Food for thought

Last week I attended the Genesis conference (http://www.genesisconference.co.uk) in London. It was an enjoyable event with some good presentations and the usual networking opportunities. The conference has become something of a showcase for the UK biotech scene and, given the current economic situation, the mood was surprisingly upbeat.

Reflecting back on the conference, one of the things that struck me was the domination of the agenda by drug discovery and, to a lesser extent, medical device technologies. Now this is nothing new but, as someone who has spent at least half of his career applying biotech to the food and agriculture sectors, I continue to be both amazed and disappointed by the lack of attention paid by the UK biotech community to matters gastronomic. No doubt our French friends would have something to say on this subject but it seems to me that, in the UK biotech, is synonymous with healthcare and medtech.

Now, there is no doubting the importance for society of addressing healthcare issues and the potential financial rewards for the developers of new products in this sector. However, has no one in the UK biotech community heard about the looming issue of food security, which promises to be just as much of a global threat as any pandemic?

Take the drought that devastated the Australian wheat harvest last year; wheat prices across the globe soared by 130%, while shopping bills in Britain leapt by 15%. This was a mere foretaste of what is likely to come. Over the next 40 years Britain's population will rise from 60 to 75 million while the world's will leap from 6.8 to 9 billion. Feeding all these people will stretch human ingenuity to its limit.

Professor Mike Bevan of the John Innes Centre in Norwich has said "We are going to have to produce as much food in the next 50 years as was produced over the past 5,000 years. Nothing less will do." Because of climate change, the farmers of tomorrow will not only have to improve yields using less fertiliser and less water, they will also have to be increasingly wary of new agricultural pests and diseases as global temperatures rise and more and more devastating varieties of plant viruses and fungal pathogens spread around the globe. You can find more information on these issues at www.foodsecurity.ac.uk.

Europe has been something of a no go area for biotech crops over the last decade but the rest of the world has moved on with 125 million hectares of biotech crops planted in 2008. There is now an urgent need to develop novel ways of growing food crops with fewer chemicals, in more hostile environments and with potentially severe water restrictions. This is a challenge that the UK, and the rest of Europe, cannot afford to ignore; we must start to channel some of the ingenuity previously applied to, for example, the development of therapeutic antibodies, towards the production of crops and agricultural systems that can cope with all that climate change will bring to our farming communities.

New approaches to stimulating the productivity of pharmaceutical R&D

I’m sure we all remember the excitement generated by the sequencing of the human genome in the late 1990’s culminating in publication of the essentially complete genome in April 2003. This was accompanied by a lot of hype about the impact on pharmaceutical R&D productivity and a concomitant surge in investment into the sector.

Looking back as the end of the decade draws near it is clear that the much anticipated impact on pharmaceutical R&D has not materialised. The rates of new product approvals has declined whilst investment in R&D has continued to climb; a recent analysis of the Pharmaprojects database revealed that between 2000 and 2008, 1,941 drugs in development were discontinued (Biancardi, A. & Green, S. Scrip 100, S33–S36, 2008).

One of the principal factors contributing to the problem is the complexity of the biology underlying specific diseases. This, coupled with the recent explosion in large-scale biological data, is leading to a realisation that no individual organization has the resources to maximize the potential of molecular data to inform drug development.

It is interesting to observe the emergence of novel models for pre-competitive collaboration to help tackle the challenges of innovative drug development (see Hughes, B. Nature Reviews Drug Discovery 8, 344-345, 2009). Some of these models seek to leverage information in an open-access way (freely available with no intellectual property (IP) restrictions). Examples include:
· Sage (http://sagebase.org): using data from Merck and seed funding from private sources
· Two initiatives created and spun out by Lilly: InnoCentive (http://www.innocentive.com) and Collaborative Drug Discovery (http://www.collaborativedrug.com), harnessing the collective talent accessible through the Internet
Several other drug development challenges, such as biomarker identification and validation, are increasingly being addressed at a pre-competitive level, often through public–private partnerships. Examples include:
· The Biomarkers Consortium (http://www.biomarkersconsortium.org)
· Critical Path Institute consortia (http://www.c-path.org/consortia.cfm)
· The Innovative Medicines Initiative (http://imi.europa.eu/index_en.html)

The issue of who owns the IP arising from these partnerships has provoked much debate. The research tools that emerge from the IMI will be made available to other companies and academic groups for research purposes at a reasonable cost or free of charge, although the IP rights will belong to members of each consortium.

I am Chairman of Psynova Neurotech (www.psynova.com), which is a participant in one of the first projects funded by the Innovative Medicines Initiative. The project is just getting off the ground but our experience to date suggests that public–private partnerships have much to offer the pharmaceutical industry. A more flexible attitude to the creation and exploitation of IP appears to be the order of the day.

New models for innovation in the biotech industry

In an earlier blog I discussed the call by Sir Chris Evans and others for the British government to provide a £1 billion bail out for the UK biotech industry. The call was prompted by fears that the UK biotech industry will collapse as hundreds of companies go to the wall due to a lack of venture capital funding. I would like now to discuss alternative models for innovation in the biotech industry.

The traditional UK biotech innovation model has been for an invention to be patented by an academic researcher, licensed by that researcher’s university technology transfer office to a biotech company that then develops a technology or product through to a demonstration of proof of concept (creating further intellectual property along the way) before licensing the accumulated IP package to a large company that subsequently markets the product, resulting in royalties flowing back to the biotech company and the university.

This is a grossly simplified summary and there are of course many variations on this theme. However, a key aspect of this model is that biotech companies play a key role in taking an early stage opportunity through to a point where the big companies are willing to get involved.

The major problem with this model is that, currently, funding for biotech companies is in short supply as investors are reluctant to part with their cash as they seek to ride out the financial storms raging across the global economy. In late February, Intercytex (a UK regenerative medicine business) announced that it was putting itself up for sale after its lead product failed in a clinical trial (http://www.reuters.com/article/rbssPharmaceuticals%20-%20Diversified/idUSLN16839220090223). At the same time Summit, another UK biotech, announced that it had failed to secure a sufficient level of funding to continue its current business strategy and may be forced to sell itself or part of its business (http://www.scripnews.com/scripnews/business/Summits-woes-continue-as-cash-resources-dry-up-115995?autnID=/contentstore/scripnews/codex/8b0bdf26-ff6a-11dd-bc01-51f4f230b844.xml).

Are there alternative innovation models available? Well, yes there are some. For example, James Lyons-Weiler of the University of Pittsburgh has proposed the development of an IP Share Market through which funders could invest in IP rather than in companies (http://www.the-scientist.com/2009/02/1/28/1/). He believes that direct investment in market-valued IP could dramatically increase the rate of development and technology transfer.
Before anyone shouts that companies would never pool their IP, let’s not forget the recent announcement by Andrew Witty, the CEO of GlaxoSmithKline (GSK) that they intend to put IP that is relevant to finding drugs for neglected diseases into a "patent pool", so they can be explored by other researchers (http://www.guardian.co.uk/business/2009/feb/13/glaxo-smith-kline-cheap-medicine).

In a similar vein, it is worth examining some Israeli initiatives to deal with the funding crisis faced by its biotech industry (http://www.genengnews.com/articles/chitem.aspx?aid=2759). Some of these initiatives are based on funding projects rather than businesses.

Giza, an Israeli VC fund, introduced a pre-seed and seed-stage investment plan called the Ofek Program, a milestone-based plan in which the firm will invest no more than $500,000 in seed funding for early-stage projects being developed into commercial ventures in an incubator setting. As a project matures, if it meets established milestones, then Giza will invest additional funds. If it does not, then Giza can cut its losses. The Ofek Program also includes early investment-round funding to bring experienced entrepreneurs and managers in-house.

A biotech incubator, BioLine Innovations Jerusalem, owned by BioLineRx (http://www.biolinerx.com/), an Israeli clinical drug development company, received a special $23 million grant from the Israeli Ministry of Trade and Industry. Unlike a traditional incubator, in which a corporate structure is built around a drug or technology, BioLineRx takes a different approach and in-licenses projects that are developed as independent programs under a single corporate structure. Successful projects can be developed further by BioLineRx or licensed out. If a project is successful, the incubator pays the government back for that project; if it is not, BioLine shuts it down.

So, there are alternative innovation models out there and, in my view, the UK biotech sector (including government, industry, investors and the research community) needs to become much more creative in exploring new ways of commercialising innovative technology.

Should the government bail out biotech?

The biotechnology industry has joined the queue of industries pleading their “special case” for a government bail out in the current financial climate. In this article I will examine the case for the biotech industry following the examples of the banking sector and, latterly, of manufacturing industries such as the car makers.

Here in the UK, a group of luminaries led by Sir Chris Evans and Lord Drayson are making the case for the government to provide £1 billion of taxpayers’ money to a group of VC funds that would then invest the money to “save” the UK biotech industry by driving the consolidation of the myriad of small biotech firms in the UK (http://www.guardian.co.uk/business/2009/feb/15/biotech-excalibur-evans).

Even in the US there have been calls for the government to provide $10-25 billion annually to venture capital firms for investment in the biotech sector (see an article by Leslie Glick in the February 1st, 2009 issue of Genetic Engineering & Biotechnology News http://www.genengnews.com/articles/chitem.aspx?aid=2760). As ever, anything that the UK may be considering pales into insignificance when compared to the US!

Those of us old enough to remember what happened in the nineties when the German government attempted to promote the development of a national biotech industry by providing matching funding to encourage venture capital firms to invest in biotech start ups – lots of new companies created only for most of them to collapse a few years later when the government money ran out – might be a little wary of the current calls for government support. Perhaps surprisingly, there seems to have been little debate within the UK biotech community about the merits of the proposals put forward by Sir Chris Evans and his colleagues. More importantly, I’m not aware of any attempts to engage with the UK taxpayers to ask if they think this would be a good use of their money!

The only note of dissent from within the UK biotech community appears to have come from William Bains in a typically trenchant analysis published in the February 23rd, 2009 issue of Chemistry & Industry (http://www.chemind.org/CI/index.jsp) . William argues that the problems faced by the European biotech industry actually have their origin in the business model adopted by European venture capital firms. He concludes that the UK government should not be bailing out a group of investors that have failed the biotech industry and that, instead, it is time to find other ways of restoring creativity and entrepreneurship to the industry.

I certainly agree that we need to find alternative business models for the European biotech industry rather than simply pouring “good” taxpayers’ money after “bad”. This is a subject that I plan to return to in another blog.