Last Thursday we travelled to Stevenage for the latest in our series of BIA Breakfasts, focused on science and finance. Among those speaking at the event was David Miles, Co-Director and Head of Business Development, AKL Research and Development. In today’s blog, David provides an account of the decision to redomicile the company in the UK, now based at the Stevenage Bioscience Catalyst, in order to benefit from the current UK business environment, as told at the BIA Breakfast.
AKL Research & Development Limited (“AKL”) is an emerging pharmaceutical development company with a disruptive approach to drug development. The company develops synthetic drug candidates from natural products, whose safety and efficacy have already been established in non-prescription markets and then moves to proof of concept through robust clinical evaluation.
To date, AKL has successfully taken a formulation via this process to a Phase II clinical trial in respiratory disease. However given the challenges of regulatory compliance for naturally derived drugs, AKL has resolved to focus on synthetic versions of natural products such as its current area of focus, APPA in the treatment of osteoarthritis (OA).
When we did what for us was a major funding in 2008, our investor base was largely US and central American. On their insistence at tax efficiency, the company was moved offshore.
Since then we’ve seen quite a turnaround in the UK environment for small companies like AKL, so in April of this year, AKL was effectively redomiciled in the UK as AKL Research & Development Ltd.
This has not been without its challenges. The cost of moving companies from one jurisdiction to another is challenging, expensive and time consuming, particularly considering our fairly large investor base of angels, friends and families. Dealing with UK bureaucracy is also quite involved, especially compared to the more relaxed approach found offshore.
But in spite of these challenges, the positives have far outweighed any negatives and we remain very happy to have made the move. For a small company like AKL, R&D Tax credits make a substantial difference. The Patent Box was also a very persuasive reason for our existing shareholders in supporting the UK move.
From a funding perspective, prior to being based in the UK we managed to fund early development and the first clinical trial with investments from four business angels / family offices, supported to a lesser degree by 15 family and friends.
Now we’re home, as it were, we have access to funding through High Net Worth Individuals and the considerable tax advantages available to them – EIS for example – and that really has made our life a lot easier. As it stands our investors have indicated a willingness, subject to successful completion of pre-clinical work, to continue funding APPA to clinical proof of concept.
Funding a small company is always tough and I think it would have been challenging to source affordable money by another route. In summary we’ve managed to fund the company entirely on private investment and at this critical juncture, this latest round of investment wouldn’t have been possible without the UK tax incentives.
Prior to the move, we had thought that another advantage to being UK-based would be access to non-dilutive grant funds, however we’ve found the process of applying overly cumbersome: it’s very time consuming, bureaucratic, non-transparent and with no scope for discussion in the early stages. Ultimately, we’ve found it more productive and a better use of our time to source funding as described above.
That said, the positives – R&D Tax credits, the Patent Box, and the tax advantages for wealthy investors – far outweigh the negatives and we, and our investors, are very satisfied with our decision to redomicile the company in the UK.
For more information on AKL Research & Development, visit the website.
Our next BIA Breakfast will take place at BioCity Nottingham on Thursday 22 October. Find out more here.