BIA: Funding and the Future of Biotech




Episode Loading...




PharmaTelevision requires Javascript enabled and Adobe Flash Player to watch our programmes. If you do not have Flash installed, you can download it for free from the Adobe Flash homepage.

Improve your Internet experience and start watching exciting new video content.

Video title: BIA: Funding and the Future of Biotech
Released on: August 25, 2009. © PharmaVentures Ltd
Share/save this page:
Email
Bookmark
Facebook
Twitter
LinkedIn
Follow us:
RSS
Twitter
  • Summary
  • Transcript
  • Participants
  • Company
Dr Fintan Walton talks with Clive Dix, Chairman, of the BioIndustry Association (BIA) at the BIA Leadership Summit in Hertfordshire.

Clive discusses:

• The state of play within the pharma and biotech industry today

• The new biotech market opening in the wake of the IPO market closing

• Importance of business angels for funding

• Government funding of research, and, in particular, the BIA’s role in the Office of Lifescience and the Government’s £150 million Innovation/Cornerstone Fund for the industry in the UK

• The future of the UK Biotech industry
The state of play within the pharma and biotech industry today.
Fintan Walton:
Hello and welcome to PharmaVentures business review here at the BioIndustry Association Leadership Summit here in Hertfordshire in the UK. On this show I have Clive Dix who is the Chairman of theBIA, which is the BioIndustry Association here in the UK. Welcome to the show.
Clive Dix:
Thank you.
Fintan Walton:
Clive Dix, as Chairman of BIA but also with somebody with a lot of experience in the pharmaceutical industry and particularly the biotech industry. How would you describe the state of play for biotech in the UK today?
Clive Dix:
I guess really it's kind of pretty tough and not because of the recession we were heading for a tough period anyway and it's one would be looking, looking at for long time.
Fintan Walton:
And when you describe it is tough you presumably mean at the financial level, is not because of the lack of invention or lack of resource, it's a lack of money?
Clive Dix:
Yeah I think its two fold. its lack of money specifically for very early phase businesses, things have just come out of the inventors lab. But that's the first thing and secondly then when companies have been well established and then because of the recession people have tightened their belts and there is no follow on money to actually develop these companies further.
The new biotech market opening in the wake of the IPO market closing.
Fintan Walton:
But also we have a situation where IPO's themselves have dried up and so the companies themselves are finding or investors are finding it difficult to get access, they are dependent more on acquisitions. So from a biotech perspective here in the UK if Biotech companies have been acquired and we've seen acquisitions by of UK biotech companies by pharmaceutical companies which on one level is a good thing but are we heading here in the UK to basically a depletion of biotech industry?
Clive Dix:
No - not at all. What we're going through is a transition for a change and first point I would like to make is that IPO's have dried up but that's a (indiscernable)thing they have a period of drying up for whatever reasons, sentiment change in the market and things move on and investors go different places and that may have been compounded slightly by a whole series of companies being acquired and in the UK we've been very, very successful. We can name six or seven companies that have been high profile companies that are acquired by big pharma for large amounts of money.
Fintan Walton:
Sure.
Clive Dix:
So the ones that you would expect to be coming through if the window was open at that moment because we are just talking both. And the good thing about the pharma sector buying the companies is that it actually has opened up a new market. So people will say the IPO market is closed, well is this a new market for biotech companies and that will maintain either as bought or taking bigger interest in bigger stakes in smaller companies, that's because the pharma industry is changing and it's innovations got worse over the last 10-years and they're looking at the innovation the biotech sector. So the biotech sector is just going to become a feeder sector for the big pharma or when the window is open it will then burst back on to the scene.
Fintan Walton:
By having lots of biotech companies in Britain is that a good thing?
Clive Dix:
Lots, it depends on how you quantify that. Having enough said is good momentum in the UK is good. So you share experiences you get enough management just moving around, the people with experience moving around different companies that's good and--and that momentum and that bulk of companies is what the US has and therefore it seems to get over its smaller problems, having a few is very, very difficult because the focus is on them, as soon as one fails that's a big junk of the each to failing. So having more is good.
Fintan Walton:
With the biotech industry that is high risk, long term investment. Haven't really investors turned off biotech as you say it's regardless of the recession and the financial crisis of 2009 is that simply the biotech companies are just not palatable to invest in?
Clive Dix:
There is an element of truth in that. The very early stage companies - if you take a company that's come up with some ideas and it started off just out of university out of an academics lab and inventors lab then you are talking particularly if it's a product a medicinal product you are talking maybe 10, 12-years before you'll ever get any product tagged and therefore investors have to stick with that till that point probably to get real, real returns. But what investors have done is they have turned to companies at a later stage. And it's because of that, that we've been talking to the government very seriously about something of fund that bridges that gap between the inventor and where the VC, the Venture Capital companies pick-up which is normally late stage pre clinical up to early stage.
Fintan Walton:
Right.
Clive Dix:
Early clinical.
Importance of business angels for funding.
Fintan Walton:
We'll come back to the proposed [ph] UK the government fund in a moment. But just looking at this sort of general environment, clearly we have an venture capital community here reasonably well developed I mean it's very specialized group of investors obviously. We've also got business angels that play a particular role. So how important is the angel business angel community to investors for investing in biotech companies here in the UK?
Clive Dix:
At the moment yeah it's absolutely vital because very few VC's will fund back at that early stage and I think it's those angels that need help because to get things through that little bit further there needs to be more money coming in at that early stage particularly for going to take what is a huge investment from the UK government into medical research into commercialization because it's just not getting at the moment.
Fintan Walton:
But here you could argue that the government already is funding research and development in the country through the MRC and other funding bodies?
Clive Dix:
Well they are funding research, commercialization of products is development and that's what biotech companies do. They don't necessarily do the research, they take the research, they develop into products and they take into a stage where people recognize as a commercially viable product.
Fintan Walton:
Why should the UK government bailout biotech in the UK?
Clive Dix:
It shouldn't. Absolutely should not bail out biotech in the UK. Companies are already there that are being funded or already floated and are not going to make it they shouldn't make it. If they can't be funded and that shouldn't happen. What the government should do is ensure that the funding environment is right, that the incentives to funds things in the UK are right and the general business environment for biotech companies is right because the whole biotech healthcare sector is now the number one sector in the UK for the economy.
Government funding of research, and in particular, the BIA's role in the Office of Lifescience
Fintan Walton:
Right. So this comes on to what the government has put out into the public domain, part in negotiation with yourselves at the BIA and other pressure groups who have been talking to them. They've just announced that they several months ago they announced they are gonna create this one billion pound fund which was for general technology fund and they've also now just recently I think this week last week announced a Cornerstone 150 million Cornerstone fund. Could you describe what actually is going on here?
Clive Dix:
I will try to and first of all I don't think this has come about solely from pressure groups. The government stated very clearly Golden Brown stated that one of the key plans for the future economy this country has to be knowledge based industries and the healthcare sector ,the Life science industry was, was firmly stated as one of those. So the starting point was he asked what is it we've got to do to ensure that and in doing that we responded so we're responding through the Cooksey report the (indiscernable)review and then from that review one of the key recommendations was to set up the office of Life science so that we spoke to government as one government and government spoke to us as one industry. So the trade associations the BIA the ABPI,diagnostics etc all these associations got together and we've been working with government through one office which is(indiscernable) 's office the office of Life science and they asked the question what do we need to do. We have been away and worked out what the things are we believe are right to make the UK the most competitive country in the world for doing biotech Life science healthcare, research and development and these are the things that are coming out from that process. In particular the investment funds you are talking about the innovation fund or the Cornerstone fund is the start of a process to build a very large fund to do exactly what I talked about early which is ensure that the inventions, the activities that are going on in the UK in medical research get turned into small companies that are producing products that then feed the whole system.
Fintan Walton:
So how does this fund actually work? How is it going to be put together?
Clive Dix:
It's still that's still to be decided and still to be worked on and we are working very, very closely with the government on that. The next key point in this I believe would be the appointment of a fund manager who actively works on the detail but that detail will come about with through collaborations with ourselves as well others.
Fintan Walton:
But is it effectively a joined venture between private, private sector and public?
Clive Dix:
It would be a joint funded.
Fintan Walton:
Right, so now
Clive Dix:
I believe is a fund it's a- so it's looking to make returns and it's looking to encourage investment in early stage companies to ensure that they become successful and produce larger companies that then get funded further.
Fintan Walton:
And do we know anything about the criteria for funding?
Clive Dix:
Not yet.
Fintan Walton:
Does it have to be UK based company?
Clive Dix:
Yes.
Fintan Walton:
Because obviously is using UK the tax payers money.
Clive Dix:
Its for the UK, it's for the UK based, technology based companies across a number of sectors.
Fintan Walton:
And wasn't there a tension in trying to produce this particular fund and there are conflicts within the you what you can and what governments can and cannot do in terms of helping to fund parts of the that industry?
Clive Dix:
That's some of that's some of the details has to be worked out but absolutely these cannot be seen as free money. it is a fund so it will have - it will be equity based and it will be exactly like any other fund.
Fintan Walton:
But there is a possibility now for that it could fall over?
Clive Dix:
Yeah.
Fintan Walton:
Because the US going to accept it?
Clive Dix:
Yeah, the government has been working on this for some time now. They don't know an answer and have not dealt with that issue.
The Government's £150 million Innovation/Cornerstone Fund for the industry in the UK.
Fintan Walton:
Right. So with the 150 million Cornerstone Fund is that how is that going to work in relation to the one billion fund?
Clive Dix:
It's the starting point to show intent. The next thing as I said would be a fund manager and then the private funds will be encouraged to join. The hope is that will build into it a billion pound fund in a relatively short period of time ready to invest over 10-year period.
Fintan Walton:
Right. So this is all is good news obviously having a billion pound fund available obviously it's not just only going to be for biotech. I understand it's going to a broader, a broader remit. So how do we see this, this actually working? do we see if there is already private money in this fund then it will also - with the government money or tax payers money going into the fund they will presumably also co-invest with other venture capital funds?
Clive Dix:
Yeah, and that detail needs to be worked on that I can give you an opinion.
Fintan Walton:
Okay. Sure.
Clive Dix:
I don't know whether this will come about. But if we take for the biotech sector - we take the early stage companies the issues that the current VC's have in funding those is that it's a long time until they get their returns and therefore they are not willing to put huge amounts of money but they do like to get involved and be ready to follow on. So if the criteria is set such that these are the companies that this fund funds then if a VC sees a good opportunity it can go to the fund and say I'll put an ex-amount if you will put the same and it will match it- that's one possibility and that would work really well because VC's in the earlier stages don't like to get together as a (indiscernable) when it's a small technology its just over burdening in terms of management and all the rest. But if you could have say thought it was worth two million to start this company of and it could put a million and another million from this fund which didn't need extra management and all the risk. That would really be very attractive too and they would have started moving their funds further back.
Fintan Walton:
So when we look at the case there is another source of funding which is obviously good news for the biotech industry here in the UK but how do you see the landscapes sorting itself up because as you've already indicated it's more or less like a conveyor belt companies are formed, they develop, they get products to a certain stage, they usually get bought up these days even if they do make it to the public markets they ultimately get bought, we've had examples of that and we have examples here in the UK. So what's going to happen over the next 25-years are we just going to see a continual conveyor belt of small companies emerging coming to a certain stage being doubled up by major pharmaceutical companies and we just have a continuous cycle of biotech companies being formed, is that the environment form?
Clive Dix:
That that's a possibility. I think the large pharmaceutical companies are very much looking to outsource their R&D. They haven't done it quickly but they are looking to do that. So you could imagine a completely new environment with a complete new dynamic which is pharmaceutical companies that basically do sales and marketing in very late stage very expensive development feeding of all of these other small companies that basically can, can compete with the pharmaceutical companies and which want to takes their product and that's a viable model. You could see some companies that start looking to how they can get early revenues to actually remain self sufficient to become sustainable. You can see companies; generic companies are starting to look backwards and do R&D of their own so they might, they might form new pharmaceutical companies which means they might buy biotech. There is whole series of different models that are being created and that's because when you get into a time like this where its tough, these new inventions go about and maybe they are the right ones who knows.
Fintan Walton:
But there, some tax payers would be saying well isn't that really up to the pharmaceutical companies to fund biotech after all they are the ones who ultimately benefit from it so why should a tax payer take risks on a biotech industry when really the pharmaceutical industry should be taking those bets. How would you respond to that?
Clive Dix:
I think its partnership. I do believe that the industry is starting to fund early stage companies. They all have their own corporate venture fund now which has a different mentality to VC fund now than they often did things earlier on. A number of the discussions we've had with government is how could we incentives big pharma to do more of that and some of the proposals coming through that are being worked on will help with that. Certainly environment will be one for encouraging pharma to be in there. But if we look very carefully let's forget it it's not tax payers money we are talking about the UK investing in its own future and that's what the tax payer's money.
Fintan Walton:
With tax payer's money, with tax payer's money?
Clive Dix:
That's what the tax payer wants. It sounds like into freebee, it's not. Tax payers want the future to look right and it wants jobs and it wants wealth creation, it wants all those things. That's what we do with tax payer's money. If it's done properly it's not giving tax payer's money away to anybody. it's actually building for the future. If the future economy is based on tax payers money then then that's good.
Fintan Walton:
But another way of inducing investment in biotechnology is not necessarily use tax payers money but provide tax incentives to those people who invest?
Clive Dix:
That's giving tax payers money away then. That's not raising tax. so it's the same thing. And tax incentives on their own are not good enough. but tax incentives will be part of the package that are things being look at there.
The future of the UK Biotech industry.
Fintan Walton:
And when it comes to when you look at what's happening now in the industry we've talked about how the industry is shaping, there is new money coming in hopefully from the government. What how do you feel personally about, I mean particularly in your role as Chairman of BIA of the future for biotechnology companies here or the biotechnology industry here in the UK?
Clive Dix:
I am very encouraged. I am very encouraged and I believe that as we come out of the recession this industry will be so much stronger because its had to think about itself. Some of the companies that may be not right word right from where they've got to some of the(indiscernable) listed companies may went there too early and they're struggling, they may disappear. But will be stronger for it. The management there would have experienced it they will recycle back in. There are many opportunities that are waiting for funding and I think if we get the funding right they will start coming out. And I my personal belief is in the next two to three-years we will see a number of new startup companies. We will see one or two really good spin outs from big pharma based in the UK because of what the government is doing.
Fintan Walton:
So Clive Dix, thank you very much indeed for coming on the show and telling us all about BIA and the future of the biotech industry here in the UK.
Clive Dix:
It's a pleasure.
Clive Dix
Chairman
Dr Clive Dixis the current Chairman of the BioIndustry Association (BIA) and Non-Executive Chairman of Modern Biosciences plc. Dr Clive Dix has more than 20 years' experience in Lifescience research, with over 15 years in senior pharmaceutical industry positions, and a degree and PhD in Pharmacology. Dr Clive Dix's expertise includes an in depth understanding of all facets of drug discovery and development, a broad knowledge of the science and commercial landscape of a variety of therapeutic areas, and solid experience of the pharmaceutical business and finance community supporting the sector. Dr Clive Dix was previously co-founder and Chief Executive of PowderMed Ltd, a vaccines development company acquired by Pfizer in November 2006. Prior to running PowderMed, Dr Clive Dix was Senior Vice President, Research and Development and a Board member of PowderJect Pharmaceuticals plc until its acquisition by Chiron Vaccines in 2003. Dr Clive Dix began his career in industry at Ciba-Geigy and then GlaxoWellcome, where he left as UK Research Director in 2001.
BioIndustry Association
The BioIndustry Association (BIA) is the trade association for innovative enterprises in the UK 's bioscience sector. Established in 1989, its mission is to ?encourage and promote a thriving, financially sound sector of the UK economy, built upon developments across the biosciences.? The BIA seeks to create economic growth, increase employment opportunities, and expand the skills base.