North East Venture Fund

Biotech firm raises £2.3m for lab models that help avoid animal testing

Newcells Biotech – whose laboratory models are used in drug development and reduce reliance on animal testing – has raised a further £2.35m to boost its growth and help establish itself as a global leader in its field.

The Newcastle-based company has secured funding from existing investors including the North East Venture Fund, supported by the European Regional Development Fund and managed by Mercia Ventures, Mercia’s own funds and Northstar Ventures. It brings the total raised by the company to date to over £12m.

Newcells’ 3D models mimic processes within the body and are used by pharmaceutical companies worldwide to test the impact of their drugs, including their efficacy and safety. They provide robust data to support critical decisions, such as whether to continue development and commence human trials. The use of non-animal testing methods is likely to increase as a result of recent changes to the FDA guidance which recognise that they can be suitable replacements for animal testing.

Newcells currently offers models of the retina, kidney and lung and also provides specialist services to run customised tests. Customers include pharmaceutical companies which use its products for applications ranging from gene therapy efficacy to toxicity screening, and a major research consortium.

A spin-out from the University of Newcastle, Newcells was founded in 2015 by Dr Mike Nicholds and Professor Lyle Armstrong. The company, which employs a 49-strong team, increased revenue by 56% in the last financial year. The latest funding round will enable it to enhance its offering with the use of powerful imaging technology that will produce more data in a shorter time, and expand its marketing activity. The company plans to create 10 new jobs in the year ahead.

Dr Mike Nicholds, CEO, said: “The support from our investors has allowed us to grow the business to the point where we now work with over 100 customers internationally including large pharma and biotech companies. This latest investment will further enhance our technology and underpin our ability to continue our rapid growth.”

Mercia was investing from the North East Venture Fund and its Northern Venture Capital Trusts.

Alex Simpson of Mercia Ventures added: By improving the models available to scientists, Newcells is not only helping pharma companies to avoid the use of animals but also to improve the efficiency of drug development and deliver new therapies to patients. The company is already recognised as a pioneer in its field and the latest funding will help it to establish itself as the market leader.”

Dr Alex Buchan, Investment Director at Northstar Ventures said: From Northstar’s first investment in 2016 we have seen Newcells continue on its growth trajectory building a suite of assays for the biotech industry. We believe in the team’s ability to scale quickly as Newcells has evidenced real momentum selling into a global customers. This investment will help Newcells establish itself as a global leader in its field.”