Newcells Biotech secures £1.2m follow-on investment to build customer base

Newcastle life sciences firm Newcells Biotech has raised £1.2m from existing investors Mercia Ventures, Northstar Ventures and North East Finance.

The university spin out which specialises in providing in vitro tools for testing how drugs interact with tissues says it will use the funds to build its customer base and develop partnerships with other companies with complementary products to its own. As part of the move, experienced pharma industry leader Mark Carnegie-Brown has been appointed as the company's chair.

Newcells' 3D models mimic tissues within the body and are used to test drugs under development, reducing the reliance on animal testing. With the company's tools, scientists can decide which drugs to progress to human trials - ultimately enabling them to bring drugs to the market more quickly and a lower cost.

The firm, which was founded nine years ago by Dr Mike Nicholds and professor Lyle Armstrong, currently offers models of the retina, kidney and lung and can also carry out testing for customers. Use of 3D models is said to have attracted interest after the US Food and Drug Administration (FDA) changed its rules two years ago, scrapping the requirement for new drugs to be tested on animals.

Mike Nicholds, CEO of Newcells, said: “We believe that providing better laboratory models enables a faster, more effective drug development process which in turn accelerates the delivery of new therapies to patients. Newcells’ models have proven to predict how drugs interact with tissues and organs.

"We have seen an upturn in demand since the FDA removed the requirement for animal testing and expect the trend to continue as more companies rethink and adapt their processes. This latest funding demonstrates the continued confidence of our investors and will enable us to exploit the growing demand.”

The investment comes from Mercia Ventures’ Northern Venture Capital Trusts and three regional funds: the North East Venture Fund, managed by Mercia; the North East Innovation Fund managed by Northstar Ventures and the Finance for Business North East Fund managed by North East Finance – all supported by the European Regional Development Fund.

Victoria Wiesener of Mercia Ventures added: “Newcells has a great product and a strong team, and has the potential to become a leader in its field. The past year has been tough for the pharmaceutical industry as economic uncertainty has affected investment, resulting in fewer drugs under development. Newcells has navigated the changing markets effectively, while also improving efficiency and strengthening its commercial team. It is now well positioned for growth as activity levels recover and more companies make the decision to move away from animal testing.”