PraxisUnico and AURIL – Written evidence (LSI0071)

1. Introduction

1.1 PraxisUnico and the Association for University Research and Industry Links (AURIL) merged on 1 April 2017 to create the UK’s national association for Knowledge Exchange and Commercialisation (KEC) professionals. Our members are mainly from the university sector but include public and independent research organisations.

1.2 Our overarching concern is to develop skills for commercialisation and business collaboration across all disciplines but members bring sector specific expertise to the network: our current joint-Chair, Dr Angela Kukula, is Director of Enterprise at the Institute for Cancer Research; Dr Malcolm Skingle, Director of Academic Liaison, GSK, was a long-standing Board member at PraxisUnico until 2017; and Dr Iain Thomas, Head of Life Sciences, Cambridge Enterprise, Chairs our Professional Development Committee.

1.3 Our purpose in responding is to draw attention to the impact of actual or proposed policy interventions on commercialisation and collaboration activities generally and in the Life Sciences sector specifically.

2. Key points

2.1 The UK’s technology transfer sector is well regarded internationally and evidence shows that it has many areas of excellence. We can achieve more but need a supportive funding and tax environment with the economic stability that encourages all businesses to think long-term and take risks to invest in early stage technologies.

2.2 The UK’s life sciences research base is world-leading and provides investment opportunities to a global market.

2.3 Research commercialisation and collaboration professionals have pioneered new business and funding models to initiate and sustain social and economic research impact.

2.4 Sir John Bell’s Life Sciences Industrial Strategy makes important recommendations around public-sector research funding, capacity for translational science, stimulating private investment, and supporting enterprise. It must be implemented in consultation with adjacent initiatives in these areas however.

2.5 Brexit has created additional stresses in research funding and collaboration and has the potential to cause more disruption, through regulatory divergence for example, which will affect the ability of the sector to reach its full potential.

3. Response to Inquiry Questions

Q1. 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?

3.1 Lack of investment in this sector is largely due to the amount of money required coupled with the risk. Taking a new treatment through to approval costs tens of millions of pounds and, for example, for oncology drugs the success rate even for something entering phase 3 clinical trials is less than 40% so the rate of return for investments at earlier stages does not stack up for most investors. This is exacerbated by the long time lines to consider: many investors want exits in 3-5 years which is the average length of a phase 3 trial. This may explain why when investors are willing to engage they are often looking for later stage opportunities.

3.2 We need investors who are more patient and less risk averse. We are just beginning to see these types of investors emerging and the new Life Sciences Strategy acknowledges this in its analysis of the sector (Section B, p31). We refer the Committee to our forthcoming response to the Treasury’s ‘Financing Growth’ report in this context.

3.3 The UK research base is world-leading and does provide models for others to follow. In September a trade delegation from India visited Birmingham’s BioHub to see how its life sciences cluster is helping to translate university research into new medical therapies[1]. This was part of bioConclave 2017 – a gathering of Indian life science business leaders who have come to the UK to explore investment and partnership opportunities since 2015[2]. The event is just one example of how the quality of UK research attracts inward investment and how professional intermediaries are working across the sector to develop new partnerships, finance and business models in response to this.

3.4 More sources of patient, earlier stage capital would also address the issue of taking too long to progress in the research base. The requirement to obtain grant funding means that there are often delays between completion of one piece of work and commencement of the next whilst ‘follow-on’ grant funding is sought and secured. Things are therefore often done in series, where they would be done in parallel in industry. For example, grant funders may not fund formulation of a potential new drug molecule until toxicology is complete because there is “no point trying to formulate a compound that may be toxic when the money could be spent on something else”. In industry toxicology, formulation, stability, scale-up and so on, are done in parallel potentially taking years off development timelines. Funding to speed up some of these translational processes – as recommended in the Life Sciences Industrial Strategy – or to do them in parallel would be helpful.

Q2. Why has the UK underperformed in turning basic research in the life sciences into intellectual property? What needs to be done to address this historic weakness in the UK and grow new companies to commercialise new research and related technologies in the life sciences?

3.5 The UK’s “highly advanced and sophisticated national IP environment” places it on almost a joint footing with the US as the best in the world[3]. There is always room for improvement but indications are strong that current arrangements to exploit IP from UK universities are effective. Many global companies and investors cite the UK as one of the best places in the world to form and scale-up new start-ups. The UKTI (now DIT) Venture Capital Unit was established to increase the funding available for UK entrepreneurs and start-ups, including those spun out of universities, through connecting them with overseas sources of venture capital investment. The Unit has stated that “investors have more confidence in the UK than any other European nation”[4].

3.6 In terms of company creation, UK universities set up twice as many new companies as the US per £m of research funding (Spinouts UK has a database of over 2,000 spin-outs and start-ups from UK universities[5]) and our success should be more celebrated.  The challenges of commercialising early-stage technologies – particularly in the Life Sciences where timescales are long and costs high – is recognised by Innovate UK in its ‘Emerging Technology’ strategy. Public funding is therefore vital to ‘de-risk’ private investment and provide more certainty for emerging companies. It is important that grants are available at the right stage and follow-on from basic research to provide pathways for impact.

3.7 The UK research base, intermediaries and industry are working together in new ways to commercialise research and improve market pull. Many universities put additional funding into the support of commercialisation activities, staff, infrastructure – such as specialist incubators and accelerators[6] - and, increasingly, early stage investment. A major development in the sector is ‘patient capital’ which enables a much longer investment perspective than traditional venture capital, vital for supporting early stage companies[7]. This and the creation of university seed funds demonstrate how universities themselves are responding to shortfalls in financing for commercialisation[8]. This is to the benefit of the life sciences sector in particular where timescales are long and risks very high and may require specialist finance (such as Epidarex Capital).

3.8 We would like to highlight the following initiatives in this context, as they were not mentioned in the Life Sciences Industrial Strategy:

Apollo Therapeutics[9]

Apollo Therapeutics was launched in January 2016 to combine funding for promising early-stage therapeutics from leading UK universities – Cambridge, Imperial and UCL – with industry expertise – AstraZeneca, GlaxoSmithKline and Johnson & Johnson. This was the first time that industry had partnered with university commercialisation offices in this way. In total, the partners contributed to a 6 year £40 million fund with the aim of sharing the risk and accelerate the development of important new treatments, while also reducing the cost. At the time of launch, Dr Iain Thomas, Cambridge Enterprise said: “Efficiently bringing together drug discovery expertise, potential customers, funding and project management, along with rapid decision making and execution through the Apollo Therapeutics Fund is a unique and extraordinarily exciting and valuable proposition for any academic or company that wants to see early stage ground breaking therapeutic technology progress to the clinic for patient benefit and economic return.”

In February 2017, Apollo Therapeutics announced the funding and launch of its first four drug discovery projects.

Lab282[10]

Lab282 is a £13 million university-industry-finance partnership, created to identify and develop new approaches to treating serious diseases. Its aim is to accelerate drug discovery from Oxford University research by providing funding, expertise and industry validation to novel therapeutic concepts at very early stage of development. The programme will support funded projects to a point where they are ready to become spin-outs with the aim of creating 5 spin-outs within 3 years. There are currently seven projects working towards seed-fund stage. Dr Carolyn Porter, Deputy Head of Technology Transfer at Oxford University Innovation commented that: “we are dealing with bold, pioneering research, and we must find bold, pioneering ways to exploit these ideas, and ensure they have a positive impact on society, the economy, and the wider world”.

Q3. What can be done to ensure the UK has the necessary skills and manpower to build a world class life sciences sector, both within the research base and the NHS?

3.9 The UK should continue to invest in its world-leading science base by funding basic ‘curiosity driven’ research as well as through more industry-led programmes. At the same time, universities and their partners must be encouraged and enabled to quickly identify and capitalise on new opportunities, those offered by interdisciplinary research for example. The skills of commercialisation and business development professionals should be recognised for their role in creating new partnerships, identifying funding and supporting cluster growth. Professor Trevor McMillan’s review of technology transfer for HEFCE concluded that the UK’s practice was internationally competitive and should be supported to do more[11].  Through our professional network we share experience and expertise on topics such as Strategic Relationships, or New Venture Creation. We engage with funding bodies, sector groups (e.g. UKSPA) industry and investors to understand market dynamics, input to training, and inform policy. Our training courses are attended by people from outside the university sector and this is increasing as we deliver more bespoke courses: it is an area where we recognise that we could do more, in particular with the NHS, given the resources.

Q6. (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’?

3.10 We welcome the Life Sciences Strategy and its recommendations, many of which are applicable to the wider science commercialisation environment where very early stage funding and tax incentives for investment are key to increasing the company creation and scale-up.  In that respect it is vital not only that the sector specific industrial strategies are coordinated but they are also coordinated with concurrent initiatives in equity investment, enterprise and small business growth.

3.11 We have previously highlighted the risk posed to university collaboration by uneven innovation funding between the devolved nations: the majority of English universities being in receipt of HEIF with alternative funding operating or being discussed in Scotland, Northern Ireland and Wales[12]. As a UK-wide body, UKRI must ensure that there is equality of opportunity for collaborations between universities and their partners across the UK.

3.12 The recommendation that the creation of UKRI to “increase interdisciplinary research, work more effectively with industry and support high-risk science” is fully supported. Joint research-council programmes not only for basic research but also for follow-on funding are vital for break-through innovations. UKRI has the potential to be an important catalyst for bringing together disciplines and partners across the UK research base and to create pathways of funding for social and economic impact.

3.13 We welcome the Strategy’s support for the HARP programmes but note that a ‘golden share’ held by the government in commercial ventures is likely to render it very hard to find investors and so may be limited to organic growth, revenue generating companies if actioned.

3.14 The focus on ‘Patient Capital’ for this sector is welcomed will be informed by the government review in this area. However, the Strategy suggests that early stage start-up capital is largely available in the UK and scale-up is the important gap: feedback from our members is that very early pre-seed and Proof of Concept funding is still thin on the ground and requires constant government and charity intervention to address this step of the market as no investor will invest this early (for reasons mentioned above). Focus on the Charity Research Support Fund is to be welcomed, therefore.

Q7. 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?

3.15 In terms of SME-university collaboration, there are clear issues of supply and demand to consider here which affect the life sciences sector as much as any other: there are 5 million businesses in the UK but under 200,000 academics across all disciplines. Because universities cannot engage with all businesses they tend to focus their activity on organisations which have the best ability to take up the research into useful products and services and/or have the internal capacity to dedicate time to working with an external partner.  These type of companies will be proactive in seeking out collaborative opportunities themselves. This will tend to favour larger organisations with more resources but considerable efforts are being made to reduce actual or perceived barriers to entry for SMEs[13] and it should be noted that annual HEBCI data reflects an ongoing increase in income from this business sector[14].

Q9. How do the devolved administrations and city regions fit into the strategy? Scotland has its own life sciences strategy, how will the two interact?

3.16 The issue of uneven ‘innovation funding’ between the devolved nations is noted above (3.11). This affects some universities more than others, largely depending on their research intensity and ability to attract funding from external collaboration partners. The Strategy needs to be sufficiently flexible that it can support innovation wherever it is found, even where that crosses geographical and administrative boundaries.

Q12. How can collaboration between researchers and the NHS be improved, particularly in light of increased fiscal pressures in the NHS? Will the NHS England research plan help in this regard? How can the ability of the NHS to contribute to the development of and adopting new technology be improved? Responsibility and accountability?

3.17 Dowling Review, 2015, recommended:

“The NHS needs to be considered a key part of innovation frameworks within the UK, becoming an early adopter of emerging drugs and technologies, and facilitating business-university research collaborations.”

In order to engage in research collaborations, most NHS organisations would need to be given more incentives through additional specific funding initiatives. These might include, for example, funding to allow them to collaborate with universities to run early stage trials for academically developed drugs and then to share in the returns when these are subsequently commercialised.

3.18 PraxisUnico/AUIRL has engaged with the NHS R&D Forum to discuss training for its members with the aim of understanding better the university context for collaboration.

Q13. Who should take responsibility for the implementation of the Life Sciences Industrial Strategy and to whom should they be accountable? What should the UK Government’s role be? What should the role of the academic, charitable and business sectors be?

3.19 In terms of implementation, sector stakeholders must be brought together – businesses, academics, intermediaries, public and private funders – to share understanding of what is needed to create more demand for UK commercialisation ideas, greater investment in early stage research, and longer-term commitment to sustain spin-outs and start-ups. This is as true in the Life Sciences sector as any other.

Q15. 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?

3.20 We would support the appointment of a dedicated Life Sciences Minister who understands the needs of the sector. This would also provide a signal that the Government is serious about truly developing the UK Life Sciences sector. If such an appointment is was made then, yes, it should be UK wide.

Q 16. What impact will Brexit have on the Life Sciences sector? Will the strategy help the sector to mitigate the risks and take advantage of the opportunities of Brexit?

3.21 Brexit has created additional stresses in research funding and collaboration (because science thrives on international networks of researchers). Concerns in this area are well documented by UUK and university mission groups such as the Russell Group and University Alliance. Brexit has the potential to cause more disruption which will affect the ability of the sector to reach its full potential. For example, there is the issue of whether the UK will remain an attractive place to carry out clinical trials if our regulations diverge from those prevalent in mainland Europe. 

3.22 Although Brexit may also create new opportunities they are difficult to define currently.  A strong strategy may give industry and investors more confidence of the path forwards but there are still many unknowns around participation in European networks and funding programmes to resolve.

15 September 2017