Ralph Atkins in Zürich and Hugo Greenhalgh in London | Financial Times | 27 Apr 2016
Swiss bank UBS has raised $471m from wealthy clients for a cancer research investment fund, as it expands its portfolio of products offering social as well as financial returns.
UBS said its “oncology impact fund” was the largest such vehicle in the healthcare sector. It would invest in early-stage cancer treatments, allowing investors to potentially profit from rising global demand for such drugs and shorter regulatory approval times compared with other treatments.
The fund would “look, smell and act” like a regular fund, said Mark Haefele, chief investment officer at UBS wealth management, “and then change the world on top of that”. He said he expected investors to earn annual returns of more than 10 per cent.
Half of the funds’ investors were in Asia, UBS said. Participants have agreed to lock up funds for five years and make a minimum $500,000 investment.
The fund could appeal “to a whole new group of investors”, said Jo Ensor, director of The Philanthropy Workshop, “one who likes to take risks, but also likes to feel that their money is being put to good use, like cancer research”.
Unlike other healthcare funds, the UBS fund is focused on cancer research. The bank hopes to be seen as supplementing the work of charities, and public sector programmes, such as the US vice-president Joe Biden’s cancer research “moonshot” initiative launched in January.
The cancer drug market is developing faster than for other medicines because of ageing populations and the expanding middle classes with access to medical care in emerging economies.
Richard Ross, chairman of the UK’s Rosetrees Trust, which funds medical research, said: “I would dearly love more people to come forward and say we will put more money into research, but what I can’t offer them is a reward in the short term, while these social impact funds can offer investors is the possibility of a reward at some point.”
Under the structure of the fund, part of the performance fees and of royalties from sales of drugs will be used to help fund cancer care for children in the developing world as well as academic research. UBS did not disclose details of the fee structure but said it would be similar to other venture capital funds.
Ms Ensor said the UBS fund was “a great example of how impact investing is becoming more mainstream, bringing together the banks and the social enterprises”.
UBS is being advised by MPM Capital, a Boston-based bio-venture fund manager that specialises in identifying breakthrough therapies and creating companies to advance them.