Matoke Holdings Ltd – Written evidence (LSI0021)

About Matoke

1.1 Matoke Holdings Ltd is a British biotechnology company that has developed a new generation of antimicrobials based on Reactive Oxygen® technology. In tests, in both the laboratory and the clinic, no Gram-positive, Gram-negative, multi-resistant or pan-resistant bacteria has survived contact with this technology platform.

1.2 Matoke Holdings Ltd is an SME, a small group of investors are funding almost all of the work to drive the R&D forward including laboratory research, clinical evaluation, regulatory control and new product development. Research (both in vitro and early clinical use) has demonstrated RO can kill many of the superbugs highlighted by the World Health Organisation (WHO), including two families of bacteria highlighted as of critical importance: Pseudomonas and various enterobacteriaceae, including CPE.

1.3 Matoke Holdings Ltd is collaborating with world-renowned scientists and surgeons at British universities and teaching hospitals – in Southampton, Birmingham, University College London and Manchester – to develop and bring to market ground-breaking new antimicrobial products for use across the world.

1.4 The business has gained medical device approval for a topical application and is now progressing pharmaceutical development.

Science and Innovation

1. How can investors be encouraged to invest in turning basic life science research into new innovations in treatment? Why has investment been lacking in this sector? Does the research base have the necessary infrastructure to be world-leading?

As an SME biotechnology company, our academic research is the bedrock of our business. However, our continued research has been dependent on a small group of investors driving work forward. There remains some way to go before we are able to bring an innovative pharmaceutical treatment to market (so far we have only brought a medical device to market). The process of randomised control trials (RCTs) required to meet regulatory standards is expensive. Additionally, while there are many research grants (such as from Innovate UK and Carb-X) for   early-stage and later-stage R&D, there is less a lack of grants which could enable SMEs and researchers to run Phase II RCTs. If the Government wants to ensure the growth of British SMEs, it needs to ensure that they are supported through the whole R&D process, from feasibility to market entry.

There is a need for greater incentives for long-term investment which is vital to drive the growth of biotechnology firms working in antibiotic research and development. As PWC’s 2016 State of the Nation Report on UK R&D noted there are only 15 SMEs active in the development of new antibiotics, and only 200 research scientists developing new antibiotics in UK industry, compared to 4,000 working on cancer research. The high attrition rate on antimicrobial R&D is disincentive to large pharmaceutical companies, who are often not prepared to take on the risks.

The asset management industry is often risk averse, therefore problems with short-termism, regulation, performance measurement and remuneration undermine investment. Only a handful of organisations are investing in SME biotechnology businesses. Therefore the government should take steps to improve the market.

The Patient Capital Review offers an opportunity to increase incentives for long-term investment in R&D that will support businesses’ growth. We welcome the Life Sciences Industrial Strategy’s acknowledgement of the importance of patient capital to the life sciences industry. To maximise its impact, this Review must put support for biotechnology industries at its heart, as we are a sector long side-lined by patient capital but with great need. The Government can incentivise more capital investment to early phase scalable science by creating targeted fiscal incentives. As the O’Neill Review has argued, the government should provide “Better incentives to promote investment for new drugs and improving existing ones”. Mainstream estimations of the scale of public sector rewards for new antibiotics include figures from $919 million to $2.5 billion.[1]

Industrial Strategy

5. (If published) Does the strategy contain the right recommendations? What should it contain/what is missing? How will the life sciences strategy interact with the wider industrial strategy, including regional and devolved administration strategies? How will the strategies be coordinated so that they don’t operate in ‘silos’?

Matoke Holdings was disappointed that the Life Sciences Industrial Strategy did not put greater emphasis on addressing antimicrobial resistance specifically. The government’s policy should contain recommendations to specifically support R&D of novel antibiotics  to combat antimicrobial resistance (AMR). AMR is widely accepted as one of the major global challenges of the 21st century. It currently kills around 700,000 worldwide, 50,000 in the U.S. and Europe alone. According to the European Centre for Disease Prevention and Control and the European Medicines Agency, the cost of AMR to the NHS is estimated to be in excess of £180 million per annum, resulting in 3,000 deaths a year in the UK alone.[2] As the O’Neill Review highlighted, without global action, AMR will kill another 10 million people annually by 2050, according to recent models. Increased death and illness would in turn wipe approximately $8 trillion (€7 trillion) of the world’s annual output by 2050.[3] However, as recent research by Boston University has noted that “the antibiotic pipeline does not match health needs because of challenges in discovery and development”.[4]

We were disappointed that the recently published 2017 Life Sciences Strategy only included one recommendation related to AMR. If the UK is going to meets its commitment to lead the global fight against AMR, it must address the desperate need for innovation investment to provide new antibiotics to stay ahead of AMR: that means entirely novel antimicrobial technologies that can be used for infection prevention & treatment. Whilst antimicrobial stewardship (limiting prescriptions of existing antibiotics) and improved infection control can form part of the solution, this will not halt AMR in the long-term – new treatments are needed.

Government policy should seek to implement the advice of the Pisani State of the Nation Report on R&D,[5] which recommended:

• Increasing R&D investment to leverage public-private financing models such as the Dementia Discovery Fund approach.
• Delivering on existing commitments such as the $2bn Global Innovation Fund proposed by Lord O’Neill.
• Joining up funding streams and initiatives in the UK and globally to create a coherent end-to-end funding solution in AMR across public and private sources.
• Funding to cover the whole range of R&D strategies, including novel antibiotics, vaccines, investigations into technology that combines old antibiotics with resistance breakers, combining existing antibiotics for clinical efficacy, and protecting those existing antibiotics through better diagnostics.

We hope that the Government’s response to the Life Sciences Industrial Strategy puts greater focus on AMR, and integrates this with existing work such as the Global Antimicrobial Resistance Innovation Fund (GAMRIF). This would create a more holistic approach in providing support to SME’s R&D.

6. What opportunities for small and medium sized enterprises (SMEs) are there/should there be in the strategy? How can they be involved in its development and implementation?

Matoke Holdings Ltd welcomes the Industrial Strategy Green Paper’s focus on investing in science, research and innovation as well as the commitment to support businesses to start and grow. We also welcome the Life Sciences Industrial Strategy’s goal to enable small and medium sized enterprises (SME) growth, manufacturing and supporting infrastructure across the regions of the UK. As a young British biotech SME, we have found our progress in bringing forward new innovations to stay ahead of antimicrobial resistance (AMR) slowed by funding and regulatory challenges, while public research funding has not necessarily been best used. The UK is home to many world-leading scientists and led global action in highlighting the international threat of AMR, both economically and on public health. However, the business environment is not supportive enough to help ideas become large commercial successes and world-leading businesses.

We welcome the fact that the first phase of the Industrial Challenge Strategy Fund will in part focus on the development of new medicine manufacturing technologies. SMEs are the driving force behind genuine innovation, and helping them to scale up development is welcome, however funding should support the whole R&D process. Development of new pharmaceutical products from R&D through to full regulatory approval and market entry – something essential to combat AMR – is a long and complicated process which many SMEs do not have the resources or regulatory expertise to complete. The costs and timescales before any form of income can be generated is a substantial mountain that makes any possibility of success extremely difficult. A breakthrough new antibiotic would have a considerable market across the globe – growing business and reducing the economic impact of AMR at the same time as improving health outcomes.

Matoke believes antimicrobial R&D should be an area of focus area for Industrial Challenge Strategy Fund. As well as driving growth, this would enable the Fund to meet the recommendation of the Centre for Global Health that “Increased public financing of a broad menu of incentives across the antibiotic life-cycle is required, targeted at encouraging the development of antibiotics to counter the greatest microbial threats.”[6] However, currently the myriad of different funding bodies and the resources required for the application process can hinder small businesses. Moreover, often there is a gap in funding support between early stage and later stage R&D. The Industrial Strategy Challenge Fund should be flexible so that funding can better support the whole R&D process.

Responsibility and Accountability

14.                     What is the role of companies within the sector, particularly the large pharmaceutical companies, in the implementation of the strategy? How are they accountable for its success?

Large global pharmaceutical companies have the expertise and the financial resources to take new products from the R&D stage through to market. However, they are often deterred from investing in the development of new antibiotics by the timescales and costs of the regulatory process. This has been evinced by some recent divestment by large pharmaceutical companies in their R&D divisions. Encouraging pharmaceutical companies to invest and share the expertise in R&D process with smaller companies would help to meet the objectives of the industrial strategy. The Life Sciences Industrial Strategy should also put greater emphasis on improving the incentives for large pharmaceutical companies to invest in antimicrobial R&D.

15.                     Does the Government have the right structures in place to support the life science sector? Is the Office of Life Sciences effective? Should the Government appoint a dedicated Life Sciences Minister? If so, should that Minister have UK-wide or England-only responsibilities?

The United Kingdom is not making the best of its remarkable science space. The UK is very effective at encouraging small businesses to develop from ideas, but it is poor at scaling these small businesses into large commercial successes. The Life Sciences Industrial Strategy’s acknowledgement of the need to support the scaling up of such business is welcome. Going forward, a new business model is desirable to bring new antibiotic products to market, as stated by the European Commission (17 June 2016). Building a fertile environment for the commercialisation of research ideas to develop new antibiotics products would position the UK as a global leader. As the Jo Pisani’s PWC State of the Nation Report on UK R&D (2016) noted, “Not only is it commercially unattractive to develop new antibiotics, it is also very hard to do… there have only been two genuinely new classes of antibiotics in the last 30 years… and even these are not effective against ‘Gram-negative’ bacteria – the most resistant type.”[7]

In the last Parliament, the portfolios for life sciences innovation and life sciences industry was split between two ministers. Given that life sciences industry is essential to innovation, this artificial division in the portfolio created bureaucratic obstacles to engaging with ministers and risked issues “falling between the gaps”. A dedicated Life Sciences Minister, sitting across the Department of Business, Energy and Industrial Strategy and the Department of Health with UK-wide responsibilities would be welcome to engage with the sector, co-ordinate the environment for innovation across all four nations of the UK and drive forward a new business model for antibiotic products. The Minister should also be supported by a team who regularly engage with all levels of industry, including SMEs as well as large pharmaceutical companies, to ensure a holistic approach to policy making that takes into account the needs of the whole sector.

As an SME, Matoke has found major regulatory barriers delaying its expansion from the medical device sector to the pharmaceutical product sector which has costed considerable time and precious and finite capital needed to sustain the business through the R&D stage. While Matoke accepts that the rigorous requirements of the regulatory system are proper and necessary, there is still a difficult process to complete, especially for SMEs, which often have limited access to the regulatory expertise larger pharmaceutical companies may possess. The Office for Life Sciences should have sufficient capacity and authority to improve the costs and timescales involved in completing the regulatory structures which are often a significant barrier to innovation. We recommend the government should invest in helping innovative SMEs through the regulatory process and consider improving the capacity of regulatory agencies to fast-track crucial new health technologies, such as those to fight AMR through the process.  Implementing the recommendations of the Accelerated Access Review (AAR), as supported by the Life Sciences Industrial Strategy, would be a crucial step forward in this regard.

Bexit

18.                     To what extent should the UK remain involved with and contribute to agencies such as the EMA post Brexit?

A close relationship and symmetrical regulatory regime with the EMA after Brexit is desirable. Businesses, particularly small businesses, need a simple (but effective) regulatory regime. Post-Brexit divergence between the EMA and the MHRA would create two sets of regulatory standards which would add another layer of red tape onto the regulatory process and hinder our ability to develop products which we can export in Europe as well as domestically. Britain should therefore work with the EMA to make regulations more efficient and streamlined where possible.

14 September 2017