Business Weekly - Cambridge, UK

Evans is holding talks with international investors about Merlin IV and V in a bold, double-your-money bid to take Merlin from 600m Euros invested to over 1 billion Euros.

Leading City investment figures believe he will succeed despite the difficult backdrop.

The SFO is still refusing to confirm whether there is any substance in a complaint lodged by former Merlin boss, Andrew Greene, who was axed by Merlin in December 2003.

The inquiry concerns an investment made by one of its funds. Merlin is adamant that the company will be cleared of any wrongdoing. A source said: “The information supplied by Greene to the SFO was highly selective and gave a misleading picture. When the SFO gets the full information Merlin is confident the issue will be resolved.”

Even though the SFO probe is embarrassing for Merlin as it bids to scale up its fundraising effort, it is understood that leading financial institutions involved with Merlin are supportive. One financial source told Business Weekly: “Frankly, this is a pain in the arse but we are relaxed.”

Greene, who received a £150k pay-off when he was ousted, is said to have clashed with Merlin director Mark Clement during his 18 months at the company. Greene, a former Merrill Lynch banker, is believed to have been angered by uncomplimentary remarks made to a national newspaper about his ability by Clement – who took over running the company.

The Independent newspaper has reported that the SFO has already spoken to Clement and Business Weekly believes they will be talking to Evans and other Merlin people in the coming weeks. It could take months to complete their initial inquiries, we understand.

Merlin is making no comment and Greene failed to respond to a call Business Weekly made to his home.

National press speculation that the inquiry involved a missing £2.5m allegedly paid into a shell company will be refuted by Merlin. A source close to Merlin said there was no shell company, but a legitimate new company, and an internal audit would show that there was no missing £2.5m.

Evans and his family are said to be deeply hurt that a probe that does not directly involve Merlin’s founder and chairman has been turned into what friends and associates call a smear campaign about his accumulated wealth and a personal attack on his lifestyle.

Although Evans has made himself unavailable for comment, friends say that far from waving two fingers at the UK biotech sector and walking away in disgust, as some colleagues at the outset advised him to do, the serial biotech entrepreneur is more determined than ever to fight for new cash for the industry – with Merlin bearing the battle standard.

One leading rainmaker told Business Weekly: “Merlin is the UK bio fund that is most like the Americans in risk culture. Chris has backed hunches that conventional funders wouldn’t and his faith has been repaid over and again.

“Investment institutions we are involved with think Merlin’s approach is good for the biotech sector and we’re encouraged to see he and Merlin are not going to lie down over this. From what people genuinely in the know understand, Chris has got more money than he’ll ever need in his lifetime.

“He could go now, take his business offshore, work over in the States – just clear off any time he wants. How does that help bio maintain its profile and raise the funds it needs to commercialise some really exciting science? If there is anyone out there to fill his shoes it isn’t immediately obvious.

“That’s the hateful thing about Britain: We build up people to knock them down. We don’t like mavericks who show off their big cars. Resentment and jealousy set in – but for the sake of UK plc we have to keep our eyes on the bigger picture.”

Another senior international biotech entrepreneur said: “Merlin will survive and biotech will survive. There is an appetite for investments in the sector as long as they are the right investments, properly stacked, and I don’t see that being destroyed by one unsubstantiated allegation.”

Business Weekly’s own research reveals not only the likely value of the wealth Evans has personally accumulated but also the benefits that have accrued to UK plc.

The Sunday Times Rich List puts his worth at £150m. Business Weekly's analysis could, at best case scenario, make him worth anything from £160m to £300m.

Across Celsis, Chiroscience, Enviros, Toad plc, Enzymatix, and Merlin Group his stock alone can be valued at anywhere from £88m to £203m.

His worth through Merlin is another £50m-£60m. His properties, art, antiques, cars etc exceed £30m-£40m. All of which makes him worth between £168m and £300m – and that doesn’t include any of his offshore private purchases, share dealings and international successes.

Business Weekly researchers pick those figures apart as follows using accepted City metrics to reach their conclusions.

Celsis International plc

Evans held over 15 million Celsis shares in his own name. Various offshore trusts, for example Solidum, associated with him held another 12 million shares. Close associates, who also manage a lot of his offshore affairs, also held over 10 million shares. Some trusts associated with Evans sold 7 million shares at the placing of the flotation. This gives him, a potential total shareholding (in various guises) of 27m-45m.

At the 1993 IPO, the share price was 100p, rising to 120p and as high as 151p from 1993-1995, handing Evans a value of between £30m and £68m. A number of disposals took place between 1993 and 1998. Celsis, created by Evans, was Britain’s first quoted and profitable bioscience company and has now sold over 100 million rapid microbial tests originally invented and patented by Evans himself.

Chiroscience

He held 3.4 million shares in his own name and share options at nil prices of more than 2.5 million - a total of almost 6 million shares. Various trusts associated with Evans held another 2m shares. The Chiroscience share price moved between 600p and – after the merger with Celltech in 1999 – as high as £18 a share. Evidence suggests Evans sold between 1998 and 2001-02 including peak pricing (£48m-£120m). He built Chiroscience, UK’s flagship biotech, with his own scientific ideas from scratch with £1m in 1992 to over £700m by 1997, returning huge amounts of cash to his original backers – and a lot to Evans himself.

Enviros

He built this environmental company from scratch and sold it for £20 million. Various trusts associated with him received cash, shares and loan notes totalling £5m-£7m plus.

Toad plc

Evans created Britain’s biggest independent vehicle security company Toad plc which has now fitted over 2.5 million British cars with innovative products developed by Evans. Between his own name and various associates and trusts we traced in excess of 20 million shares. The share price varied from 30p to 90p.

Enzymatix

Our estimates put his wealth from this source at a minimum £2m. He broke up Enzymatix in a novel business model for biotech and produced the likes of Chiroscience and other fledgling companies that went on to greater things.

Merlin

Evans built Merlin Biosciences in just six years with over $600m invested funds under management (in three funds) into the largest exclusive European biomedical venture capital firm ever seen. He intends to raise funds IV and V and grow it to more than $1bn by 2007 despite the current problems. Evans owns 100 per cent of his Merlin Group with the income, profits, profit share through funds. Merlin has 39 new medical companies capitalised at over 2 billion Euros, raised 900 m Euros cash and has several plcs trading over 500m Euros in value, 180 new medical products – 79 in human trials – and more than 90 institutional investors. The whole group, if quoted and compared to companies such as IP2IPO would be worth a conservative £40m-£60m.

Personal

Close associates confirm that he has carefully acquired properties, art, antiques and cars for up to £40m in value.

Taking a broader picture, the Life Sciences industry has benefited hugely from the Evans factor. He has created 45 successful science companies in the UK worth more than £2bn. He has floated 12 companies on the UK stockmarket, a feat for which it is hard to find a parallel by a single biotech entrepreneur.

His businesses directly employ over 3,500 people – mostly British scientists – spending over £350m each year with British suppliers and with an annual PAYE salary spin-off to the Treasury of £200 million.

Evans is currently developing over 180 new medical projects with 79 innovative products in advanced human clinical trials in over 20,000 patients in various countries around the world. He has many new medicines in development for serious diseases.

Evans has raised over £1.5 billion Euros, mainly from overseas, to fund projects that have helped save thousands of lives. And he has raised millions to put Britain in the forefront of global stem cell research.

His success has spun off over 50 new multi-millionaires in the UK who in turn have created their own businesses cumulatively worth more than £1 bn and employing 2,000 people.

In the last 12 months alone he has raised over 600 million Euros for Merlin’s projects and listed five new companies on the London stockmarket; most of the money was raised outside the UK in US dollars, Euros and yen.

Evans built his first successful company Enzymatix at the age of 28 to kick start the UK biotech sector in the ‘80s and was Britain’s first and youngest bioscience millionaire. By the age of 33 he had floated four companies.

Awarded an OBE at the age of 36 for services to biosciences, he was subsequently knighted at 42 by Tony Blair’s government and continues to advise the Government on biotech and stem cell issues.

Evans has been a pioneer of financing stem cell science companies in the UK. His first corporate stem cell venture – ReNeuron – is the world’s first team to produce stable, fully functional human neuronal stem cells in the lab, not extraction.

Clinical trials to reverse stroke and Huntington’s disease start in 2006 and of the total £35m investment into all UK stem cell companies to date, some £29.5m is attributed to his efforts. Business Weekly understands Evans has already raised £12m towards a new £100m stem cell fund.

The biggest biotech deal in European history (worth $380m) was recently signed between two Merlin portfolio companies – Arakis and Vectura – with European pharmaceutical giant Novartis.

This year Evans sold Microscience for $110m to a US firm and Arakis for $190m to a Japanese pharma company.