick Type C (‘NP-C’) an extremely rare and devastating genetic condition which causes neurological decline (problems with posture, speech and movement) and childhood dementia. In 2016, H. took part in a project run by Aparito with Great Ormond Street Hospital. Her mother describes the experience.

“H. has now been part of the Aparito wearable technology study for just over a month. She has a lovely pink watch which she happily wears at all times. The watch can track her walking and sends information directly down to an app loaded on my iPhone and on to the hospital.

At first we thought H. might be upset at having to wear a device on her wrist all the time but this was made so much easier when she realised there was a choice of colours to wear and pink was one of them!

Over the last month she has worn the watch with ease and never complains about it being uncomfortable. I go into the app twice a day to log the times that H. takes her medication and I also have to log on the app any falls or adverse events that may occur, any hospital visits that take place and fill in online quality of life surveys once a month. The app is easy to use and is a great way of logging the required trial information.

Prior to the trial H. only used to take part in a six minute walk test at routine NP-C clinic visits. The data gathered from these tests would be very much dependent on what mood H. was in, whether she was tired or whether she would cooperate (walk rather than dance along the mat!). I am hopeful that this wearable technology will give a clearer pattern of her walking in everyday situations.”


Target returns 

The management is targeting returns to investors of 6.9x (before EIS tax relief) and 9.9 x (after EIS tax relief) after three years – returns and timeframes are not guaranteed. This is based on a range of multiples from 8x to 16x pre-tax profits.

Even if the business plan is achieved, we prudently consider an exit in year three is likely to attract a range of 6x to 10x, given the Company is still relatively small.

That said, if the plan is delivered, it could be possible to achieve an attractive return even when applying the lower multiples. Please download our research report to read more on the Company's financials and projections. 

Management team

The team is led by CEO and founder Dr Elin Haf Davies. 

A former Senior Research Nurse at Great Ormond Street Hospital, Dr Elin Haf Davies, experienced firsthand the cost of clinical trial failures. 

“When you’ve seen firsthand the pain, discomfort and trauma children experience in hospital, you’re always trying to think how to make this better”. 

So, Dr Davies made it her mission to “make it better”. Since 2007, she has raised £250k for charities focusing on children with rare diseases (she rowed across the Atlantic and Indian Oceans and sailed across the Pacific and the Atlantic). She achieved a PhD from University College London on clinical research, then worked with the Centre for Health Economics & Medicines Evaluation and the European Medicines Agency. The experience she accumulated led to the creation of Aparito. 

Dr Davies is supported by a credible team who all have significant experience in technology, medical trials or both. 

Exit options

We understand the management intends to stay in the business for the mid to long term to be able to fulfil the Company’s exciting ambitions. 

However, as with all EIS companies, there is the option of a trade sale, a sale to another financial investor, refinancing or a stock market listing. There is a great deal of activity and investment in the sector and should the Company successfully achieve its plan, it could have many options and be an attractive acquisition target. Exit options and timeframes are not guaranteed.

Risks - important 

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.

EIS / SEIS investments are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

This is a single company EIS offer with no diversification. It involves investing in an early-stage business which is by nature high risk and prone to failure. You could lose the amount you invest.

The value of tax benefits depends on circumstances and tax rules can change. 

Fees and charges

Investors are investing in the company directly so will pay no direct initial or ongoing charges. Aparito will pay an introducer fee to Wealth Club of 6% as well as a performance fee on exit - please see the offer documents for more details on the fees.

Our view

This is an exciting opportunity to invest in a proven technology company operating in a high-growth market, with the potential of creating significant shareholder value as well as helping make a difference to patients' lives. 

Aparito has achieved a lot to date and has built up a good reputation with its highly regulated customer base. If successful, technology can deliver huge cost savings and improve patient outcomes. The business has done well to be selected by Bayer and should be well positioned for the next stage of growth following this fundraise. 

The Development Bank of Wales provides corporate governance and will be working with the business to ensure it has the right infrastructure to support the planned growth.

There are significant risks to investing in technology and healthcare early-stage companies so this is for experienced investors only. You should not invest money you cannot afford to lose as there are no guarantees of success. If Aparito achieves its ambitious plans, the returns to investors could be significant – there are, however, no guarantees.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.

The details

Type
Single company
Sector
Healthcare & Technology
Target return
-
Funds raised / sought
£1.0 million / £1.0 million
Minimum investment
-
Deadline
CLOSED
Last updated: 12 February 2019

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