Newcells Biotech– whose laboratory models help speed up drug development and reduce reliance on animal testing – has raised a further £1.2m from existing investors Mercia Ventures, NorthStar Ventures and North East Finance.
The funding will enable the Newcastle-based company to build its customer base and seek new partnerships with companies with complementary products to enhance its offering to customers.
Newcells’ 3D models, which mimic tissues within the body, are used to test drugs under development and provide data to support key decisions on which drugs to progress into human trials. They enable companies to bring drugs to market more quickly and at lower cost than using animal testing and have also proven to be better at predicting how a drug will behave in the human body. Newcells currently offers models of the retina, kidney and lung and also provides a service carrying out tests on customers’ behalf.
The use of advanced 3D models has attracted increasing interest after the US Food and Drug Administration (FDA) changed its rules two years ago, removing the requirement for new drugs to be tested on animals. Research has found that around 90% of drugs shown to be safe and effective in animals do not work as planned in humans, which is one reason for the high failure rate in drug development.
Newcells was founded in 2015 by Dr Mike Nicholds and Professor Lyle Armstrong as a spin-out from the University of Newcastle. It now employs 42 staff and serves pharmaceutical companies worldwide. As part of the latest funding round, the company has appointed Dr Mark Carnegie-Brown as Chair. Mark has over 30 years’ leadership experience in corporate and biotech environments within the pharma industry.
“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.”
Dr Mike Nicholds, CEO of Newcells
The funding has come from Mercia Ventures’ Northern Venture Capital Trusts and three regional funds – the North East Venture Fund which is 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 – which are all supported by the European Regional Development Fund.
“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.”
Victoria Wiesener of Mercia Ventures
“We have been closely involved with Newcells since its founding and are proud of their significant progress to date. Their products have evolved into industry-leading solutions, designed to streamline and optimise drug development. The quality of their client base and reputation in the industry underpins their enormous potential, which we believe is beginning to be realised.”
Alex Buchan of Northstar Ventures
Mercia Ventures is a proactive venture capital investor focused on being the first-choice partner for growth. Mercia Ventures makes equity investments of up to £10million across all sectors, with specialisms in Software, Consumer, Healthcare and Deep Tech.
Mercia Ventures is part of Mercia Asset Management PLC and sits alongside its wider private equity, debt and proprietary balance sheet capital operations. The Group has 11 offices in the UK and Mercia Ventures’ national footprint and 48 strong investment team draws on their experiences as founders, PhD scientists, software engineers, corporate financiers and management consultants to help our partner companies successfully achieve their ambitions. Mercia Asset Management PLC currently has c.£1.4billion of assets under management and, since its IPO in December 2014, has a portfolio of over 400 start-ups from pre-seed to Series B. Mercia Asset Management PLC is quoted on AIM with the epic “MERC”.
The Group raises its own Venture Capital Trusts (VCTs) and Enterprise Investment Scheme (EIS) Funds and details about open offers can be found through Mercia’s website.
Mercia Asset Management PLC is quoted on AIM with the epic “MERC” and includes the following wholly owned subsidiaries –
- Mercia Fund Management Limited is authorised and regulated by the FCA under firm reference number 524856
- Enterprise Ventures Limited is authorised and regulated by the FCA under firm reference number 183363
- EV Business Loans Limited is authorised and regulated by the FCA under firm reference number 443560
Northstar Ventures is a long-established venture capital and social investment company based in the North East of England.
As the region’s leading early-stage investor, we have provided over £500m of funding into start-ups, early-stage businesses and high impact social enterprises.
Supporting entrepreneurs since 2004, we know how to identify strong, effective teams with innovative ideas that will drive high growth, scalable businesses, and sustainable charities. Our particular focus is on those organisations who provide solutions to societal and industry-wide issues on a regional, national and even global scale.
Our investment managers have a wealth of expertise supporting new and growing businesses. They bring commercial and operational knowledge to the table combining everything from PhDs, MBAs, international careers and finance to micro-business experience.
Northstar Ventures Limited is authorised and regulated by the Financial Conduct Authority.
The North East Fund is a suite of five venture capital and loan funds which was established in April 2018, to invest £153m in around 600 North East businesses in the period to December 2024. The fund managers provide business development advice and investment finance to small and medium sized enterprises based in the seven Local Authority areas of North East England: Northumberland, North Tyneside, Newcastle, South Tyneside, Gateshead Sunderland and County Durham. The programme encourages investment in and the commercialisation of new technologies, including low carbon technologies, as well as stimulating new business creation, private investment and entrepreneurialism in the North East, with a view to creating over 2,500 new jobs. The North East Fund has overall responsibility for the programme, which is delivered through five separate funds, each managed by independent, FCA regulated fund managers. Details of these, and up to date information on the progress of the programme, is available on The North East Fund’s website: www.northeastfund.org
The North East Fund has been established with funding from the North East of England European Regional Development Fund programme, the European Investment Bank and from returns on previous North East based, publicly supported investment funds. It is jointly owned by the seven North East local authorities.
About the European Regional Development Fund
The North East Fund will receive up to £66,500,000 of funding from the England European Regional Development Fund as part of the European Structural and Investment Funds Growth Programme 2014-2020. The Department for Levelling Up, Housing and Communities is the Managing Authority for European Regional Development Fund. Established by the European Union, the European Regional Development Fund helps local areas stimulate their economic development by investing in projects which will support innovation, businesses, create jobs and local community regenerations.
About the European Investment Bank
The European Investment Bank (EIB) will lend up to £60,000,000 to the North East Fund programme. The European Investment Bank is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
