The Welsh Government and the NHS is seeking a takeover of a private cancer treatment centre in Newport owned by Rutherford Health, which is expected to go into liquidation.
The centre, which uses proton beam therapy to treat cancer, is one of four facilities across the UK owned by Rutherford Health which next week will lodge a court application to appoint an official receiver - and officer of the Insolvency Service - as liquidator.
It said its trading position had been impacted by a fall in patient numbers during the pandemic. It was unable to secure new investment having invested £240m on its four centres.
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However, while the group is still expected to be liquidated, it is also understood that a number of NHS trusts in England are also considering taking over the running of the Rutherford centres in Northumberland, the Thames Valley and Somerset, while there is private sector interest in the Liverpool centre.
Individual centre deals could be struck before the group is put into liquidation. It is understood that the interest from Welsh Government and the NHS in Wales for Rutherford’s £40m-plus Newport centre is at an advanced stage. However, no formal offer has been tabled and there is no guarantee that any deal could be struck.
Then known as Proton Partners International, it was the first Rutherford centre to open back in 2017, as well as being the first facility in the UK to use proton beam technology. The NHS in Wales, through its health boards, has developed a strong working relationship with Rutherford with a steady stream of patient referrals. Any deal, backed by the Welsh Government, could be seen a natural progression of that relationship. However, if a deal is agreed it is not expected to include the freehold interest of the Newport facility. The same is likely to apply to deals for any of the centres in England.
The Welsh Government said: “Discussions between us, NHS Wales and the Rutherford Centre are ongoing and no decisions have been made."
The Welsh Government is an investor in Rutherford Health, having invested £10m in equity as part of a £100m fundraising in 2015. The investment was made through its £50m Welsh Life Sciences Investment Fund (WLSIF) overseen by the Development Bank of Wales (then Finance Wales), which it wholly-owns, back in 2015.
The discretionary funding management of the WLSIF was outsourced to Arthurian Life Sciences, chaired by Port Talbot-born serial life sciences entrepreneur and investor Sir Chris Evans. The fund was then takeover in 2016 by Arix Bioscience by which time all £50m in the fund had been invested into nine life sciences firms, which as well as Rutherford included ReNeuron and Simbec-Orion.
Sir Chris remained on the board of Arix until 2019 and as a board member of Rutherford until November last year. Since taking over the fund management of WLSIF, Arix has made it owns investments into some of the portfolio companies. Regardless of any takeover deals for the Rutherford centres, or disposal of assets through a liquidation process, the WLSIF, which has no charges over assets of Rutherford, is not expected to get any return from its £10m investment.
However, even accounting for a £10m write-off on the Rutherford investment, the fund overall remains in positive terrain. In 2019 the fund exited its stake in Merthyr-based drug trial venture Orion-Simbec following a venture capital backed management buyout.
Whit not disclosed it is understood that the deal provided at least a four times return on the WLSIF's £6m equity investment. Following the deal a payment from the fund back to the Welsh Government of around £24m was made. That gave a profit of around £18m on the original Simbec-Orion investment. Assuming a loss of £10m on Rutherford that still gives a return of £8m from the Rutherford and Simbec-Orion investments (£16m) combined.
The WLSIF has just over a 5% stake in Rutherford. In a statement Arix said: “The Wales Life Sciences Investment Fund made an investment into Rutherford, formerly Proton Partners, before management of WLSIF was transferred to Arix. No further funds were invested in Rutherford during Arix’s management of WLSIF.
Since the investment from WLSIF was made, Rutherford has faced numerous challenges, including an ultimately unsustainable funding need. Arix Capital Management, as the manager of WLSIF, is actively engaging with Rutherford’s management at this time.”
