The perfect storm brewing for company pensions

Company pensions are becoming increasingly unsustainable due to the plunge in government bond yields and low interest rates, warns the CEO of one of the world’s largest financial advisory and fintech organisations.

The warning from Nigel Green comes as the yields of government securities – in which pension funds heavily invest – have fallen dramatically since the coronavirus crisis.

Mr Green says: “Institutional investors, such as pension funds, have always traditionally invested in government bonds, as they’re widely regarded as a safe-haven.

“However, the world has changed considerably in six months.

“Around the world, government bond yields are plunging as a direct result of the record-breaking asset purchase schemes introduced by central banks to help ease a severe worldwide economic slump due to the pandemic.

“And as the historic stimulus is set to remain, or even be expanded, the pressure on bond yields is expected to intensify.”

He continues: “The far-reaching stimulus agendas and more than a decade of ultra-low interest rates – which could be going even lower – are creating a perfect storm for company pensions, which are already feeling the squeeze of ballooning deficits.

“Increasingly, no longer are government bonds delivering the returns required to fulfil the obligations made to retirement savers.”

The deVere CEO also underscores the ongoing issues of the wider bond market.

“The falling yields have forced pension funds, and other institutional investors, to make highly unusual changes to their asset allocation mix as they seek out better returns in riskier assets.

“But then, the question is: If pension funds don’t buy government bonds, who will?

“China has been a major purchaser of U.S. bonds in the past to keep its export prices down. With its $1trn of Treasurys it’s the number two holder.

“But the new economic realities and geopolitical tensions have prompted Beijing to shed some of its U.S. bonds. In March alone, China sold $8bn of its hoard – in the same month as overseas investors and central banks got rid of $300 billion of Treasurys to raise dollars.”

Mr Green concludes: “Typically, bonds account for more than half of the assets held by pension schemes.

“Due to the falling bond yields, the potential for negative interest rates, and the already chronic deficits, company pension holders should seek with their adviser the available ways to safeguard their retirement income.”

The Volvo Group and Daimler Truck AG to lead the development of sustainable transportation by forming joint venture for large-scale production of fuel cells

Sharing the Green Deal vision of sustainable transport and a carbon neutral Europe by 2050, two leading companies in the commercial vehicle industry, Daimler Truck AG and the Volvo Group, have signed a preliminary non-binding agreement to establish a new joint venture. The intention is to develop, produce and commercialize fuel cell systems for heavy-duty vehicle applications and other use cases. Daimler will consolidate all its current fuel cell activities in the joint venture. The Volvo Group will acquire 50% in the joint venture for the sum of approximately EUR 0.6 billion on a cash and debt free basis. 

“Transport and logistics keep the world moving, and the need for transport will continue to grow. Truly CO2-neutral transport can be accomplished through electric drive trains with energy coming either from batteries or by converting hydrogen on board into electricity. For trucks to cope with heavy loads and long distances, fuel cells are one important answer and a technology where Daimler has built up significant expertise through its Mercedes-Benz fuel cell unit over the last two decades. This joint initiative with the Volvo Group is a milestone in bringing fuel cell powered trucks and buses onto our roads,” says Martin Daum, Chairman of the Board of Management Daimler Truck AG and Member of the Board of Management of Daimler AG.

“Electrification of road transport is a key element in delivering the so called Green Deal, a carbon neutral Europe and ultimately a carbon neutral world. Using hydrogen as a carrier of green electricity to power electric trucks in long-haul operations is one important part of the puzzle, and a complement to battery electric vehicles and renewable fuels. Combining the Volvo Group and Daimler’s experience in this area to accelerate the rate of development is good both for our customers and for society as a whole. By forming this joint venture, we are clearly showing that we believe in hydrogen fuel cells for commercial vehicles. But for this vision to become reality, other companies and institutions also need to support and contribute to this development, not least in order to establish the fuel infrastructure needed,” says Martin Lundstedt, Volvo Group President and CEO. 

The Volvo Group and Daimler Truck AG will be 50/50 partners in the joint venture, which will operate as an independent and autonomous entity, with Daimler Truck AG and the Volvo Group continuing to be competitors in all other areas of business. Joining forces will decrease development costs for both companies and accelerate the market introduction of fuel cell systems in products used for heavy-duty transport and demanding long-haul applications. In the context of the current economic downturn cooperation has become even more necessary in order to meet the Green Deal objectives within a feasible time-frame.

The common goal is for both companies to offer heavy-duty vehicles with fuel cells for demanding long-haul applications in series production in the second half of the decade. In addition, other automotive and non-automotive use cases are also part of the new joint venture’s scope. 

To enable the joint venture, Daimler Trucks is bringing together all group-wide fuel cell activities in a new Daimler Truck fuel cell unit. Part of this bundling of activities is the allocation of the operations of “Mercedes-Benz Fuel Cell GmbH”, which has longstanding experience in the development of fuel cell and hydrogen storage systems for various vehicle applications, to Daimler Truck AG. 

The joint venture will include the operations in Nabern/Germany (currently headquarters of the Mercedes-Benz Fuel Cell GmbH) with production facilities in Germany and Canada.

The signed preliminary agreement is non-binding. A final agreement is expected by Q3 and closing before year-end 2020. All potential transactions are subject to examination and approval by the responsible competition authorities.

Facts: Fuel cells and hydrogen as fuel
•  A hydrogen fuel cell converts the chemical energy of the fuel, in this case hydrogen, and oxygen (in the air) into electricity. The electricity powers the electrical motors that propel an electrical vehicle. 
•  There are two main ways to produce the hydrogen needed. So-called green hydrogen can be produced locally at the gas station, using electricity to convert water into hydrogen. Blue hydrogen is expected to be produced from natural gas, utilizing carbon capture technology to create a carbon neutral fuel.

2020-04-21

For further information, please contact:
Claes Eliasson, Volvo Group Media Relations, +46 31 323 72 29
Florian Martens, Daimler Trucks & Buses Media Relations +49 160 8687552

Nigerian bank DLM on the move delivers at all levels – with exciting plans in the pipeline

DLM Capital Group – a developmental investment bank that supports economic and social infrastructure projects with the aim of driving GDP growth and improving lives. 

Founding chairman and group CEO of investment firm DLM Capital Group , Sonnie Ayere
Founding chairman and group CEO of investment firm DLM Capital Group, Sonnie Ayere

DLM Advisory Partners (DLMAP), formerly Dunn Loren Merrifield Advisory Partners, is the advisory and capital-raising arm of DLM Capital group. The principal services provided by DLMAP include financial advisory, debt capital-raising, equity capital raising, mergers and acquisitions, and company set-up advisory.

DLMAP has played a leading role in structured finance and securitisation within Nigeria. “We have acted as sole arranger to more than 80 percent of structured finance transactions in Nigeria, and 100 percent of all securitisation transactions in the market,” says CEO Sonnie Ayere.

Most Innovative Transaction of 2019

In 2019, DLM executed the first Bus Rapid Transit (BRT) securitisation in Nigeria, working with the sponsor, Primero Transport Services Limited (PTSL). The system caters to residents of the country’s most densely populated city, Lagos. DLM raised ₦16.50bn ($45.8m) through the securitisation of the company’s BRT tickets receivables. The sponsor is licensed to operate the longest BRT route in West Africa, 35.3km, with its 434-bus fleet.

DLM Capital Group

A feasibility study conducted put the daily passenger carriage at about 226,300 passengers per day. Due to working capital pressures, the company was only able to serve an average of 135,000 daily passengers before the securitisation transaction in 2019.

The ₦16.5bn 17 percent Series 1 Fixed Rate Bonds issued were primarily used to refinance all pre-existing commercial banking loan facilities on the books of the sponsor. The transaction provided the company with savings in interest, shaving the cost of funds from 27 percent per annum to 17 percent. At the same time, it extended the tenor of the company’s debt from three years to seven.

With this transaction, DLM was able to provide the company with up to 10 percent savings in interest, reducing the cash required to service debt and improving the company’s working capital. DLM also advised on the restructuring of the company’s balance sheet by moving the operating assets into a new vehicle and eliminated the strain of depreciation charges.

Focus for 2020

DLM is in discussions with industry stakeholders and umbrella bodies to establish proprietary funding conduits across key sectors of the Nigerian economy. It intends to include microfinance, agriculture, education, health care and a continuation of other funding programmes for the mortgage, real estate and transportation sectors.

Working with a DFI partner, the company recently concluded the design of an aggregation vehicle aimed at providing local currency, wholesale funding solutions to micro-lenders in Nigeria by way of loan book securitisation.

A similar platform to provide financing to primary users of agriculture commodities is currently being developed.

European FinTech Lending Industry to Hit $9.6bn Value This Year

Innovative lending services, such as crowd and P2P marketplace loans, are becoming increasingly popular in many European countries. With the development of financial technology, recent years have witnessed a growing number of business customers and private borrowers using these digital financial services.

According to data gathered by Finanso.se, the European fintech, or the alternative loans industry, is expected to hit a $9.6bn transaction value this year, growing by 10% year-on-year.

Crowdlending Generates Nearly 70% of Total Market Transaction Value

After the financial crisis, many traditional banks became very restrictive in approving loans, especially in some European countries, leaving businesses and individual consumers with no access to much-needed cash. This created space for lending platforms, which connected borrowers directly to lenders, and removed the banks from the equation.

Lending platforms use sophisticated computer algorithms to make lending decisions, provide fast loans, and lower rates to borrowers. Investors, on the other hand, are given the ability to easily invest in loans outside of their countries at attractive returns.

In 2017, the European fintech lending market hit $6.3bn value, revealed the Statista Alternative Lending Market Outlook. By the end of 2018, the market value increased by 20% and reached $7.5bn worth. The rising trend continued in the next twelve months with the entire market reaching $8.7bn value. The statistics indicate European fintech lending industry is expected to show an annual growth rate of 3.0% between 2020 and 2023, resulting in $10.5bn transaction value in the next three years.

The market’s largest segment is crowdlending or peer-to-peer business lending. In 2017, European peer-to-peer loans in the business sector reached $3.6bn worth. Over the last three years, the market value of the crowdlending loans increased by more than 75% and hit $6.5bn transaction value in 2020. Statistics show this amount will grow to nearly $7.2bn in the next three years.

Consumer peer-to-peer loans are forecast to edge up to $3.1bn value in 2020, twice less than business lending.

Number of European Fintech Loans to Reach 1.3 Million by 2023

Although peer-to-peer business loans represent the leading market segment, the statistics indicate a much higher number of consumer peer-to-peer loans in Europe. In 2017, there were more than 911,000 successfully funded alternative loans in the consumer segment.

Business peer-to-peer loans reached over 63,000, or 14 times less compared to consumer loans. In the last three years, consumer and business alternative loans rose to 1 million and 75,900, respectively. The average funding per loan in the crowdlending segment is expected to reach $86,185 this year. Statista survey indicates the total number of European fintech loans will amount to over 1.3 million by 2023.

Compared by geography, the United Kingdom represents the leading European fintech lending market, and the third-largest fintech lending market globally. According to statistics, the total value of UK fintech loans is expected to peak at a value of $4.8bn this year.

Switzerland ranked as the second-largest market in Europe with $1.4bn worth transactions in 2020, growing by remarkable 27.4% year-on-year. With a $796 million transaction value in 2020, Italy ranked as the third-largest fintech lending market in Europe.

However, besides Switzerland, Denmark and Spain are expected to see the highest growth rates in the following years, rising by 23.7% and 22.9% respectively year-on-year.

Read the full story here: https://finanso.se/european-fintech-lending-industry-to-hit-9-6bn-value-this-year/

NDB Board of Directors meets in Shanghai, approves three projects with loans aggregating to USD 937 million

On December 2, 2019, the 22nd Meeting of the Board of Directors of the New Development Bank (NDB) was held in Shanghai, China.

The Board approved three projects with loans aggregating to approximately USD 937 million, bringing the NDB’s portfolio to 49 projects with loans aggregating to USD 13.7 billion.

Hubei Huangshi Modern Tram Project

The NDB will provide a loan of RMB 2.76 billion (approx. USD 400 million) to the People’s Republic of China for Huangshi Modern Tram Project. It will address urban transport connectivity problems in Huangshi, a municipality in the southeastern part of Hubei Province, through the construction of a modern tram network with a total length of 27.33 km. The components of the Project include: i) laying of tracks, construction of stations and installation of associated facilities for the tram network; ii) procurement of rolling stock; and (iii) consultancy support for commissioning, preparation of operations and maintenance plan, capacity building and project management.

Manipur Water Supply Project

The NDB will provide a loan of USD 312 million to the Republic of India for Manipur Water Supply Project. It will address serious challenges in clean drinking water supply in Manipur, a small mountainous state in the northeastern region of India, through construction and upgrade of drinking water supply infrastructure. The components of the Project include construction and upgrade of drinking water supply systems in: i) Imphal Planning Area, the capital city of Manipur; ii) additional 25 towns; and iii) 1,731 rural habitations.

Indore Metro Rail Project

The NDB will provide a loan of USD 225 million to the Republic of India for Indore Metro Rail Project. The Project is to implement a metro line of approximately 31 km in the city of Indore. The Project will provide mass rapid transit capacity for the city’s major mobility corridors, thereby contributing to local economic development and an improved urban environment by reducing traffic congestion and pollution.

The Board also approved technical assistance totaling to USD 0.7 million for two projects from India and Russia.

Mizoram Tuirini Small Hydro Project

The NDB will provide technical assistance of USD 300,000 to the Republic of India for Mizoram Tuirini Small Hydro Project. The NDB’s technical assistance will provide consulting services aimed at preparing the Mizoram Tuirini Small Hydro Project. The project envisages construction of a small hydropower plant with an installed capacity of 24 MW in the state of Mizoram, to increase installed power generation capacity of Mizoram.

Krasnodar Cable Car Project

The Bank will provide technical assistance of USD 400,000 to the Russian Federation for Krasnodar Cable Car Project. The NDB’s technical assistance will provide consulting services aimed at preparing the Krasnodar Cable Car Project up to the stage when it can be considered by external financiers to seek approval for its financing. The project envisages the construction of a cable car network to be used as an alternative public transportation modality in Krasnodar city, Russia to relieve traffic congestion.

It is the first time that the NDB Board of Directors approved the provision of technical assistance through the Bank’s Project Preparation Fund (PPF), a multi-donor fund open to contributions by all the Bank’s members. The PPF’s objective is to support preparation of bankable projects to facilitate borrowing member countries to raise funds for such projects from the NDB or other multilateral development banks.

During the Meeting, an update on the NDB project pipeline and status of approved projects was provided to the Board. The Board also discussed matters pertaining to equity investments, funding programme, treasury related matters, membership expansion, review of NDB’s General Strategy: 2017-2021 and development impact of the Bank’s operations.

On December 2, 2019, the 13th Meeting of the Audit, Risk and Compliance Committee (ARC) of the New Development Bank was held in Shanghai. The ARC reviewed Quarterly Audited Financial Statements for the New Development Bank and the Project Preparation Fund of the NDB for the period ended September 30, 2019. The ARC also discussed matters pertaining to risk, internal audit and compliance.

The 8th Meeting of the Budget, Human Resources and Compensation Committee (BHRC) of the New Development Bank was held on December 2, 2019.  The Committee considered the Budget Utilisation Report for CY2019 and the Proposed budget for CY2020 as well as the three Year Budget for 2020-2022. The Committee also discussed matter pertaining to recruitment and diversity.

Background Information

The NDB was established by Brazil, Russia, India, China and South Africa to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development. To fulfill its purpose, the NDB will support public or private projects through loans, guarantees, equity participation and other financial instruments. According to the NDB’s General Strategy, sustainable infrastructure development is at the core of the Bank’s operational strategy for 2017-2021. The NDB received AA+ long-term issuer credit ratings from S&P and Fitch and AAA foreign currency long-term issuer rating from Japan Credit Rating Agency (JCR).

Could this be the SME election? Small businesses employ 16million – over a third of the electorate

SME experts – IW Capital and the UKBAA – discuss the importance of SME success to the next Government

Today will see the three main party leaders set out their plans to secure the support of the UK’s business leaders at the CBI conference. Boris Johnson is set to make the case for getting Brexit done, while Jo Swinson is to claim that the Lib Dems are the “natural party of business”. Labour is to focus on apprenticeships and training for the business community.

When setting out their stall in business policy, one area that is set to have a huge impact is the support promised for small and medium enterprises across the UK. The SME community employs 16.6million of the roughly 45million eligible voters in the UK and contributes £2.2trillion (52%) to the economy. If the next Government can make it clear that they are the party to help this sector of business to grow and thrive they could see significant support from one of the biggest sections of voters to exist in the UK.

Luke Davis – CEO of SME investment house IW Capital says:

“The importance of the SME sector is hard to overstate, and in the context of the upcoming election will be hugely important to the future economy. With over a third of the electorate employed by small businesses this could really be a swing vote of society – if this section of the workforce feels more confident in their job security and business growth with one party, it will almost undoubtedly affect voting decisions.

“For SMEs to feel confident in their capacity to grow, employ more people and expand they need to trust that the incoming Government is going to look after them and deliver security. The range of innovative and agile firms in the space currently is reflective of the entrepreneurial spirit of the UK which if fostered correctly could kick-start the wider economy into a period of growth.”

Jenny Tooth, CEO of the UK Business Angels Association, has commented:

“Not only is it the employees of SMEs that are keeping a keen eye on this election, but also the investors involved within the SME arena. With Britain’s impending exit from the European Union, the loss of the Jeremie fund and Horizon 2020 are bound to leave regional SMEs proactively seeking private investment more fervently. However, the mindset of investors could change post-Brexit. Investors will be looking for greater longevity when assessing the potential of a business, and will now look to how scalable businesses are in terms of their international reach. The forthcoming election and the pledges that the parties sell to businesses needs to reassure investors that the environment they delve into is a sustainable one.”

The Dutch Fund for Climate and Development open for business

The Hague, November 15, 2019 – The Dutch Fund for Climate and Development (DFCD) has officially been launched in the presence of government officials, NGOs, investors, politicians and other interested parties. In May of this year, the DFCD was awarded to the consortium of Dutch development bank FMO, SNV Netherlands Development Organisation (SNV), World Wide Fund for Nature (WWF-NL) and Climate Fund Managers (CFM). “Today’s launch means that the DFCD is officially open for business,” said Linda Broekhuizen, Chief Investment Officer at FMO. “The consortium is keen to connect with innovative entrepreneurs with climate-related businesses and with private investors keen to mobilize much-needed funding from the private sector to join us in our mission to create a more climate-resilient world.”

Climate change is one of the biggest challenges we face today. It is already affecting people and nature across the globe, with developing countries being most impacted. “The poorest communities are the most vulnerable to climate change. Poor farmers and others at the bottom of the pyramid suffer and lose their livelihoods even with small changes in rainfall patterns or temperature”, as Meike van Ginneken, Chief Executive Officer at SNV explained.

There is an urgent need for investment to enable vulnerable communities and ecosystems to adapt to climate change. Carola van Rijnsoever, Director of Inclusive Green Growth, and Ambassador for Sustainable Development, Dutch Ministry of Foreign Affairs, said: „The challenge we face to help communities adapt to and mitigate the effects of climate change is enormous, and the case for action is incredibly clear. We cannot do this with governments alone. We need all stakeholders to be strong enough to confront this challenge. The set-up of this consortium in which finance and NGOs come together, is unique and uniquely positioned to do this.“ The government of The Netherlands has committed to addressing this need through the DFCD, making EUR 160 million available in the period 2019-2022 for climate adaptation and mitigation, of which at least 50% is earmarked for climate adaptation projects.

DFCD is a direct response to the increasing demand for climate adaptation projects that have to date suffered from a lack of funding compared with mitigation efforts. Linda Broekhuizen adds: “In 2018, USD 612 billion was invested in climate mitigation which is important and much needed. In contrast however, only 5%, USD 30 billion, was invested in adaptation. Adaptation may have to be USD 180 billion a year if the 2030 goal is to reach the USD 1.7 trillion as required according to the most recent report of the Global Commission on Adaptation.”

To help bridge this funding gap the DFCD aims to mobilize upwards of EUR 500 million from private sector investors. Andrew Johnstone, Chief Executive Officer of Climate Fund Managers adds: “The opportunities are there. Take water for example: 80% of the world’s wastewater enters rivers and oceans untreated and by 2025, half of the world’s population will be living in water stressed areas. Neither the private nor the public sector is doing enough, but together the investment potential is enormous, as is the impact to be delivered.”

This partnership of NGOs and financiers seeks to develop and finance sustainable private sector solutions to enhance resilience to the effects of climate change. These projects will boost the health of freshwater, forest, agricultural and ocean ecosystems, and improve water management.

“The consortium takes a landscape approach through investing in projects which are planned in an inclusive manner, and build on a solid understanding of the landscape, ecosystems and communities. In this way these projects will contribute to healthier ecosystems,” said Kirsten Schuijt, Chief Executive Officer of WWF-NL. “New and incredibly exciting in this consortium is that there is early-stage funding available to convert adaptation opportunities into bankable projects.” 

WWF and SNV take on the key role of developing climate-relevant projects from an early-stage idea to a bankable business case. Climate Fund Managers and FMO provide investment capital, delivering projects to full operations. This combination of early-stage involvement with full life-cycle funding will ensure lasting, long-term impact that contributes to the Paris Agreement and the United Nation’s Sustainable Development Goals (SDGs).

Interested parties can contact the DFCD through: www.thedfcd.com.

The Dutch Fund for Climate and Development open for business
In picture from left to right the DFCD partners at the official launch event in The Hague: Andrew Johnstone, CEO of Climate Fund Managers, Kirsten Schuijt, CEO of WWF-NL, Linda Broekhuizen, CIO of FMO, Albert Bokkestijn, project manger DFCD at SNV, Carola van Rijnsoever, Director of Inclusive Green Growth, and Ambassador for Sustainable Development, Dutch Ministry of Foreign Affairs.

In picture from left to right the DFCD partners at the official launch event in The Hague: Andrew Johnstone, CEO of Climate Fund Managers, Kirsten Schuijt, CEO of WWF-NL, Linda Broekhuizen, CIO of FMO, Albert Bokkestijn, project manger DFCD at SNV, Carola van Rijnsoever, Director Inclusive Green Growth, and Ambassador Sustainable Development, Dutch Ministry of Foreign Affairs.

Flarin Holdings completes first round of fundraising for revolutionary drug

Investment from IW Capital to drive rapid commercialisation of world’s first lipid formulated ibuprofen

Flarin Holdings Limited today announces the completion of its first round of fund-raising by IW Capital. Flarin Holdings was recently demerged from Infirst Healthcare Limited in order to provide greater focus on the rapid commercialisation of Flarin.

Flarin is a unique and patent protected lipid formulated ibuprofen which at a dose of 1200 mg/day has shown to be as effective as 2400mg/day of standard liquid ibuprofen capsules in patients with acute joint pain 1. Flarin’s unique lipid formulation also helps to shield the stomach from damage 2.

“The very positive response we have had from presenting Flarin to new investors has given us great confidence in taking Flarin to the next stage of its commercial development,” says Andrew Macmillen, Managing Director. “These new funds give Flarin greater ability to increase investment in marketing in the UK as well as building a network of distributors and licensing partners in other countries.” 

Luke Davis, IW Capital chief executive, said:

“We are hugely excited to be involved with this innovative pharmaceutical product at an early stage in its commercial development. It is also key to be able to work with such an experienced management team in the pharmaceutical and healthcare arena.

“Our research shows that around 20% of private investors are looking to invest within Pharma and Biotech while half of this group is put off by Big Pharma. With this in mind we were not surprised that the initial investment target for Flarin was over-subscribed by IW capital’s network of net-worth individuals and independent financial advisors.

There is a fantastic exit opportunity here with the product already fully developed and on sale in UK pharmacies, meaning there is already an established sales infrastructure in place.”

If you have any questions about the release or would like to speak to Luke please don’t hesitate to get in touch.

About Flarin Holdings 
Flarin Holdings is a new company demerged from Infirst Healthcare Limited in order to focus on commercialising Flarin’s unique lipid formulation of ibuprofen.

About Flarin Lipid Formulation Technology
Flarin is a unique and patent protected lipid formulated ibuprofen which at a dose of 1200 mg/day has shown to be as effective as 2400mg/day of standard liquid ibuprofen capsules in patients with acute joint pain1. Flarin’s unique lipid formulation also helps to shield the stomach from damage2.

About IW Capital
IW Capital is a leading SME investment provider specialising in private equity and debt financing, having facilitated well over c.£100m in development capital investment in UK companies.

Bierma- Zeinstra SMA, Conaghan PG, Brew J et al. Osteoarthr Cartil:  2017 25; 12: 1942-1951 Open Access: http://dx.doi.org/10.1016/j.joca.2017.09.002 Accessed at: http://www.oarsijournal.com/article/S1063-4584(17)31197-4/fulltext
2 Data on file, Infirst Healthcare Limited.

www.flarin.co.uk
https://www.linkedin.com/company/flarin/

Desentum will run a clinical trial on its allergy vaccine this winter supported by 4 M€ of new investments

Finnish biopharmaceutical company Desentum is about to initiate a first-in-human clinical trial with its birch pollen hypoallergen designed to improve immunotherapeutic treatment of birch pollen allergy. In a funding round arranged by Springvest Oy, the company raised 4 million euros that it intends to use for funding clinical trials, developing new hypoallergens and advancing business goals.

Desentum develops novel type of immunotherapeutic hypoallergens, so called allergy vaccines. The hypoallergens are biotechnologically produced, modified allergen proteins aimed for improving the efficiency of allergen immunotherapy while also reducing the time required for treatment. The lead product candidate, birch pollen hypoallergen DM-101 (Bet v 1 dm), has produced good results in preclinical tests assessing allergenicity and immunogenicity, and is now advancing to clinical phase.

In clinical trials, the safety and efficacy of a new medicinal product is demonstrated in volunteer study subjects. The primary objective of Desentum’s first clinical trial is to confirm the safety of DM-101, but information about the immunological response generated by the hypoallergen is also collected.

“For the past couple of years, we have worked together with international allergen immunotherapy experts to prepare for the clinical studies. The first study plan was submitted for regulatory and ethics evaluation in the summer of 2019. The study will be performed in Finland and the dosing is scheduled to be completed before 2020 birch pollen season”, explains Pekka Mattila, CEO of Desentum.

To strengthen the company’s financial position, Desentum initiated a funding round in September. It was carried out by a Finnish investment service company Springvest Oy. The public offering was fully subscribed, which translates to approximately 4 million euros of collected capital. Desentum plans on using the majority of the proceeds for funding early-stage clinical trials. The remaining funds will be used for the research and development of new hypoallergens as well as for partnering activities to support late-stage clinical trials and market access.

“We are very happy with the results of the public offering. The collected capital enables us to focus on our primary goal, which is testing the novel immunotherapeutic allergy treatment and bringing it to the market. Today, allergy affects a huge number of people, and I believe that in addition to the expectation of financial return, many investors also hope that our technology could solve a health problem that impacts the life of their family or friends”, says Mattila and continues: “This is our target as well. We have started by looking at birch pollen allergy, but our platform can be used for producing hypoallergens from other allergens, too. We are already developing similar products to address peanut, grass pollen, dog and horse allergies.”

Immunotherapy in allergy treatment

Allergy is one of the most common chronic conditions in Europe. Today, more than 150 million Europeans suffer from allergic diseases. For one in five patients the condition is severe enough to create a constant threat of a severe allergic reaction or an asthma attack. European Academy of Allergy and Clinical immunology (EAACI) predicts that by 2025 allergy will affect half the population in Europe. Allergies cause social and economic burden such as health care costs, missed school and work days and impact on the daily lives of the patients.

Allergies are generally managed by medication that alleviates the symptoms. The most common medications are antihistamines and corticosteroids. Immunotherapy is the only treatment currently known that affects the mechanism of allergy. It re-educates the immune system to tolerate the allergen, decreasing the need for medication. Immunotherapy can be administered as injections or sublingual tablets or drops, and the treatment usually takes a few years. The novel immunotherapeutic products that are under development aim for speeding up the treatment as well as improving the safety, efficacy and convenience.

About Desentum Oy: Desentum is a biopharmaceutical company based in Espoo, Finland. It is specialized in developing a novel type of allergen immunotherapy based on switching the immune system’s response to allergens from hypersensitivity to tolerance by utilizing modified hypoallergens. Desentum, founded in 2011, is a spin-off company from VTT Technical Research Centre of Finland Ltd. In 2013 VTT received an EARTO (European Association of Research and Technology Organisations) Innovation Prize for the work behind the immunotherapeutic products. In 2018, Desentum was awarded a 1,9 M€ grant from the highly competitive Horizon 2020 SME instrument for the first-in-human clinical trial and business development.

Contact:

Pekka Mattila, CEO
Desentum Oy
Tel. +358-500-512934
[email protected]
www.desentum.com

Business Risks – Threats that nullify the company’s ability to meet its financial goals

The company has always exposed to uncertainties that are called business risks. They may affect a firm’s aim to gain its goals. The danger of loss is in the form of machinery breakdown, strikes, change of trends, etc.

Business risks refer to the threat to the company's ability to meet its financial goals. It indicates the risk of uncertainty or loss in profit and the risk of some eventuality in the future, which can make a business fail.

Factors Causing Business Risks

Business risks result in less profit or even loss. The factors that lead to risks can be Internal or External.

  1. Internal Business Risks: risks that arise due to some event happening within a firm are internal risks. However, the firm can control them. Internal risks occur by:
  • Technological factors
  • Human factors
  • Physical factors
  • Operational factors

Examples: New technology, fire, cost-cutting, etc.

  1. External Business Risks: External risks occur by any event happening outside the firm. However, the firm’s management cannot control them. The factors that lead to external risks are:
  • Natural factors
  • Economic factors
  • Political factors

Examples: Floods, price pressure, riots, etc.

Types of Business Risks

Risks have divided into five kinds:

  1. Strategic Risk: The risks associated with business operations are strategic risks. They arise when the business plans fail. Poor business decisions lead to failure, e.g., marketing risk, project risk, competitive risk, etc.
  2. Financial Risks: These risks related to business events and finance. It adds to shareholders by debt financing, along with equity.

For example, there can be losses by movement in stock prices, interest rates, etc.

  1. Operational Risks: These risks linked with official procedures of a business. There is a failure to connect to internal policies.

For example, some events like frauds, computer hacking, etc. affect a company’s daily activities

  1. Compliance Risks: Such risks occur by state rules and commands. When the company fails to follow laws, it has to face legal penalties. These risks ensure that the firm runs justly.

For example, corrupt practices, social responsibility, etc.

  1. Reputation Risks: The negative publicity of a firm/product leads to this risk. There is a chance that a company’s name can damage.

For example, a mobile company issues a phone that breaks easily. But then it markets a new and better model.

Business risks refer to the threat to the company's ability to meet its financial goals. It indicates the risk of uncertainty or loss in profit and the risk of some eventuality in the future, which can make a business fail.

Ways to Manage Business Risks

You can plan to manage the exposure of risks.

  • Mitigate the risk: You need to keep a contingency plan. In case if the risk materializes, you must have a second plan to follow.
  • Avoid the risk: It’s better to avoid than to bear a loss. Sometimes the launch of a product leads to affect the company financially. You can postpone it until your company stabilizes.
  • Transfer the risk: You can pass financial risks to someone else. For instance, fire insurance is the best example of it.
  • Accept the risk: If the risks are likely to happen, you can opt for small damage. So, examine the other option and make the right decision to accept the risk.

Business risks lead to uncertainties, but a good businessman takes them as a challenge. Risks lead to new clients and more sales. You can, however, manage to minimize the worst to happen.

See also about Financial Riska Management