One-third of publicly owned UK biotechs have less than six months’ money left in the bank, and just 0.2 percent of the London Stock Exchange is now made up of biotech companies. “A new approach to funding is needed to fill the gaps left by investors,” claims Aisling Burnand, chief executive of the BioIndustry Association.
“We are faced with a very different world than we were a few years ago,” says Bioscience Innovation and Growth Team chairman Sir David Cooksey. The BIGT just released Bioscience 2015, an industry report designed to map out the market for the next six years.
First released in 2003, the report had been written to look forward 12 years and forecast where industry would be. In this revised and refined report BIGT has have lowered its sights.
The main problem, Cooksey claimed, is that investors simply do not see enough reward to justify the risk in putting their money into the sector. “There are hurdles in the way such as NICE and the EU clinical trials directive, which has been more stringently applied in the UK than in other countries,” he says. “We have to change the balance.”
This drying up of finance for biotechs is a real problem. “Biotech companies have not given good enough returns to investors to make them want to come back. Private sector angels, venture capitalists, and public markets have all turned away. We need to make it more attractive, and then I have no doubt that as the extra funding is rolled out we will get the situation where there is more participation in terms of the public sector.”
However, Cooksey does not believe that a large investment by government is the right way ahead, in contrast to the demands made by Sir Chris Evans and a group of his fellow venture capitalists at the end of last year. “We’ve not said, ‘Let’s have $1 billion in [government] funding,’” he claims. “If you look at history, governments putting a lot of money into technology development with civil servants picking the winners has not had much success.” Rather, they are looking for regulatory help and enhancements to the existing R&D tax credit scheme to encourage pharma companies to invest in biotech.
He believes that if Big Pharma were given more confidence in the biotech sector and had a more collaborative involvement at an earlier stage, it should give investors more confidence, too. “We are looking for real support from government to put a regulatory environment in place that will be effective in the longer term,” he adds. “We need to look at how to change the drug development pathway, use modern techniques to make it cheaper, faster and safer—it’s currently unnecessarily expensive. We are in danger of it no longer being worth a company’s while [to get into drug discovery] as they will never get to be able to sell a product at the price they need and which is also acceptable [to the payers].”
However, he says, this cannot be done by the UK on its own—it will have to involve the EU and the FDA, too. “Changes in the global regulatory system will take time and effort,” says serial entrepreneur and former BIA chairman Simon Best. “In the past four or five years, the sector has fallen out of favour. If we can do more work using modern tools such as genetics and genomics, and run smaller, better focused trials, it will be a reduced ask for investors.”
There is also the suggestion of allowing patients to receive drugs for life-threatening diseases after Phase II trials on a conditional licensing basis. “Hopefully safety issues would be flagged up more quickly, and the poor uptake of innovative drugs could be addressed,” Best said. “We want to see more pivotal trials carried out in the EU, maybe allowing conditional licenses while still doing Phase III trials in the US. This would allow us to address safety issues much earlier, and identify which patient populations could most benefit—or would most likely to have problems. I’m not convinced that post-marketing surveillance is the way ahead.