AstraZeneca and Quell in $2bn-plus deal

BY Fraser Tennant

In the latest of a series of deals involving emerging forms of cell therapy, Cambridge-based drugmaker AstraZeneca is to collaborate with biotechnology start-up Quell Therapeutics to develop cell-based treatments for autoimmune diseases.

Under the terms of the agreement, Quell will receive $85m upfront from AstraZeneca – which comprises a predominant cash payment and an equity investment – and is also eligible to receive over $2bn for further development and commercialisation milestones, if successful, plus tiered royalties.

The collaboration between AstraZeneca and Quell Therapeutics will develop multiple engineered T-regulator (Treg) cell therapies that have the potential to be curative in type 1 diabetes and inflammatory bowel disease indications.

“We are extremely pleased to have AstraZeneca on board as our first major partner,” said Iain McGill, chief executive of Quell Therapeutics. “This collaboration builds on our pioneering work to develop exquisitely engineered, multi-modular Treg cell therapies for immune disorders and provides excellent validation for the technologies and capabilities we have established.”

In addition, Quell’s proprietary toolbox of Treg cell engineering modules, including its innovative Foxp3 Phenotype Lock will be leveraged to develop autologous multi-modular Treg cell therapy candidates for major autoimmune disease indications.

“This is a very exciting collaboration with Quell as we look to expand our next-generation therapeutic toolbox and explore the untapped potential with Treg cell therapies in autoimmune indications,” said Mene Pangalos, executive vice president of BioPharmaceuticals R&D at AstraZeneca. “This is aligned with our strategy to target underlying disease drivers to stop or slow disease progression and ultimately accelerate the delivery of transformative care to patients with chronic autoimmune conditions.”

A global, science-led biopharmaceutical company that focuses on the discovery, development and commercialisation of prescription medicines in oncology, rare diseases and biopharmaceuticals, AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide.

Mr McGill concluded: “We are proud and excited to partner our leading science with the deep experience of AstraZeneca to accelerate the application of our Treg cell therapy platform in major autoimmune disease, where we believe there is a broad opportunity to reset immune tolerance and drive durable responses for patients.”

News: AstraZeneca signs $2 billion agreement with Quell to develop cell therapies

Tech investment in Asia rapid in 2022, reveals new report

BY Fraser Tennant 

Tech investment has grown to represent the majority of private capital activity in Asia, even amid the global correction in 2022, according to a new report by the Global Private Capital Association (GPCA).

In its ‘2023 Trends in Global Tech’ data report – which examines some of the contours of the changing tech investment landscape with a focus on emerging trends and cross-border insights – the GPCA states that investment in tech across China, India and Southeast Asia has steadily expanded since 2017.   

“While Asia was not immune to global tech and venture corrections in 2022, tech remained a dominant theme for private capital investors in the region,” said Ethan Koh, Asia Research Director at GPCA and co-author of the report. “Despite a pullback from 2021 highs, tech investment was on par with pre-pandemic levels at $146bn in 2022.

Of all the investment activity in Asia, the GPCA notes that it is Chinese investment in deep tech that received the lion’s share of interest from investors in 2022, accounting for 71 percent of deal value (up from 40 percent in 2020).

In comparison, investment in China in other tech areas was much less prolific, with enterprise software & IT services receiving 16 percent of capital investment and consumer tech 8 percent.    

Additional key findings in the report include: (i) Western and Chinese money is moving to Southeast Asia; (ii) over half of 2022 deals include US or European investors; (iii) Chinese investors now participate in one quarter of Southeast Asian tech deals; (iv) consumer tech and FinTech dominate investment landscape in Southeast Asia; and (v) deep tech is benefitting from regulatory shifts and growing investment from local and international investors alike.

However, according to Rebecca Xu, co-founder and managing director of Asia Alternatives and a contributor to the report, despite a decisive shift toward deep tech, many investment opportunities in this key area remain untapped.

“Deep tech is underdeveloped, like consumer tech was 15 years ago,” said Ms Xu. “There are not many fund managers who have established a proven track record in deep tech. With plenty of room for development, finding professionals who have experience and specialised expertise involving science and technology is more essential than ever.”

Report: ‘2023 Trends in Global Tech’

Consortium buys WestConnex toll road for AU$11.1bn

BY Fraser Tennant

In an AU$11.1bn transaction that gives it full control of one of the largest road infrastructure projects in the world, a consortium led by Australian road operator Transurban is to acquire 49 percent of the WestConnex toll road in Sydney.

The consortium, Sydney Transport Partners (STP), already owns 51 percent of WestConnex – an approximately 70km-system of toll roads – after it purchased the stake from the New South Wales (NSW) government in 2018 and emerged as the top bidder for the remainder.

In addition to Transurban, which owns 50 percent, STP, AustralianSuper and Tawreed Investments are also partners in the consortium. Following the acquisition of the remaining 49 percent stake of WestConnex, AustralianSuper and Tawreed Investments will maintain their holding in STP, while the consortium will add Canada’s Caisse de dépôt et placement du Québec (CDPQ) as a new partner.

“WestConnex is one of the largest road infrastructure projects in the world and a key component of NSW’s integrated transport plan to ease congestion and connect communities in Sydney,” said Scott Charlton, chief executive of Transurban. “We feel privileged to take STP’s holding in this critical asset to 100 percent.”

Under the terms of the acquisition, CDPQ will contribute 20.5 percent of the acquisition cost for the remaining 49 percent stake in WestConnex for a 10 percent stake in STP. Canada Pension Plan Investment Board's interest in the STP consortium will be 10.5 percent.

Upon completion of the transaction, the NSW government will have received a total of AU$20.4bn from the sale of the entire WestConnex project.

To fund the acquisition, Transurban will raise AU$4.22bn of new equity. Overall, the acquisition will be fully funded by STP with equity upfront and no additional debt funding. The increased WestConnex ownership is currently expected to facilitate more than AU$600m of additional potential capital releases until 2025.

Dominic Perrottet, NSW treasurer, concluded: “This transaction continues our successful asset recycling strategy, which has been the cornerstone of our record A$108.5 billion infrastructure pipeline that has built and upgraded schools, hospitals, road and rail across NSW.”

News: Transurban consortium to pay $8.1 billion for full control of Sydney tunnel network

Over three quarters of FIs unprepared for LIBOR transition, reveals new report

BY Fraser Tennant

Over three quarters (77 percent) of financial institutions (FIs) do not have a comprehensive plan in place for transitioning from the London Interbank Offered Rate (LIBOR), according to new report by Duff & Phelps.

A key part of the financial services infrastructure, LIBOR is a globally recognised base rate for pricing loans, debt and derivatives and has been called the “world’s most important number”.

According to the report, based on a survey of private equity firms, professional service providers, hedge funds, banks and others, while 54 percent had identified LIBOR exposures, they had not yet taken necessary action to resolve their liability.

Furthermore, 58 percent of these firms had not catalogued transition provision and 42 percent said they were unsure of what to do next. Almost a quarter (23 percent) of the firms surveyed have not begun any formal processes to identify exposure, with 14 percent suggesting they would not be ready until Q1 2022 at the earliest.

“The LIBOR transition is one of the greatest regulatory-driven changes ever, and inevitably it requires complex planning, thought and analysis,” said Jennifer Press, a managing director at Duff & Phelps. “It is therefore quite surprising to see that just nine months away from the hard deadline, the majority of financial institutions who were polled do not have a comprehensive plan in place.”

A failure to adequately prepare for the LIBOR transition – which is due to take place on 31 December 2021 – could lead to significant risks for firms as contracts transition to alternative reference rates.

However, a third of respondents revealed a belief that they are on track, despite limited progress across the majority of the industry. However, the report notes that firms may be underestimating the extent and complexity of the work required for a successful transition.

“The results indicate that although the majority of firms have identified their LIBOR exposures, many have yet to formally catalogue the transition provisions,” said Marcus Morton, a managing director at Duff & Phelps. “There is a real fear that many are pinning their hopes on fallback provisions written within existing contracts. The reality is that fallback language may not suit each and every party, and in some cases, contracts will fail if such provisions are inadequate.”

Rich Vestuto, a managing director at Duff & Phelps, added: “Technologies such as natural language processing and artificial intelligence could go a long way to help firms fully understand their exposure, but they must start the process now.”

Report: LIBOR transition survey

Sustainable debt market to top $400bn in 2020, claims new report

BY Fraser Tennant

Driven by an expansion of the pool of financing options for investors, 2020 is likely to see the sustainable debt market surpass $400bn, according to a new report by S&P Global Ratings.

In ‘Led By Green Bonds, The Sustainable Debt Market Looks To Surge Ahead’ S&P notes that issuance in sustainable debt has doubled in 2019, with the primary driver being green bonds, which is expected to remain the main type of sustainable debt instrument in 2020.

"We also expect the sustainable debt market to continue to diversify and innovate, as investors look for alternative ways to contribute to sustainability objectives," said Noemie De La Gorce, ratings credit analyst at  S&P Global Ratings. “Furthermore, the market shows few signs of abating. Strong market fundamentals along with persisting positive credit conditions in the private sector are likely to support further green issuance growth in the next year.”

The report’s key takeaways include: (i) green-labelled issuance is expected to reach close to $300bn in 2020, partly reflecting the surge in absolute global fixed-income issuance and private financing; (ii) other sustainability-labelled debt instruments have emerged, including social bonds, sustainability bonds and sustainability-linked loans, which increased to about 35 percent of the total sustainable debt market in 2019; (iii) the unique and unprecedented regulatory and political push for green and sustainable finance in Europe will help to consolidate the region’s leadership in green-labelled issuance; and (iv) the majority of green-labelled proceeds will remain allocated to the energy transition, which absorbed 80 percent of proceeds in 2019.

Looking ahead, the S&P report suggests that issuance in the labelled green bond market could grow close to $300bn in 2020, after achieving a record $238bn in 2019. "While it still represents a minor part of global issuance, this share is increasing – to about 3.5 percent from less than 1 percent five years ago,” added Ms De La Gorce. “We expect this growth to be a long-term phenomenon, with sovereign and regulatory interventions, particularly in Europe, acting as a catalyst for private issuance.”

That said, the report sounds a note of caution, stating that growth levels are insufficient to bridge the existing financing gap between available sustainable debt and the investments needed to transition to a low-carbon and climate-resilient economy, which the UN. estimates will be at least $60 trillion by 2050.

Report: Led By Green Bonds, The Sustainable Debt Market Looks To Surge Ahead