Lord Drayson, a former science and business minister, is attempting to take private the healthcare technology company he floated three years ago after a turbulent time on the markets.
The Labour peer, 61, has approached the board of Sensyne Health requesting approval to speak to third-party investors to pursue a management buyout of the Aim-quoted company.
Lord Drayson and his wife Elspeth are the biggest, with a 22.8 per cent stake, according to filings. Other top ten independent shareholders include Gatemore Capital Management, an activist investor which in July had pressed Sensyne’s board to launch a secondary listing on Nasdaq.
Sensyne has been considering its strategic options to boost its market value and funds. It warned of a “material uncertainty” relating to its ability to continue as a going concern at its full-year results last month, when it posted deepening operating losses of £27.9 million for the year to April 2021 and cash of £23.6 million, as of the end of April.
Shares in Sensyne rose by 6½p, or 6.9 per cent, to 100½p yesterday, but are 43 per cent below its 175p per share issue price in August 2018.
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It is seeking to capitalise on the potential of big data by using artificial intelligence algorithms to analyse patient data and to work with pharmaceutical companies to discover medicines.
It has been repairing its board and trying to rebuild its share price after a furore over a lack of transparency over £1 million of executive bonuses and the departure of a number of directors.
The board has appointed JP Morgan Cazenove and Peel Hunt, its joint broker and nominated adviser since the float, to consider any potential management buyout and explore other interest from buyers, alongside alternative options, such as strategic investment or the continued pursuit of a secondary US listing. Neither the company nor Drayson have received a possible offer, it said today.
Sensyne’s chairman is Sir Bruce Keogh, the fourth director to hold the role since the company floated.
Sensyne said the £167 million market value of the company did not reflect the patient record health data it has accessed through its strategic partnership agreements with NHS Trusts and US health systems.
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Despite the governance issues, it has built access to a data set of 22.5 million patient records, including from Oxford University Hospitals, Chelsea and Westminster Hospital and South Warwickshire.
It said that it had the potential to access a further 22 million US patient records through an agreement with Omny Health, the US data company, and about 42 million clinical trial records through a deal with Phesi, another American company.
“Being undervalued means that Sensyne cannot execute on opportunities that may create novel treatments for patients,” it said. Drayson said that he was pursuing a buyout so “Sensyne can realise its mission to become the leader in the ethical application of clinical AI to health data and maximise value for all stakeholders, including the NHS”.
Keogh, 66, chairman of Birmingham Women’s and Children’s NHS Foundation Trust and a former director general in the department of health, said Sensyne had launched a formal sale process “as we believe it will help the company to deliver maximum value to all shareholders and prosper in the long-term”.
“The board is fully aligned with Lord Drayson’s proposal to explore a management buyout as one route towards maximising value for all stakeholders while respecting our heritage and unique, ethical business model.
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“Additionally, as part of the board’s duty to act on behalf of all shareholders, the board will also consider other options that may include strategic equity investment or continued exploration of a secondary US listing.”
Other large independent shareholders include Lansdowne Partners, the third biggest with a 7.8 per cent stake, and Amati Global Investors, with 4.9 per cent, according to filings. Gatemore holds 5.7 per cent.
Behind the story
When Lord Drayson floated Sensyne Health on Aim in 2018, he thanked investors for providing the “resources to make the vision a reality over the next few years” (Alex Ralph writes).
Three difficult years on and he is seeking to retake the company private to ensure that Sensyne can “realise its mission to become the leader in the ethical application of clinical AI to health data”.
Despite agreements with a series of NHS trusts and American health groups to access an anonymised data set covering 22.5 million patient records, Sensyne seemingly has struggled to generate sales and to raise funds. One source said that the “business model has failed to play out and they have languished on Aim because revenues have not come and they continue to spend a lot of cash”.
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A potential sale of Sensyne, through a management buyout by Drayson or to a third party, would mark an abrupt change of direction. Growing the business on the public markets was “a central thesis for the company”, the source said. “They made a huge play on the fact that it was public and therefore open to scrutiny, given the model was to acquire patient data from the NHS.”
Another source said seeking a sale “makes sense if you’re running out of options and have got to try and smoke out a potential buyer”.
Sensitivities about partnerships with NHS trusts, which hold stakes in the company, may complicate its options. The company’s prospectus shows that an agreement with Oxford University Hospitals can be terminated under a “change of control” and refers to considerations relating to a new controller operating in an “unethical manner or in a way that could reflect negatively on their reputation”.
Drayson and Sir Bruce Keogh, the non-executive chairman, said that the company was focused on protecting its “ethical” business model. Oxford University Hospitals declined to comment yesterday.
