(Note: The views expressed below are my own and do not necessarily reflect the views of my employer)
[Additional note added Wednesday 21 March – Daniel Perez of OBR has asked me to remove this post as he belives it to be an attack on OBR. It certainly is not and I am disappointed that he feels it is.]
On Friday I attended the OBR debate “This house believes UK biotech is dead” – such a ridiculous concept that I felt I had to see what arguments were going to be made in proposition of the motion.
Proposing the motion were Martino Picardo, CEO of Stevenage Bioscience Catalyst, Chas Bountra, Chief Scientist of the Structural Genomics Consortium in Oxford, and Daniel Perez, the CEO and founder of Oxbridge Roundtable. In opposition were Anton Hutter, a Partner at IP lawyers Venner Shipley, Morris Berrie, Co-Chair of Tech Transfer Summit Ltd, and serial biotech angel investor Andy Richards. The debate was to take the Oxford Union format.
Sadly, most of the speakers chose not to address the subject of the motion. Indeed, the ridiculousness of the topic was highlighted by the proposers, who failed to raise any arguments to support the debate topic. Indeed their arguments fell into areas which I feel showed a lack of understanding of the current biotech space.
First, they suggested that collaboration is needed between academia, biotech and pharma. However, this is already happening and almost every biotech company has an alliance with either academia, pharma or both. Second, they suggested that it was still the job of biotech companies to discover, develop and market products themselves and this was simply unaffordable in the current environment. While this model may have been the goal for companies 30 years ago at the birth of the industry, things changed when big pharma woke up to its pipeline issues and the opportunity biotech presented to fill them. The proposers summary was that biotech is too expensive, too risky and there are not the funds to do it.
The motions opposers were little more convincing. They at least focussed in part on the UK and said that UK biotechs were producing IP but that it needed something like the US NIH to validate which potential products have value. One of the opposers quoted 2003 figures about the number of companies in the sector – 250 with 160 products in development. Why he didn’t use the most recent figures, struck me as odd. In 2011 government figures show that there are 325 companies developing therapeutics and over 600 companies providing services to them. These companies have 423 antibody, protein, vaccine or advanced therapy products in development with a similar number of small molecule or blood and tissue products also being developed.
In the audience participation it was suggested that the UK had not created any large firms – Andy countered with Shire – and that there was a high level of failure. I am not sure that there will be many more – if any – large biotech companies being built in future as pharma is rich enough to buy the products or the company at will. As for failure, clinical failure is a reality of drug development and currently only 1 in 11 products makes it through the clinic – and this figure is no worse for the UK than anywhere else. I think that one of the problems in the UK, possibly everywhere but the US, is that companies tend to be focussed around a single product and a product failure can cause the company to go under.
It was only when Andy Richards took the floor to close for the opposers that the actual topic of the debate – whether or not UK biotech is dead – was addressed. He said that in the UK we are great at being negative and cynical. He said there was great concern when the economy crashed in 2008 that many biotech companies would fall – but virtually none did. Andy said the sector here is much more resilient than thought because it has experience and is diverse – in terms of funding, technology and business models. He argued that biotech should not be measured on how much cash is put in, but on the IP, the patient benefits and the cash that comes out of the sector.
His second point was that many people say there have been no successes for UK biotech and that no-one makes money. He thinks this is rubbish and listed some examples. He said that Shire is a £13bn company, BTG is a £1bn company; that companies such as Abcam, Vectura and Astex are sustainable and successful; that the UK has developed products that are delivering patient benefit – Humira, which will soon be the biggest selling drug in the world, Cimzia, Campath, Benlysta and Zytiga; and that world-changing platforms had been developed in the UK such as monoclonal antibodies and Solexa’s gene sequencing technology. He added that people were also making money.
Andy said that the real sign of health for the sector was in recycling. He said that people have not succeeded and just run with their gains, but have come back and tried again: for example Jonathan Milner has put his experiences from Abcam back into Horizon Discovery; Steve Jackson having sold KuDos to AstraZeneca has established Mission Therapeutics; Ian Garland sold Arrow Therapeutics to AstraZeneca and now is leading Vernalis, which recently raised almost £70m; other people from Arrow had founded re:Viral; investors from Respivert have come back into Topivert; Invesco which has gained from its 29% holding in BTG has also invested in Vernalis, e-Therapeutics and Immupharma; Greg Winter, who developed the technology that underpinned CAT, has come back again first with Domantis and then with Bicycle; others from CAT have come back in Crescendo, KyMab and PanGenetics. Money, people and expertise are being recycled.
One point where I would disagree with Andy was his comment that trade associations were no longer necessary for the UK biotech sector. Working for the BIA I have seen what has been achieved for the sector. One example is R&D Tax Credits, which have been described by some as a lifeblood for the research insensitive companies in biotech. I know of one company – and Andy should know this too as he was on the board there for 11 years – has said that R&D Tax Credits cover the costs of one quarter of its staff. The BIA campaigned not only for the introduction of R&D Tax Credits but also for their extension and additional benefits that have been introd
uced. This includes the removal of the PAYE/NI cap that has meant that the credits are much more valuable for the more virtual companies in biotech and the prevention of changes to going concern status that would have removed most biotech companies from eligibility for the credits. Less than three months before the last election in 2010 both the Conservatives and Liberal Democrats were going to scrap R&D Tax Credits if elected, the BIA and a number of other organisations representing innovative companies convinced them of the value of the credits to companies that could represent the future of the UK economy. Trade associations for maturer industries than biotech have evolved as their industry has developed and the BIA is at a point where it too has started to mature.
As he drew to a conclusion Andy said it is the sector’s diversity and capital efficiency that have contributed to its success. He said that more cash had hone into UK biotech in the last two years than ever before and that he has never seen a set of companies that are less struggling. He said the sector has become mature and as a result will not grow at the same rate as before. He finished by saying the motion was stupid and that the audience should vote against it.
Daniel, closing for the proposers, put up no argument. Using a presentation – not Oxford Union style – he simply said biotech was dead and then gave a presentation for a project he is involved in. A failure to debate and a failure to address the topic at hand.
The vote was not even close, only about 15-20 of the 200 or so audience members voted for the motion. The house did not believe UK biotech is dead.