Where's the Money Coming From?
According to Prof. Evans, U.K. biotechs must find buyers for their technology and not look to the city, as there is a lack of enthusiasm now for spending time understanding what makes a good biotech prospect.
“Specialist biotech fund managers are on thin ground in the U.K.,” Kieran Murphy, CEO of Whatman, commented. “This is because for many fund managers, the U.K. biotech industry is too small in terms of market cap for them to invest their time getting to know it intimately.”
Prof. Evans noted that, “The U.K. is not like the U.S. where investors will spend their way out of a crisis. I have seen good U.K. biotechs value their technology at 40 percent less than similar U.S. companies; it means that U.K. biotechs have to keep taking their eye off the ball to go, cap in hand, to raise money.”
“Most big pharmas still have dry pipelines,” Prof. Evans continued. “With around 30 percent of the drugs on the market having come from biotechs and costing up to 50 percent less to develop, many big pharmas are still willing to pay for good technology.” Prof. Evans cited Piramed Pharma the Slough-based biotech acquired by Roche in April for $185 million, as an example of big pharma’s increasing appetite for all things biotech.
Ian Kent, chairman of Argenta Discovery and formerly chairman of Piramed, added, “Piramed would not be valued by the public markets at anything like this, but PI3-kinase is an area of research that is interesting to big pharma at this time.”
Two Cambridge-based biotechs that are thriving after being purchased by big pharma are Cambridge Antibody Technology (CAT), now MedImmune and part of Astra Zeneca, and Domantis, part of GlaxoSmithKline.
Bill Bertrand, svp, legal affairs, general counsel, and corporate compliance officer at MedImmune, was positive about its future in the U.K. “We have 400 people at our two sites and we plan to recruit another 75 in Cambridge this year to allow us to move our U.K. antibody pipeline forward. Our focus at MedImmune is to produce 25 percent of AZ’s drugs.”
“AZ’s original intention was to keep CAT as a separate entity developing therapeutic antibodies,” according to Chambré, ex-CEO of CAT. “When it bought MedImmune, however, AZ changed its mind as it could see the synergies between the two companies and then put them together. There is no doubt that CAT had a special top team and a combination of exceptional people and science. The leadership team at the time of the acquisition has now left, and so some energy within MedImmune in Cambridge may have dissipated. This could benefit the U.K., however, as these people are going on to repeat their successes at CAT, in other U.K. companies.”
“Many smaller biotechs that have gone public in the U.K. are struggling, mainly with adverse investor sentiment toward the sector as a whole,” Richards added. “In the current climate it looks better for all concerned to keep these companies private and set up trade sales to increasingly hungry pharma companies.”
“The fundamental ideas and science are good in a lot of U.K. biotechs so they need to out-license as much as possible to raise money, and if they can’t out-license, then they should be ruthless and dump the project as it is probably worthless,” Prof. Evans concluded.