Archives for the month of: December, 2013

The BIA today submitted a response to the Financial Conduct Authority’s (FCA) consultation on crowdfunding. These will set the ground rules for both peer-to-peer and investment-based (equity) crowdfunding platforms in the UK in the years to come. How the regulatory framework is set up will have an important bearing on whether this emerging source of alternative finance continues to grow or is stymied.

Given the nature of the funding model for bioscience companies the BIA naturally focused, in our response, on the equity side of things. Investment-based crowdfunding currently represents a small, but growing, source of finance. There is increasing interest amongst start-up companies and spin-outs as to the potential this type of funding could offer, particularly in the £100,000 – £1 million mark. We have seen successful fundraisings using this model in the sector. For example, Cell Guidance Systems raising £290,000+ for 14.55% equity stake earlier this year. We have also heard interest from other BIA members and companies that we talk to about this.

In particular there is interest as to how the “crowd” might act as a co-investor, perhaps coming in alongside an angel investor to complete an early stage fundraising round. In this way, a recognised angel investor may perform some due diligence, investing, for example, 50% of the required capital which could then catalyse the crowds’ co-investment.

Other talked about models include the funding of specific phases of a clinical trial, and again we have seen this in practice already. This would allow investors, perhaps interested in the specific therapeutic area, to help fund a specific trial they have an interest in to help fund the development of a new product.

It is clear that medical research and bioscience represents the riskier end of investment propositions that will be seen on crowdfunding platforms given the lengthy timelines involved and investors will need to be properly aware of the risks involved in such investment. But at the same time the new regulations should not be so strict as to stifle this innovative new funding mechanism before it has had a chance to properly demonstrate its potential. With medical research, investors may very often be motivated not simply by financial returns but also for philanthropic reasons.

In our response the BIA made three key points:

  • The approach outlined by the FCA is largely correct and proportionate. It would not freeze out retail investors from the opportunities available but applies some brakes to ensure an individual is aware of the risks involved. A number of these checks can be automated by the platform.
  • Retail investors have an interest in supporting innovation. The FCA and policymakers need to be aware that the public want the opportunity to support innovation and they should not be stopped from doing so, provided the necessary safeguards are in place. The interest that the general public has in supporting UK innovation was clearly demonstrated by independent research commissioned by the BIA and articulated through our report on Citizens’ Innovation Funds (CIFs), independent research which demonstrates that almost nine out of ten people who expressed a preference agree that the public should be given the opportunity to invest in innovation.
  • Government has a role in supporting retail investment into innovative companies. The government can do more to harness the public’s interest in supporting high-growth innovative companies. Through the Business Finance Partnership scheme’s provision of funding to peer-to-peer lenders the government has shown that it is open to supporting crowdfunding platforms. In keeping with the CIFs model, such support could also be provided through tax incentives for public investment-based crowdfunding, which may also mitigate the risks associated with investment-based crowdfunding for retail investors.

CameronDementiaSummit_600_300Last week David Cameron spoke passionately about the UK life sciences sector at the G8 Dementia Summit. He highlighted the government’s plan to double spending on research into dementia and the MRC’s commitment to spend an additional £150 million on clinical infrastructure for dementia and genomics. We welcome the Prime Minister’s continued commitment to the life science sector as a key part of his long-term plan for Britain and we therefore look forward to an early and positive government response on proposals for an early access to medicines scheme.

Early last week I was at the World Innovation Summit for Health (WISH) where I saw some excellent speeches on how to address some of the health challenges of the future. One topic which struck me particularly was when Andrew Dillon of NICE said that the innovative industry should be better remunerated for products to address anti-microbial resistance.

One Nucleus’ Genesis conference is always a good way to end the year. I was pleased to be engaged in the lively debate on funding in our sector over lunch with Kit Malthouse the deputy mayor listening intently to Andy Richard’s contribution. The “talent lounge” enabled delegates to discuss skills, training and recruitment. If you want to highlight the skills in your organisation Cogent has just launched its Life Science Skills Awards Programme for 2014. Nominations are now open. We have just taken on our second intern from Cogent’s placement service. If you are interested in the opportunity to bring a quality intern or student placement into your business now is the time to engage with Cogent’s #BigJanPlan campaign.

Just a couple of weeks after the Ministerial Industry Strategy Group accepted a series of recommendations to take forward to address challenges in medicines manufacturing in the UK it is great to see GlaxoSmithKline making further investments in the UK. Their decision to invest at Ware and Worthing and to build a centre for pharmaceutical manufacturing innovation is welcome and a further example of the benefits to our sector of the Patent Box, which was first called for in the Review and Refresh of Bioscience 2015.

I am delighted to say that our Gala Dinner on 30 January 2014 is nearing capacity and we have started a wait list and if you are interested in joining this, please contact Cathy Smyth.

Finally, this is our last weekly update of the year – the first Newscast of 2014 will be on January 13th. If I don’t see you on the webinar on how to get the best from JP Morgan on Thursday , I hope you all have a great Christmas and New Year and I look forward to working with you all in 2014.

Best

Steve

It’s rare that you hear NICE stand up and say that the innovative industry should be better remunerated but that’s exactly what Andrew Dillon, the CEO of NICE, said in his contribution from the floor at the seminar on anti-microbial resistance at the World Innovation Summit for Health (WISH), which I attended in Doha this week. The video for the 70 minute discussion is worth a look if this is an area of interest.

The report authored and co-ordinated by Dame Sally Davies, the UK’s chief medical officer, aims to move forward the international debate on how best to develop next generation anti-infectives and it was great to see that this is an area of concern that is being given serious policy consideration at key international fora, since several BIA members are active in this space.

The report published to coincide with the event came up with a range of suggestions that ranged from measures to raise awareness, conserve existing antibiotics, through sanitation hygiene and infection prevention and control to proper surveillance and monitoring.

But, from a parochial private small company R&D view the most interesting parts of the report are the practical suggestions for actions to incentivise R&D. Given that the report suggests that 80 per cent of this work is being done by biotech and small pharma companies, I know this is an area where incentives might make a difference to member companies.

On incentivising R&D the report suggested four basic approaches:

  • Increase the price of antibiotics
  • Extend IP or patent protection to reward the developer of a new antibiotic with a longer period of exclusivity
  • Decouple sales from R&D, and thereby separate the incentive to innovate from the incentive to sell
  • Guarantee income to innovators, by entering into long term contractual agreements – agreements ensuring a minimum level of return regardless of the volume of product sold

The last two of these were the ones that attracted the attention of attendees and generated serious debate in the room. The concept of decoupling sales from R&D, and thereby separating the incentive to innovate from the incentive to sell was discussed. Essentially, a separate funding mechanism would have to be found for R&D. Suggestions included a public-private partnership (PPP), a grant from an R&D granting agency, a prize, or a goal-specific investment by government or philanthropic organisations. Many in the audience favoured the PPP model. If the PPP holds the IP in the drugs discovered, it could license the drugs to different manufacturers in ways that promote both access and appropriate use. But, the model has some disadvantages too: the PPP would demand substantial public funding up front, as the R&D pipeline has to be large enough to ensure sustainable output; and the PPP would need rigorous governance and performance management, to ensure that the public funds are invested responsibly and produce the expected results.

Contributors from the floor also suggested that missions that had been successful in this area in the past had been cornerstoned by a single philanthropic organisation but this was not the case at present for anti-microbial resistance.

The other idea that was discussed was whether a guaranteed income to innovators could be made to work by essentially establishing agreements ensuring a minimum level of return regardless of the volume of product sold. To operationalise such a guarantee, various options are possible: a fixed fee, licensing fee, or an advanced market commitment. The advantage of this guarantee mechanism is that the public funds would be spent only once the product is launched. The disadvantages are that appropriate safeguards have to be created to ensure access and appropriate use, and that the commitment needs to be negotiated upfront.

Both of these ideas were seen as addressing the R&D incentive problem holistically, and they could be implemented with design features to ensure access and appropriate use. Andrew Dillon’s comments were that the market had not sent a strong signal to potential providers of next generation anti-infectives that their innovation was valued – hence greater incentives should be introduced through policy.

This is a moving global policy debate that I will watch with interest and I’d very much welcome comment on the Doha discussion as we formulate our own position on what would work best to incetivise companies to tackle this thorny global challenge.

Policy makers are engaged on this – 2014 is when we can make our collective voice heard.

Nicole_Jadeja_220_portraitNicole Jadeja is a Senior Associate at Rouse Legal and a member of the BIA’s Intellectual Property Advisory Committee. Following on from her previous blog about Supplementary Protection Certificate (SPC) FAQs, here Nicole has provided an update on recent developments in the Supplementary Protection Certificates (SPC) field. There have been several developments in the SPC field over the last month. A couple might be of particular interest. The first is a disappointing decision of the Court of Justice of the European Union (case C-210/13) which means SPC protection will not be available for adjuvants per se. The Court has essentially treated adjuvants in the same way as it does excipients and said that they are not ‘active ingredients’ for the purposes of the SPC Regulation. It, therefore, felt bound by one of its earlier decisions concerning polymeric, biodegradable excipients. It did not give credit to the fact that adjuvants can be innovative products, which act physiologically and are often the subject of extensive R&D. The disappointment extends to the fact that where you have a patent which protects an active ingredient, SPC protection is only available for the active ingredient itself and not a combination of the active ingredient with an adjuvant. The second is an opinion of the Advocate General in a case (C-484/12) where the primary question concerns whether you can get more than one SPC where your patent covers more than one product. Since the SPC Regulation came into force, many people have been proceeding merrily on the basis that you can. The AG’s opinion only addresses the ancillary questions in the case; the key question is yet to be resolved. However, some commentators consider that, by having answered the ancillary questions as the AG has, all indications are that another disappointing judgment is imminent (it is due this Thursday) – i.e. only one SPC will be available per patent. Procedurally though, it is not a surprise that the AG has only answered the ancillary questions; the Court said at the hearing that this was the approach it would take. There is hope that the Court will see sense on this one and I’m trying to stay optimistic that logic will prevail. However, given the CJEU’s approach to SPCs to date, I wouldn’t put money on it!

George Osborne, Autumn Statement 2013

I am starting this week at the World Innovation Summit for Health where decision-makers and influencers from across the world will convene to discuss practical, lasting and innovative solutions to global healthcare challenges. The speakers include Lord Darzi, Aung San Suu Kyi, Simon Stevens the incoming CEO of the NHS, John Dineen, President and CEO of GE Healthcare, and Boris Johnson. I am looking forward to hearing what they have to say and reporting back to you all, so that the UK bioscience sector can play its role in addressing the challenges identified.

The Chancellor of the Exchequer delivered his Autumn Statement last week and he pressed the case for continued economic vigilance. There were not many headline announcements for the life science sector but we have highlighted some of the interesting points of direct or indirect relevance on our blog, including on science and innovation strategy, retail participation in capital markets, education and the tax framework and funding support. Some of these present an opportunity for BIA representations on behalf of the sector over the next period of time.

I was delighted to be able to attend the HealthTech and Medicine KTN’s annual bioprocessing conference last week. The conference drew 280 delegates ranging from the bursary winning postgraduate students presenting posters to industry veterans. As our recent engagement with the Ministerial Industry Strategy Group’s medicines manufacturing project has shown, this is an area of interest for the government and we will be working hard to deliver on the recommendations of the project. I would like to add my congratulations to those from the KTN to Andy Lyddiatt the recipient of this year’s Peter Dunnill award for his contribution to bioprocessing in the UK.

I also attended the Oxbridge Biotech Roundtable’s debate on whether there is a need to reform university technology transfer offices. There were some interesting points of view from speakers including Herman Hauser. I was struck by the quality of the panel and debate and the obvious frustrations shared across the board at unexploited patents. But, it was equally clear that ideas like incentivising tech transfer officers with siqnificant equity, enabling a market of TTOs for entrepreurial academics to choose from, or limiting a TTO stake to a golden 2 per cent share did not have universal approval. If policy reform here is an area members want us to prioritise I’d welcome your input.

Are you heading to California in early January for JP Morgan Healthcare Conference, Biotech Showcase and associated events? BIA in partnership with Biopartner, UKTI AZ, MedImmune are co-ordinating a range of activities and events before and during that week which will all be covered in our pre-event webinar entitled ‘How to get the best out of JP Morgan Conference, Biotech Showcase and other events planned for that week‘ on Thursday 19 December at 11am. Register via our website.

Finally, I have blogged some further thoughts on the recent PPRS announcement and why the deal matters for biotech companies – even those not directly selling drugs to the NHS. I’d welcome your comments.

Best,
Steve

“Science is a personal priority of mine” George Osborne, Autumn Statement speech, 5 December

The Chancellor delivered his Autumn Statement yesterday in the House of Commons. It has been described by various commentators as a “steady as she goes” type statement with the Chancellor pressing the case for continued economic vigilance. There were not many headline announcements for the life science sector but we have picked out some of the interesting points of direct or indirect relevance which present an opportunity for BIA representations on behalf of the sector over the next period of time. For those who want to read all the relevant documents you can find them on the HM Treasury website.

Science and Innovation Strategy
The government have committed to producing a “Science and Innovation Strategy for Autumn Statement 2014”.

This is designed to provide a longer-term approach to science and innovation and will be welcomed by the science community. It will provide a useful platform for the BIA and others to outline the key long term needs of UK bioscience companies. The manifesto process the BIA is working on with members and other organisations will clearly play a key part in developing our representations.

Retail participation in capital markets
The statement said: “Retail participation in capital markets: public equity markets – the government will publish a discussion paper on enhancing equity financing in the UK, including options to improve access to public equity markets for UK businesses and retail investors”.

A large number of BIA members have raised the importance of achieving a viable and sustainable public market in the UK for bioscience companies and working with members we are already reaching out to the City and other stakeholders to effect this. This government commitment provides an opportunity for us to further emphasise the needs of bioscience companies and, also, outline our thoughts on how retail investors might be afforded a chance to back innovation – through our proposals for Citizens’ Innovation Funds for example.

Education
A few notable commitments of relevance to life science companies:

  • Higher Apprenticeships – the government will provide an additional contribution of £40 million to deliver an additional 20,000 higher apprenticeships starts in the 2013-14 and 2014-15 academic years
  • Extra STEM funding for higher education institutions – the government will provide extra funding for the teaching of STEM subjects of £50 million per academic year
  • The government will remove controls on the number of students who can attend higher education institutions in 2015-16. In 2014-15 an additional 30,000 student places will be created at publicly-funded institutions.

These measures have been welcomed by the science community. In particular, the BIA is keen to hear views on the use of apprenticeships in the sector.

Tax framework and funding support
Quite a quiet autumn statement as far as this topic is concerned, especially as compared to previous years. In the documentation the government does highlight the Patent Box and R&D tax credits as measures which they are using to support companies in the UK.

The Patent Box in particular is coming under scrutiny from the European Commission who claim it is contrary to EU State Aid rules. We hope the policy will be robustly defended by government so that it can fulfill its potential in encouraging research and innovation in the UK.

The new pricing deal agreed between the Department of Health (DH) and the Association of the British Pharmaceutical Industry (ABPI) sets, and for the first time caps, the size of the expected market for branded prescription drugs in the NHS (which is in effect the only market for drugs in the UK) for the next five years. Whatever the benefits to the NHS and HM Treasury, it is this cap that the global pharmaceutical market and investors will see from abroad.

It does this despite the fact that the branded medicine bill in the UK is already under control. Indeed, as a percentage of NHS spend the drugs bill has been in steady decline, down from 10 per cent of NHS spend in 2003 to 8 per cent in 2011. This is despite the fact that UK prices for medicines are amongst the lowest in Europe, and are far lower than in the USA.

In the last year, although prescribing volumes have risen 3.9 per cent, the cost of medicines on prescription has fallen by 0.4 per cent. And the speedy genericisation of older drugs is set to yield over £3.4 billion of savings between 2012 and 2015.

This is set to adversely affect investment in the UK. For the first time the size of the UK market – and flat growth – has been explicitly and publicly stated. I am seriously concerned that this will send a signal around the globe about how attractive the UK is as a market to do bioscience in.

Although the attractiveness of the home market is one of a series of complex factors considered when globally mobile companies make their investment decisions, it is a factor, and I was incensed to see the government response document deny this – the Department of Health stating “there is no reason to expect that changes in UK prices would significantly affect the UK’s attractiveness as a location for R&D”.

The government are ready to accept the argument that the Patent Box (which is really a sales issue) has an effect on the location of R&D in the UK at the earlier stages of development, yet they are not willing to accept the very same argument, based on the very same logic, for pricing. This is simply because it doesn’t suit them to do so.

I believe that buying new medicines is not only an investment in NHS patient care but also in the UK’s future economic prosperity, as the life science sector is a key part of the our future rebalanced economy. Decisions which affect the commercial environment for medicines have a significant impact on the UK’s attractiveness for direct global R&D investment and on our biotech ecosystem.

The announcement shows a worrying lack of joined-up thinking in government about a sector it has identified as being key for the UK’s future economic growth.

We at the BIA have repeatedly warned that the government’s pricing proposals for pharmaceuticals put at risk future investment in the UK R&D base, as the perception of the UK as a market for innovative products does have an important bearing on the global investment decisions of multinational biopharmaceutical companies.

I think this deal makes it harder for the UK-based managements of global organisations to get their companies to invest in our ecosystem. With global predictions of growth coming from other markets this will mean the UK – as a flat 3 per cent of the global market – runs the risk of falling in importance as a launch market, with the consequential impact for R&D investment.

So now we need to stress other reasons to invest here – the other key factors still in our favour:

  • The excellent fiscal environment for companies – including R&D tax credits, Biomedical Catalyst funding and the Patent Box
  •  The UK’s first class science and talent pool
  • The strength of expert providers of all the things needed to take a discovery in the lab and turn it into a world leading product
  • The core UK advantages of English language, rule of (IP) law, timezone

This deal makes the need for a funded earlier access scheme all the greater too, in order to encourage companies to launch new therapies for patients here first.

Full details of the PPRS scheme were published on 3 December 2013.

Dr Julie Barnes receives WISE award from HRH Princess RoyalIt’s the pre-Christmas rush this week. The bioProcessUK conference, the FT pharma and biotech conference, OBR’s event on tech transfer and the Chancellor’s Autumn Statement are all happening in a week, as well as our Manufacturing, People and Regulatory Affairs advisory committee meetings.

Last week the BIA’s voice was loud in key European debates. First it was great to see our focus on competitive assessment timelines in the Clinical Trials Regulation reflected in the joint EuropaBio-EFPIA-Cancer Research UK-EGAN-ACRO press release issued on 27 November calling on legislators to improve the clinical research environment here.

We were also at the heart of a useful discussion on parallel scientific advice with health-technology assessment (HTA) bodies on evidence-generation in medicine development at the EMA. The workshop brought nearly 300 representatives from the European Commission, European regulators, HTA bodies from 12 European Union countries and EUnetHTA together with industry, payers, patients, healthcare professionals and academics, as well as representatives from EMA Committees and Working Parties. Next year, guidance for EMA-HTA parallel scientific advice will be developed and published for public consultation – to which we will of course respond.

The Ministerial Industry Strategy Group produced some positive outcomes in discussion with Ministers on medicines manufacturing, which I’ll discuss at the bioProcessUK conference tomorrow.

On Thursday we’ll watch for progress on early access, patent box and early stage financing in the Autumn Statement – and provide a briefing for members on what it means soon after.

As we prepare for the New Year, now is a good time to consider taking on a quality intern or student placement in 2014. Engaging early with Cogent’s #BigJanPlan campaign is a great way to raise your profile as an employer and get the right fresh talent into your organisation in line with the academic cycle. You can read about our recent Cogent placement here.

Finally, compare and contrast. Last Wednesday morning 40 men (including me) and one woman met in Whitehall at the Ministerial Industry Strategy Group on the future of our sector. On Thursday around 40 women networked at our Women in Biotech group to discuss how successful leaders handle conflict. We’ll be continuing to run these popular networking events in 2014. So well done to Dr Julie Barnes of Abcodia Ltd for scooping this year’s WISE Enterprise & Innovation Award presented by HRH the Princess Royal (pictured). It is great to see her leadership in our sector being recognised, for the rapid commercial success of the biotech company she founded just three years ago, which will make an enormous difference to so many lives through earlier detection of ovarian and pancreatic cancer.

Best
Steve