PhoreMost Ltd – Written evidence (LSI0045)
As a founder of two start-up Biotechnology companies in Cambridge, please find my responses to the Committee’s questions below that I feel qualified to answer:
Science and innovation
Response: HM-Government EIS/SEIS investor incentivisation strategy (along with the Angel Co-Fund) has been very successful and I recommend they continue. The primary, or at least most desired by a start-up, investor type using this mechanism is an ‘Angel’ investor. They are typically previously successful entrepreneurs themselves, and as such, can add critical advice along with their unique risk-tolerant financing power. The issue for the UK is that we have not yet generated as large, or as deep pocketed, pool of Angel investors as in the U.S. This I feel is secondary to the endemic earlier-stage issues faced by start-ups, which will be covered in another section i.e., raising VC funding too early, or too much, such that companies are sold too soon to non-UK interests and at little return to founders. I feel the UK does have the research base to grow more early stage companies, but management talent, along with a large pool of risk-capital is limiting.
Response: In my experience University Technology Transfer Offices are entirely passive, waiting for translationally minded academics to initiate a patenting and spin-out strategy. Given that academics are not often of this mindset, and even more rarely will leave their current positions to initiate a risky start-up, many good ideas will undoubtedly be going unseen or unrealised. Commercial management skills would have to be sought early on for any spin-out to gain traction, which again TTO’s should be looking to solve for academic founders. TTO’s do at least help well with early seed funding for any spin-out that can pass these barriers.
Response: Historically we have not lacked these skills, however and post-Brexit scenario would need to seek continued access to EU-domiciled talent who often train in the UK and would generally seek to stay in the UK given its superior science-based opportunities. In contrast, the UK will not be as attractive to drawing U.S. talent.
Response: Well compared to Europe, but poor compared to the U.S. Talent is equivalent, so it is really about the amount of investment for start-ups and how many established technology companies also choose to reside in the same environment – to benefit from this feeder-pool and critical mass. The UK therefore needs a strategy to draw-in larger biotechnology companies, as well as seed smaller ones, to develop the same critical mass – one that does not solely rely on funding, but in providing a unique infrastructure for drug development in the UK. Please refer to later questions and an attached position paper elaborating on this concept.
Industrial Strategy
Response: There were many good proposals in the Strategy, some of which can be assessed for impact at this stage. SEIS/EIS has been crucial, as have the R&D tax credits. The former can be readily quantified with respect to the number of start-ups that used EIS-investment in its earliest funding rounds. The latter is harder to assess, but for my companies at least, I can say that this has extended the runway of initial seed-investment to gain crucial proof-of-concept demonstration (technical and commercial) prior to seeking VC-funding. This allows smaller companies to increase their valuations before larger investment sums are sought, thus enabling founders and initial investors to remain significant stakeholders in their companies. In this vein, Innovate UK and the Angel Co-Fund have also been an important source of non-VC funding to support the development of early stage companies. In my experience, VCs are not high-risk takers and seek to mitigate their risk by demanding significant equity-level and board-level controls, along with pursuing near-term exits, often with preferential returns to themselves. If the government continues to use VCs as a vehicle to invest in innovation, it should demand a more long-term, risk-tolerant attitude for its investments, with terms broadly equal to those of the Angel and founder investors.
I like the idea of apprentices, but have not been successful in recruiting them to date. Our experience thus far has been that apprenticeships have been back-up plans for individuals seeking University places.
I approve of plans to make it easier to translate academic science into new start-ups, but have not seen evidence of this to date. Universities are being encouraged to adopt standard reasonable terms for transferring IP to start-ups, but inertia is strong here.
I strongly agree with the several existing ideas to make the UK a hub for experimental medicine and have an additional suggestion to make, which I will elaborate on in the relevant question below and the attached position paper.
Response: The Early Access scheme and Clinical Trials Gateway are excellent ideas to add to alongside continuing the funding for Innovate-UK’s BMC and Stratified Medicine programmes. As alluded to in the question above, any clinical strategy needs to link up with an industrial strategy, and do so in a way that creates a unique environment that will attract new SME growth and inward investment into the UK biotech/pharma sector.
I believe a key step to achieve this is for the NHS to become an active partner in drug development; working directly in collaboration with an ecosystem of SMEs and academic groups, that can bridge the clinical gap to develop a diversity of new precision treatments and bring those to market at sustainable prices. There is a unique opportunity for the UK with its science base and a joined-up healthcare system to provide an alternative and more efficient model for developing a range of complex modern medicines in the future. It should be noted that Pharma are now almost entirely reliant on academia and SMEs for their innovation, yet who receive increasingly disproportionate returns for performing the final step (clinical development) that the NHS, and other hospitals globally actually perform for them. Instead of hospitals providing this service under contract for Pharma, revenues from which they pay back quickly many-fold, the NHS could invest this time and effort with small-biotech companies and academia, sharing equity in those programmes and generating longer-term substantial revenues from novel drug royalties, as well as gain low-cost proprietary drugs for prescription in the UK. Moreover, this unique end-to-end experimental medicine environment, which can arguably cannot be achieved in the U.S., would be a hot-house for establishing new biotech companies in the UK, many of which would originate from other countries, bringing significant external-investment to UK-PLC. This proposal is laid out in more detail in the attached position paper.
The question above also asks how this can be fostered in a non-silo way, that brings multiple parties to the table. In my view, a networking coordinator/champion is required, with experience and contacts in each sector, but is independent, and ideally not an existing lobbyist for the Pharma sector (for all the reasons above).
Response: This is covered in the response above and the attached position paper. SME inclusion will be critical to maximise the potential of any clinical strategy that involves the NHS. My company is already putting together networks of active collaborators that we could bring and build upon in a future UK-led ecosystem driven alternative drug discovery model.
Innovate-UK provide a good base; and while additional funding is always desirable, the above mentioned idea primarily asks each party to self-fund their activities, but in a more coordinated way that accesses a key clinical resource that only the NHS can provide. Collectively, these previously separate groups can overall achieve a better, cheaper and faster output over pharma; still providing a good return on investment for the SMEs involved, and provide a previously absent route for the NHS to generate revenue. This latter point will be crucial in the future as modern medicine (preventative and interventional) becomes increasingly complex and life-long in its nature.
Response: I am not well positioned to have a view on this. However, I do support the development of critical-mass hubs in other areas of the country besides Cambridge, Oxford and London.
Response: I refer you to the response in Question 6. It is less about procurement, than active collaboration.
Response: Accelerated access a key plank that can yield benefits to patients and the economy, but only substantially if the NHS becomes an active participant in drug development. Accelerated review alone will simply yield more pharma generated drugs that the NHS can already ill afford, and thus patients would not quickly benefit from.
Response: Current channels for researchers to work with the NHS are principally via procurement. This suits medical devises well, but not new therapeutics, especially given the collaborative requirements mentioned above. Fiscal pressures are understood, but the bigger picture should be how the NHS can ultimately access a supplemental revenue stream that does not also compromise, but actually aid, free healthcare provision to the UK. In becoming an active clinical development partner to biotech/academia, the quid pro quo would be substantially lower-cost drug access in the UK, revenues from non-UK sales (via the SMEs) and potentially even a burgeoning health-tourism industry from non-UK patients seeking to access novel treatments.
Responsibility and accountability?
Response: I do not feel qualified to answer this question. My only advice is to choose impartial, genuinely end-goal motivated (not special interest) organisations.
Response: Small companies and academia will be crucial. Big companies will look to maintain the status quo. However, if a unique personalised medicine hub, with the NHS at the centre, can be created in the UK, this will also attract larger companies back to the UK to perform clinical trials; and greater leverage for the NHS to regulate the costs of large-pharma drugs.
Response: I don’t feel qualified to answer this question, but if the biotech sector is to become a major plank of the UK’s economy, which I believe it can, it would seem like a good idea to have a dedicated UK-wide Life Sciences Minister.
Response: Brexit has not had a major effect yet, but access to non-UK talent should remain to maintain our effectiveness/competitiveness. A beneficial by-product of Brexit could be the ability for the UK to approve its own medicines. This will be the final key piece in the new drug development model described above; enabling rapid approvals of proprietary UK-innovation, which outside markets would seek to gain commercial access.
15 September 2017
Appended Position paper
The concept:
To explore a new model of performing drug discovery that actively leverages the strengths of the UK’s NHS and its innovative science base to deliver affordable ‘precision medicine’.
The background:
Advances in genomics and basic research have now generated a deep understanding of the root causes of cancer and many other complex diseases. This is leading to an expanding array of novel ‘targeted’ treatments that are only effective when precisely prescribed to the ‘right’ patients. However, the current large pharma drug discovery continuum is increasingly misaligned with the broader interests of society: Firstly, in an era of expanding disease knowledge and complexity, pharma are increasingly importing their innovation from academia and small biotech’s. Secondly, despite this, they continue to seek a ‘blockbuster’ pricing model to support their large infrastructure. Thirdly, they are failing to pass onto patients the cost savings of performing modern precision clinical trials, which are now smaller, faster and more likely to succeed when candidate drug targets are first well validated. Finally, in the U.S., the primary market for drug development currently, the balancing forces for society to combat sharply rising drug prices are minimal due to a highly fragmented and private insurance based healthcare system.
The idea:
In contrast, the NHS in the UK is better able to address all these issues and as a result, could place the UK as the principle place for the development of modern precision medicines in the future, if it now takes the novel step of becoming an active partner in drug development. In contrast to the U.S., the NHS directly feels the burden of drug prices, and crucially, has a rapidly maturing infrastructure for performing stratified clinical trials aimed at moving away from blanket prescriptions to more economical evidence-led ‘tailored’ treatments. If the NHS was to now become a direct co-invested partner with small-biotech and academic innovators; helping these financially constrained organisations across the clinical development gap, but who would in exchange launch drugs at substantially lower prices compared to Pharma, this could provide a sustainable new model for the development of modern precision medicines and a hot-bed for future inward R&D biotech investment into the UK. Moreover, armed with a growing suite of fairly priced ‘proprietary’ drugs, the NHS could generate significant non-tax based revenue via health-tourism from non-UK patients, and importantly, receive substantial rest-of-the-world royalty streams from the drug discovery partners they help through the critical clinical development phase.
Why PhoreMost?
PhoreMost is a new biotech start-up focussed on consistently developing first-in-class drugs to the most important, yet neglected, disease drivers, the majority of which are unfortunately currently dismissed by big-pharma as ‘undruggable’. PhoreMost has a developed a new ‘phenotypic’ screening technology that can systematically identify the most important targets for any particular disease, and crucially, how to drug them. This technology therefore has the potential to substantially accelerate and diversify the range of therapies required to deliver precision medicine. PhoreMost and its ‘Angel’ investor base, also aim to change the current default ‘sell-out to pharma’ dynamic of performing drug discovery, instead recruiting a community of like-minded and co-invested academic and biotech partners; who firstly, would be operationally better able to tackle the complexity of discovering precision medicines in the future; and secondly, do this with less risk-aversion and a greater sense of social responsibility and sustainability compared to big-pharma. With the NHS’s help, this new ‘ecosystem’ model could now bridge the key clinical development gap that currently prevents smaller organisations directly competing with large pharma companies, and thus deliver a far greater diversity of important new medical treatments in a way that society can afford.
Dr Chris Torrance
CEO