Archives for the month of: June, 2016

Last week, leading senior level management from bioscience companies across the UK gathered at Down Hall for this year’s BIA UK CEO and Investor Forum. As UK voters headed to the polls, the Forum provided an opportunity for open discussion around the EU Referendum, as well as the current state of fundraising in the sector and the talent agenda. Some of the highlights are detailed below, along with pictures from the day.

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Having recently launched our Money, momentum and maturity report into UK biotech financings and deals in 2015/16, the opening panel on Wednesday evening discussed recent funding and investment in the sector. The panel, including Sam Fazeli of Bloomberg Intelligence, Dan Mahony from Polar Capital Partners, Imperial Innovations’ Nigel Pitchford, Saku Saha of Woodford Investment Management and Edwin Elmhirst from EP Vantage, were enthusiastic about the highs seen in venture capital financing in 2015. It was encouraging to hear reassuring comments from each investor when questioned on the potential impact of the imminent EU Referendum, US Presidential election and the turbulent Chinese markets – with our resilient sector expected to continue to succeed despite the challenges. Indeed, this was echoed following the announcement of the EU Referendum result on Friday, with Neil Woodford stating, “In the longer term, it is my view that the trajectory of the UK economy, and more importantly the world economy, will not be influenced significantly by today’s outcome. Consequently, the portfolio strategy will not change.” You can read his initial thoughts on the vote here and watch a video describing his longer term view here.

27281434403_87b25432a7_oThe conference kicked off in earnest on Thursday morning, with an update on the BIA Vision from BIA Chair, Jane Osbourn. Attendees were also treated to a great keynote presentation from Dr Richard Mason, Head of Johnson & Johnson Innovation, London, who spoke on the critical role of collaboration to the long-term success of biomedical innovation.

As UK voters headed to the polls, BIA CEO Steve Bates and PwC’s Jo Pisani and Jonathan Gillham led the discussion on the potential implications of the EU Referendum for the biotech industry. PwC have produced a booklet that you can download here, and do take a look at the BIA’s response that was issued on the Friday following the result.

Chair of the BIA Finance and Tax Advisory Committee, Colin Hailey, gave an overview of current funding incentives in the UK, including R&D tax credits, the Patent Box and EIS/SEIS reliefs. There were also some interesting discussions around partnering following presentations from Syncona’s Chris Hollowood and Taylor Wessing’s Tim Worden.

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There were some fantastic presentations as part of the business development soapbox session, including Biotecnol, BliNK Biomedical, Orphidia, Eagle Genomics and Videregen.

Led by RSA’s Chris Molloy, our afternoon panel session on talent generated much discussion around how to support the next generation of biotech leaders – represented on the panel by Iwan Roberts of Puridify, Jemma Gatliff, CEO of Keregen Therapeutics and Fiona Neilsen of DNAdigest and Repositive. As mentors themselves, Barbara Domayne-Hayman and Chris Thomas gave their views on the important role that mentors can play in the development of talent. Look out for some work from the BIA on this issue later in 2016.

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The recent interest in crowdfunding as an alternative source of funding for biotech companies was tackled in our penultimate panel session, with Fran O’Brien, Head Associate at SyndicateRoom. It was also interesting to hear the perspective of Mark Beards, Corporate Development Director at Cell Therapy, which successfully utilised the crowdfunding platform to raise funds in December 2014. Definitely one to watch in 2016 and beyond.

Finally, the Forum drew to a close with a discussion around the UK public markets, chaired by Liz Klein. Panellists James Clark from the London Stock Exchange, Sherry Coutu from the Scale-up Institute and Clare Terlouw from Numis Securities debated the benefits of the London markets and the key ingredients to a successful IPO. James also drew attention to the successful follow on environment currently witnessed on the London Stock Exchange – an essential component for the scaling up of biotech companies into the mid-tier we want to cultivate here in the UK.

Click on the video below to watch a slideshow of pictures from the event, or view on our Flickr page here.

 

The BIA recently published a report, Money, Momentum and Maturity, with Evaluate and the London Stock Exchange, which indicated a drop in reported seed funding in the sector in 2015. On the blog today, BIA member Midven take a look at biotech seed investment and the important role it plays in the ecosystem.

Biotech seed investment can be a difficult space to invest but it’s the foundation of bioscience innovation, spring boarding new companies into the ecosystem. Yet biology is hugely unpredictable and despite attempts to apply models from other industries, notably software development and the rise of biology accelerators, the sector remains stubbornly risky, slow and potentially extremely costly to market.

It is not all doom and gloom. Drug development is seeing deep pocketed evergreen investors back some programmes straight out of university research and fund through to phase II. Sadly, many more companies fall outside this model. Not all drugs originate in academic groups with rich translational funding and good proof of principle data pre-spin out. Diagnostic and drug biomanufacturing often fails to raise similar levels of research funding and innovations may reach investors very early. Seed investment is crucial to overcome the ‘evidence hurdle’ and avoid funding rejection.

Different biotech companies present different risks and funding requirements over their life cycle but all face a reality in which private venture finance is principally for later stage investment. The BVCA reports that between 2012 and 2014 (latest figures available) all stage healthcare investment in the UK dropped from around 21% of the total venture investment to 9%. A recent report published by the BIA and Evaluate found a 71% increase in venture financing of healthcare 2014 vs 2013. Healthcare funding is growing slower than other technologies and the BIA headlined ‘better seed financing required’, noting that 70% of the UK biologics are phase II and later. The funding shortfall is at the start of the pipeline.

How can we spur seed investment in biotech? With appropriate investment staging and inventive investment structures. Seed investors back less developed technology and may be investing without any real opportunity for technology diligence. The seed investment is the technology diligence for the richer funds that follow or for the company management reaching out to new investors at the next round. Either way there are always key points at which a technology is better validated and more attractive to less risk-averse investors. The challenge is capital efficient funding to that point.

In drug development the risk points are well tested; there are fewer for diagnostics and they may be less clear in bio manufacturing technologies. Perversely it is easier to judge risk in the sector with the greatest technology failure rate. Greater clarity on risk points helps and the lower cost in some fields encourages different types of seed investors. Ultimately seed investment is crucial and whilst the quantum varies dramatically and what is seed to some looks like a far larger investment to others, the outcome is the same: more evidence.

What’s the reward for seed stage risk appetite? If the evidence increases valuation much of the seed stage dilution challenge is managed. Even so, for some sectors the funding requirement is so great that equity alone may never offer decent multiples. Other strategies may be mixed into the term sheet to protect against dilution such as royalties or leveraging public funding. Royalties have no impact on the subsequent investors yet are familiar to industry partners. Public financing is hugely helpful. The UK govt. provides very strong support for biosciences including a variety of grants as well as seed funds such as the Rainbow Seed Fund. Imaginatively combined these offer an extremely capital efficient way of reaching those key risk points. Innovative strategies will encourage seed investors and expand the number of de-risked bioscience companies developing better medicine.

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On Thursday the UK public voted to leave the European Union. As you will be aware from the position the BIA has taken over the past few months, this is not the outcome that the BIA, as an organisation, wanted and this was made clear in the public statement we released after the result was announced.

However, as a community, we are resilient and unfazed by new challenges and are staffed by great management teams used to working in a global environment. As our latest report, Money, Momentum and Maturity published last week shows, the sector is in great shape. The outcome of this vote leaves many things unchanged. The fundamentals of UK bioscience remain strong. In terms of potential new therapies in the pipeline, the UK is by far the strongest in Europe. And long-term capital remains committed to our sector.

Yet of course the outcome of the referendum means that several key issues for our sector are now in flux. The number one issue on the minds of many bioscience leaders I spoke to at last week’s BIA CEO and Investor Forum was their people and how to talk with them about the vote to leave the European Union. Be prepared for people to react emotionally, to what for many will be an unwelcome shock. Ensure time for reflection and discussion. Reassure.

What has not changed since the vote is the circumstances of both European Union citizens living here and Britons living in European Union countries. This will be a key message to underline to individuals falling into these categories working in our life sciences sector.

This continuation of current arrangements for European Union citizens currently working and living here in the UK reflects the fact that today’s legal situation is no different to last Thursday’s. The UK will remain a member of the European Union until the UK’s departure has been negotiated. European Union laws will continue to apply to the UK, and the UK will continue to participate in other European Union business as normal. There is no immediate change to the movement of people, access to the single market or to the UK’s participation in the harmonised regulatory regime for medicines.

Sector investor perspectives are also important. Neil Woodford’s statements that his portfolio strategy will not change and that Britain’s long-term economic future would be largely unaffected are reassuring. GW’s positive phase III results in Lennox-Gastaut syndrome – a rare and severe form of epilepsy in children announced today are also helpful boost for the UK sector that will be noticed by investors if not headline writers.

In terms of what will happen within the UK government, David Cameron will be stepping down as Prime Minister and handing over the process of negotiating the UK’s departure from the European Union to his successor. The precise timetable for this Conservative leadership contest still in the process of being finalised but it’s expected that a new Prime Minister will be in place by the start of the Conservative Party conference at the start of October.

This indicates that the formal process to kick-start the UK’s departure from the European Union is not likely to start until at least October. Many of you will know or will have read about Article 50 of the Lisbon Treaty, the mechanism that allows any Member State to notify the European Union of its withdrawal and which obligates the European Union to try to negotiate a “withdrawal agreement” with that Member State. Once this happens there will be a two-year window to negotiate a deal. UK membership of the European Union will cease either on the entry into force of a withdrawal agreement, or if no new agreement is concluded, after the two-year period is up (unless there is unanimous agreement to extend the negotiating period).

Whilst the outcome of the referendum clearly represents a fundamental shift in the UK’s relationship with the European Union, it will take months and years, not days and weeks, to understand what our current membership of the European Union will be replaced with and what this means both generally for the UK and specifically for the UK life sciences sector. Despite the frantic activity that we currently see in both the political and economic spheres, the reality for the issues that are really important for our sector is that these will not change overnight and the forward timescale means that, as a sector, we have time to reflect, gather our thoughts and then work with government and agencies towards the best way forward.

In the BIA’s detailed submission to the House of Commons Science and Technology Select Committee inquiry on EU regulation of the life sciences sector we set out some key sector-specific issues for the life sciences sector that would be impacted by a change in the UK’s membership of and relationship with the European Union: the regulatory regime for medicines, intellectual property and the patents ecosystem and access to EU research funds and collaborative programmes. In addition to this there are more general issues affected by a change in the relationship with the European Union, which have significant impact on the life sciences sector: access to talent, access to the single market and trade.

The MHRA have issued their first public statement since the referendum this afternoon.

There are a number of different models for the UK’s future relationship with the European Union. These include membership of the European Economic Area (often referred to as the “Norwegian model”), a bilateral agreement with the European Union (often referred to as the “Swiss model”), a Free Trade Agreement model (often referred to as the “Canadian model”) and a full break/no access agreement with the European Union (often referred to as the “World Trade Organisation model”).

It is far too early to say either which model is most likely, or which might be the preferred option from a life sciences perspective. Discussion on these details will be a key focus for the BIA over the coming period of time. We will collaborate with other partners on the macro issues of people, trade and access to the single market and focus our specific energies on the key issues of relevance to the life sciences sector in relation to medicines regulation, IP and access to European research funds and collaborative programmes.

The outcome of the vote does not change the BIA’s commitment to making the UK the third global cluster for life sciences and we will work closely with government and relevant agencies to see how this new environment can be harnessed to deliver on this ambition.

This week I will be in Brussels attending the Europabio Board meeting, explaining the BIA’s views and hearing the perspective on the outcome from our European colleagues.

The BIA’s annual Parliament Day on Thursday 7 July is also a great opportunity for us to put our questions direct to an impressive roster of policy makers and politicians from both the Remain and Leave camps, as well as Chair of the Science and Technology Select Committee Nicola Blackwood MP who has already committed the Committee to looking at the impact of the vote for British science. This will be followed by the Summer Reception which offers a great opportunity for the sector to come together.

I will also be updating the BIA Board on the status of debate and proposed next steps at its next meeting at the end of July.

Your insight and input is vital to ensure your Association is focused on the issues of key concern, as many things are now in flux I welcome your thoughts and views as we look to respond to the unfolding situation.

Best

Steve

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The House of Lords Science and Technology Committee recently held two evidence sessions to question witnesses on the future of Innovate UK. Big changes are afoot at the agency, with a bill currently going through Parliament that will bring it under an umbrella with the Research Councils and the introduction of “new finance products”, which will significantly alter the support it can provide to businesses. So what have we learned from the peers’ recent interrogation of the Science Minister and other witnesses?

Peers unconvinced by UKRI

The Higher Education and Research Bill, introduced to the House of Commons last month, proposes creating a new body – UK Research and Innovation (UKRI) – to have strategic oversight and provide back and mid-office functions for the seven Research Councils, Innovate UK and a new body, called Research England. This follows recommendations by Sir Paul Nurse and a Government white paper. The current funding bodies will lose their statutory independence and become “Councils” of UKRI. The Members of the S&T Committee were keen to understand the reasons for this rearrangement of the funding landscape.

jo_headshot_welcome_3The Science Minister, Jo Johnson, was unequivocal in his support for Innovate UK, saying that it is “an essential strand to the Government’s approach to addressing the productivity challenge”. But he said greater coordination was needed between academic research funded by the Research Councils and industry supported by Innovate UK. He also wanted to break down silo behaviour and barriers to multi-disciplinary research. He said that the bill would do this while delivering safeguards for Innovate UK’s independence.

Ruth McKernan, Innovate UK’s Chief Executive, also had positive words for the proposed new setup, which she thought would help academics have a better understanding of what businesses want. She welcomed a protected budget for her agency and the inclusion of innovation in UKRI’s name as well as planned business representation on its board. Merging grant systems with the Research Councils would also provide a powerful source of data to allow the tracking and analysis of grant impact.

The former Chief Executive of the BBSRC, Jackie Hunter, wasn’t so convinced on UKRI, however. Although she believed greater collaboration between research disciplines and between academia and industry is needed, she didn’t think an over-arching body is necessary to achieve it and questioned whether the very different grant funding processes of the Research Councils and Innovate UK could be successfully merged.

Many Members of the Committee seemed equally sceptical (and they aren’t the only ones in the House of Lords). Baroness Neville-Jones questioned the need for the move and said that the new Councils would lack independence. “I think you have described a very top-down system, minister,” she said. The issue of independence is likely to receive more attention when the bill reaches the Lords chamber later this year.

A range of options being considered for the new innovation finance products

In the 2015 Spending Review, George Osborne announced plans to introduce new finance products to replace some existing Innovate UK grants to the value of £165 million per year by 2019-20, so that total Innovate UK support is maintained in cash terms. The BIA has been following the development of this policy carefully but little is publically known; so this session was a good opportunity to glean intelligence.

Government officials are busy developing the new products with help from Innovate UK and the British Business Bank. Although the Department for Business Innovation and Skills is leading on the policy, Dr McKernan’s views will likely be very influential. She was “enthusiastic” about new funding models but thought that 2020 was a very ambitious timescale to bring in £165m-worth of new finance products.

The products would support businesses to scale up according to Dr McKernan, but Innovate UK must not “lose sight” of the role of grants in supporting early, riskier research, she added. Filling in the gaps where funding from other sources isn’t available would remain Innovate UK’s raison d’être.

The BIA understands that BIS is looking at a range of options for the new finance products, from low-interest loans to buying equity in companies. Dr McKernan supported equity-based products as part of the suite, saying that the tax payer should see a return when companies succeed. Speaking of loans, she said they should aim to provide cash for things that normal banks would not lend for, such as big kit where there is no collateral, or long-term projects; she specifically mentioned the long development timelines for biotechnology, adding that there could be an early interest-free period to make the loan more attractive.

Mr Johnson only briefly spoke about the finance products but did say he wants to see a full range of support made available, including equity, “to reflect the balance of risk between the tax payer and private investors”.

The new finance products will require specialist expertise that Innovate UK doesn’t have. Dr Hunter pointed out that the organisation currently has flexibility in the salaries that it can offer to attract experts and cautioned that this could be lost under UKRI.

The new finance products are intended to be gradually introduced over the coming years. Gareth Davies from BIS told the Committee that they will be piloted in the next financial year but other reports, including from the Minister, say later in 2016. Whenever they land, there isn’t much time to get them right!

What next?

The Committee plan to write a letter to Mr Johnson setting out their thoughts and concerns about the future of Innovate UK. I’m told this will be sometime after the EU referendum. The inquiry will also inform the peers’ interrogation of the Higher Education and Research Bill when it reaches them; however, it will not likely arrive in their chamber until the autumn, as it has not yet had second reading in the Commons.

The BIA is engaging with BIS and Innovate UK to feed in the views of the biotechnology sector as they develop the new finance products. Our sector is not opposed to loans or other forms of finance products in principle, but we are clear that grants must remain available to support the early, riskier end of research and innovation in businesses. In consultation with our members, we have drawn up some over-arching principles that should guide the development of the products:

  • We do not believe a loan in the form of equity will work as the government will find it difficult to value companies accurately.
  • Any government loan needs to be super-subordinated (meaning it is paid back after other debts and investors) in order to attract, not repel other forms of financing.
  • Payback of a loan should only kick in post-revenue generation from the investment or at company/asset exit.
  • Loans should be interest free, money repaid can then be recycled in real terms value.
  • At a fundamental level a loan can only work in a timescale of at least 4-5 years for the life sciences sector due to long development times.
  • A one size fits all approach may not be suitable. Government and Innovate UK need to explore and understand how different types of companies and projects will be suited to different types of non-grant product. That said, it is important that overall funding schemes are easy to understand and use in order not to reverse company engagement with Innovate UK schemes. Striking the balance between these two points will be a challenge and requires serious and thorough consideration and industry consultation.

These principles and our views on the future of Innovate UK funding are discussed in greater detail in the BIA’s submission to the National Innovation Plan call for ideas.

Innovation Plan submission

Finance report 2016 Newscast

The pivotal week of the year coming up for the sector. Ahead of the crucial EU referendum vote on Thursday (we’ll be publishing a special member briefing on Friday with what the sector needs to know), I look forward to seeing many of you at our CEO Forum entitled “Which Way now?” on Wednesday and Thursday this week.

You may well have caught the media coverage of the launch of our new annual finance report in partnership with Evaluate and the London Stock Exchange (LSE). The title of this year’s report, “Money, momentum and maturity: UK biotech financing and deals in 2015/16”, says it all. The UK biotech sector is in great shape. Firstly, more venture capital money went into UK biotech than ever before, cementing the UK’s lead in Europe. Secondly, impressive levels of follow-on funding demonstrate that not only can companies raise money, they can continue to build momentum through accessing further funds as they grow. Finally, 2015 showed continued maturity through both larger financing rounds and the fact that M&A in the sector is no longer dominated by the large players alone.

The report will also be the focus of Wednesday night’s panel at the UK CEO and Investor Forum at Down Hall, Hatfield Heath – looking forward to some in-depth discussions on the findings then. How we can sustain start-up momentum, alongside scaling-up UK life sciences companies that the country needs to feature as a top three global cluster, should be the shared focus across industry, government and investors in 2016.

As many of you will have seen, this morning Circassia announced top line results from its cat allergy Phase III study. In the study, both treatment regimes and placebo greatly and equally reduced subjects’ combined allergy symptom rescue medication use score from baseline. As a result of the very marked placebo effect, the treatment did not meet the study’s primary endpoint. As Circassia reports, such a dramatic placebo effect was not a feature of earlier Phase II studies and the company will now rapidly analyse the full dataset and provide an update on development plans for the broader business at its interim results.

In terms of the wider UK biotech sector, this is disappointing but not devastating news. As our report published last week shows, the sector is better funded, more diverse, and better managed than a generation ago. Just as there is more to Circassia than the allergy franchise, there is more to the UK biotech ecosystem than Circassia.

The open and matter of fact manner in which this difficult news has been shared with investors and media alike by the Circassia team pays tribute to the mature and business-like way Steve Harris and his team are conducting themselves at a particularly challenging time.

On Thursday the UK will take to the polls for the EU Referendum. The BIA has worked hard to make sure that the voice of UK bioscience has been heard loud and clear in the debate and we will be communicating to members on Friday following the result. In the meantime, if you are approached by the media for your companies view then do take a look at the page on our website that has a useful thought process chart to help you prepare for any interviews.

In other activities last week, we’ve been continuing a series of regional roundtable discussions for business leaders, academics and clinicians with Life Sciences Minister, George Freeman MP. Today we’re in Manchester for the final event of the series at CityLabs, with the Northern Health Science Alliance and attendees from across the Northern Powerhouse region. Last Thursday we were at Kymab’s offices in Cambridge, where a strong cross-sector line-up – including Vicky Ford MEP, Labour MP for Cambridge Daniel Zeichner and former Lib Dem MP Julian Huppert – met sector representatives to discuss pressing issues for the region’s life sciences scene.

Cambridge regulars won’t be surprised to know that transport and housing infrastructure remain issues of concern, but attendees’ top requests also included many calls for the continuation of the Biomedical Catalyst scheme, plus a focus on NHS uptake and incentives for academics and clinicians to innovate. After the meeting the Minister hosted a press conference and was also joined by the full political panel and Conservative MP for South Cambridgeshire, Heidi Allen.

A ‘How to guide’ for the upcoming Accelerated Access Review (AAR) has been produced by Deloitte and the Office for life sciences. It is still in the beta stage so there is an opportunity for BIA members to input – you can send any feedback you have to acceleratedaccess@officeforlifesciences.gsi.gov.uk.

Thanks to Bristows for  hosting another very successful BIA Women in Biotech event last week at their central London offices. Lively networking and an inspiring session on leadership in times of change from Sarah Brummit both contributed to a highly enjoyable evening. The next Women in Biotech Networking Evening will be held 14 September – so make a date in the diary now!

Finally, an important piece of information to note as the database of payments and benefits in kind to healthcare professionals and organisations goes live, next week, on 30th June. Disclosure UK – is the pharmaceutical industry-led, publicly available database detailing payments and other benefits in kind made by the pharmaceutical industry to UK healthcare professionals (HCPs) and healthcare organisations (HCOs).

Part of a Europe-wide initiative to increase transparency around the important relationships and collaborations between HCPs and the pharmaceutical industry, the new database will show transfers of value made during 2015, where the HCP has given the pharmaceutical company permission to disclose the information. This includes activities such as speaking at or chairing meetings, advisory board meetings, training services, fees and expenses for services and sponsorship of attendance at meetings. The database will also show transfers of value to healthcare organisations; a total amount for those individuals that did not give consent to disclose and a total amount of R&D expenditure with HCPs and HCOs per company.

Since 2012, the pharmaceutical industry in the UK has been publishing details of the annual total payments made to HCPs and HCOs under the ABPI Code of Practice for the Pharmaceutical Industry. The self-regulatory Code has been operational for more than 50 years and sets standards to ensure that pharmaceutical companies operate in a responsible, ethical and professional manner. This includes appropriate training as well as robust guidance on the promotion of medicines and requirements for interactions with HCPs, patients and the public.

The Disclosure UK database and the disclosure of individual level data is a requirement for all pharmaceutical companies that are signatories to the Code, and is co-ordinated via the ABPI. Its development signifies a further step forward in greater transparency around the industry/HCP relationships that enable the development of life-saving and life-enhancing medicines for the benefit of patients.

Publication of this data is complementary to current NHSE proposals for managing conflicts of interest.

For more information about the Disclosure UK database, please visit www.disclosureuk.org.uk or email info@disclosureuk.org.uk for more information about the plans for launch and all media enquiries. For more information about the ABPI Code of Practice for the Pharmaceutical Industry, please visit the Prescription Medicines Code of Practice Authority website www.pmcpa.org.uk

Best

Steve

This week’s member video showcase comes from Peptinnovate, a specialty biopharmaceutical company that is discovering and developing new treatments for respiratory disease. Peptinnovate is based on the ability of tuberculosis bacteria to subvert or manipulate the human immune system.

Watch the video below to find out more.

Do you have a video you would like the sector to see? Contact us.

Image 1 - Front coverToday we published a new report in partnership with Evaluate and the London Stock Exchange, Money, momentum and maturity: UK biotech financing and deals in 2015/16. In the post below, BIA CEO, Steve Bates takes a look at the key statistics and what they mean for the sector.

The biotech sector has enjoyed a remarkable surge over the past couple of years, evident across the globe. The latest data, compiled by the BIA in partnership with Evaluate and the London Stock Exchange, indicates continued momentum for the UK industry in 2015.

Whilst IPO activity may have cooled off, last year saw an unprecedented rise in follow-on funds raised on the London Stock Exchange. This was particularly evident on AIM, with almost four times the amount raised than the previous year, accounting for over 60% of the total amount raised by biotech companies on the LSE (versus 23% in 2014).

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Another stand out story for 2015 was the level of VC activity in the sector, with £489m raised in the UK – that’s up a staggering £166m from 2014 – helped by Immunocore’s record-breaking £205m round. The UK continues to extend its lead in Europe, accounting for over a third of total European VC funding.

A marked trend is towards larger financing rounds of fewer but perhaps better positioned businesses, as investors move away from the historical ‘drip-feed’ approach. This will enable quality UK management teams to focus on delivering value with an increased level of maturity. Although the UK and Europe as a whole still lag behind the US and its leading clusters, these are all promising trends as we look to develop the UK as the third global biotech cluster, building on its established lead in Europe.

UK VC activity with count

There are also some advantageous differentiations developing in the UK versus the US. Firstly, London has established itself as a hub for IP commercialisation businesses in recent years, providing the longer-term patient investment and support required by companies to succeed. Secondly, we’re starting to see the nascent crowdfunding sector have an increasing impact on biotech here in the UK, ahead of the US, with AIM-listed Scancell the first company to apply crowdfunding to the public markets. This is a trend to keep a closer eye on in 2016.

At the time of writing we await the result of the EU Referendum in the UK. With other global political events in play for 2016 – such as the US Presidential election – the crystal ball remains foggier than usual in terms of predicting the macro-economic and political environment, both at a national and international level, which undoubtedly has a significant impact on sector financing. That said, the first half of 2016 has seen private fundraising continuing to grab headlines, with the UK’s MISSION Therapeutics recording a £60m Series C in February led by Imperial Innovations and Woodford Patient Capital Trust. The IPO window also remains ajar even in these chillier months with Shield Therapeutics, and most recently Mereo BioPharma, successfully listing on AIM.

However what is clear is that despite signs of continued momentum and maturity in the funding of the sector, from the data for 2015 and our experience so far in 2016, there is no room for complacency. For example, the lack of reported seed capital for UK companies in 2015 raises a potential red flag and underlines the importance of effective support for early-stage companies through fit for purpose innovation policy from the government.

Image 8 - Pipeline

Given the strong R&D pipeline coming through the UK and the impressive rate of regulatory approvals, the sector is in good shape and there is great potential to build on. Ensuring that early-stage companies have access to kick-start innovation funding, such as that offered through the Biomedical Catalyst, is essential to take start-ups to a stage from where they can effectively leverage private capital.

A shared focus from government, industry and investors on how we can sustain start-up momentum, alongside scaling-up UK life science companies into the cohort of mid-tier companies the country needs to feature as a top three global cluster, is what is required in 2016 to build on current momentum – whatever the rest of the year holds.

Download the report here.

Launched last week, the KTN Medicines Discovery Landscape portal provides a simple and accessible platform that shows the UK’s strengths and capabilities across the medicines discovery landscape. On the blog today, Dr Alexander Henzing from the KTN gives an overview of the portal.

Medicines discovery is evolving. Historically, discovery was mainly conducted in house, whereas currently a significant proportion of this process is external through in-licensing, outsourcing and collaborative partnerships. Medicines discovery is now firmly a multidisciplinary process whether as part of a multinational pharma or biotech company, contract research organisation or academic institution.

Knowledge Transfer Network’s (KTN) role, in this space, is principally around building a community across the medicines discovery and manufacturing sectors, where individual sector communities already exist. We also use our expertise to drive cross sector knowledge transfer and collaboration. We’re there to assist companies in navigating the innovation landscape for medicines discovery and manufacturing and finding the right way, or organisation, to help solve their challenges so that the UK is increasingly the location of choice for this type of activity. We are part of the Innovate UK family, working alongside Enterprise Europe Network (EEN), National Contact Points (NCP) and the Catapult Network. For this sector there are at least four that align well – the Cell and Gene Therapy; High Value Manufacturing; Precision Medicine and Medicines Discovery Catapult centres. Ultimately this is about accelerating innovation to grow the economy and to bring benefits to patients sooner.

MD Landscape Home Page

The KTN Medicines Discovery Landscape portal provides a simple and accessible platform that shows the UK’s strengths and capabilities across the medicines discovery landscape from the identification of novel therapeutic targets to developing products that represent substantial improvements on current treatments.

KTN Medicines Discovery Landscape was designed to map the innovation landscape in medicines discovery to showcase the UK capabilities and enable the added leverage from external collaborations from outsourcing to strategic partnerships. It complements other similar resources such as the KTN’s Medicines Manufacturing and Precision Medicine Landscape Portals.

The Medicines Manufacturing Landscape Portal was delivered by KTN on behalf of the Medicines Manufacturing Industry Partnership (MMIP). MMIP is supported by trade associations, the Association of the British Pharmaceutical Industry (ABPI) and the BioIndustry Association (BIA) with the KTN as a partner.

The Precision Medicine Landscape portal was delivered by Innovate UK and hosted by the KTN on behalf of the Precision Medicine Programme Coordination Group.

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First and foremost, it’s my pleasure to congratulate Harriet Fear, CEO of our United Life Sciences partner, One Nucleus, on her MBE for services to the healthcare and life sciences sector, awarded in the Queen’s Birthday Honours List over the weekend. A fantastic recognition for both her hard work and achievements, and also for the biotech sector.

BIO2016 took place last week in San Francisco and BIA were there, representing and promoting the UK biotech industry. One Nucleus held a successful dinner on the Sunday night, followed by a breakfast featuring insightful talks from J&J and Philips Healthcare on the merging of tech and healthcare. Bionow organised a lively KPMG-hosted roundtable to discuss life sciences in the northern powerhouse – highlighting the strengths of the region, attractiveness to overseas investment and huge contribution within the UK biotech hub.

As the California Primary result set up a Trump versus Clinton Presidential election campaign, US politics was a recurring theme in conversation as was, to perhaps a surprising extent, our own EU referendum. Several themes were recurrent throughout the week, including:

  • empowerment of the patient, enabled by technology and data
  • payment reform towards value models
  • importance of partnerships and collaboration where solutions are challenging – leading to the co-creation of integrated solutions and shared accountability

Unsurprisingly, AMR featured strongly with a packed session considering innovative approaches to the challenge (lead by IMI), and another on incentives, exploring the need to address the market failure that occurs in the development of antibiotics and ‘de-link’ revenues from usage.

As always, the conference saw the launch of a number of interesting global sector-based reports, including EY’s latest Beyond Borders, Scientific American WorldVIEW, new work from analysts Pugatch Consilium and an analysis comparing host countries for life science companies in Europe from KPMG, EuropaBio and Venture Valuation. What’s great to see is whatever the basis of the analysis the UK competes strongly globally as a leading life science hub, going up the rankings in several surveys.

It was great to see so many BIA members represented out in San Francisco, and also to catch up with our international counterparts as part of the International Council of Biotech Associations (ICBA), which hosted the inaugural Global Life Science Industry and Ministerial Meeting on the eve of BIO last week.

That’s it for my brief highlights, but do explore the BIO YouTube channel for a whole host of video interviews and highlights from the week.

Meanwhile, in the UK, we hosted a roundtable meeting for Birmingham business leaders, academics and clinicians with the Life Sciences Minister, George Freeman MP, to discuss how the region’s strength in life sciences could be built upon. Large patient cohorts and advanced clinical trial infrastructure were highlighted as particular strengths but national issues such as uptake of innovation in the NHS were also mentioned as challenges that need to be overcome.

Following the meeting, George Freeman hosted a press conference and was joined on a panel by local research leaders to speak to journalists about the region’s life sciences sector and the value of EU membership. You can see a video clip here. Local press in the East of England have also been taking an interest in the impact of the referendum on the life sciences sector, with BIA member Harren Jhoti of Astex Pharmaceuticals being interviewed by ITV East Anglia. The report is worth watching.

Continuing on the theme of the EU, the House of Commons Science and Technology Committee has published its report on EU regulation of the life sciences following an inquiry held earlier this year. The BIA submitted written evidence to the enquiry and Steve Bates appeared in front of the Committee to answer their questions. The BIA has been quoted extensively throughout the report and our key messages are echoed in its conclusions – that EU membership brings net benefits to the UK life sciences sector through harmonised regulation, greater patent protection, support for research collaboration and funding.

The KTN launched a new Medicines Discovery UK Landscape last Wednesday. This new tool is designed to map the innovation landscape in medicines discovery – showcasing the UK capabilities and enabling added leverage from external collaborations, from outsourcing to strategic partnerships. You may remember seeing the Medicines Manufacturing and Precision Medicine landscape versions previously.

Also taking place last week, some fantastic news as BIA member Mereo BioPharma listed on AIM following a £14.8m fundraise – congratulations to Denise and co. You can hear more about the company on this Thursday’s webinar as CMO, Dr Alastair MacKinnon joins Glyn Edwards of Summit Therapeutics, David Fellows from NightStarX and Dr Tim Guilliams of Healx to discuss advances in research and development in rare diseases. There’s still time to register here if you would like to join in.

It’s a busy week for the BIA with the latest in our series of Women in Biotech events taking place on Wednesday and a further roundtable with George Freeman MP in Cambridge on Thursday – and look out for some exciting new material from the BIA on financing of the sector towards the end of the week.

Best

Steve

Today’s video showcase features Harren Jhoti, CEO of Astex Pharmaceuticals and previous BIA Board member, speaking as part of an ITV News Anglia report into the impact of a vote to leave the EU on science and research in the East.

Watch the report and read the article in full here.

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