Oxford biotech deals highlight stature of UK university spinouts
by Andrew Ward, Pharmaceuticals Correspondent, The Financial Times
A trio of biotech companies based on science from the University of Oxford have raised almost £37m in a record round of fundraising for UK academic spinouts.
The companies — OxStem, EvOx and Vaccitech — all received money from Oxford Sciences Innovation, a £300m fund set up last year with backing from several high-profile City investors.
The burst of deals highlights the growing supply of “patient capital being ploughed into UK academic science as investors aim to improve the country’s patchy record of taking innovation from university laboratories to the marketplace.
“We are seeing more long-term investment in building scalable businesses which is something the UK has found difficult in the past,” said Adam Stoten, head of technology transfer at Isis Innovation, which is responsible for commercialising intellectual property from Oxford.
The £16.9m raised by OxStem, a specialist in regenerative medicines for age-related diseases, is the largest financing on record for a company newly spun-out from a UK university, according to Isis.
As well as Oxford Sciences Innovation, other investors in OxStem included Human Longevity, the Californian company founded by Craig Venter, one of the pioneers behind the decoding of the human genome.
Also taking part was Robert Duggan, the US venture capitalist who made a fortune selling Pharmacyclics, the US biotech company he ran, to AbbVie for $21bn last year.
Meanwhile, EvOx and Vaccitech, drug and vaccine developers respectively, each raised £10m from Oxford Sciences Innovation, whose backers included Invesco, Lansdowne Partners and Woodford Investment Management.
Oxford has so far spun-out nine companies this year — including those announced on Tuesday — compared with 11 in the whole of last year and eight in 2014.
Dr Stoten said the positive trend reflected the increasing availability of investment as well as the strength of science. “Putting £300m on the doorstep is proving to be a tremendous catalyst,” he said, referring to Oxford Sciences Innovation. “It is the most exciting time in Oxford’s history in terms of translational medicine.”
Other leading UK universities have also gained access to similar pots of money. The Oxford biotech deals highlight stature of UK university spinouts — £50m UCL Technology Fund was set up in January to invest in IP from University College London. In the same month, the £40m Apollo Therapeutics Fund was created in collaboration with Cambridge, Imperial College London and UCL.
These have joined others such as Imperial Innovations, IP Group and Cambridge Innovation Capital which were already active on UK campuses.
The surge of finance reflects growing interest from investors, industry and policymakers in unlocking IP from universities and helps the resulting spinout companies clear the “valley of death” in which many fail due to lack of funds.
AstraZeneca, GlaxoSmithKline and Johnson & Johnson, three of the world’s largest pharmaceuticals groups, are among the investors behind the Apollo fund, for example, as they scour academia for the next blockbuster drugs.
The UK has five of the world’s top 10 medical research universities, according to Times Higher Education, and Oxford has been number one for the past five years.
However, Britain has struggled to translate this strength into commercial success. Examples of squandered potential include Humira, the rheumatoid arthritis drug which had its origins in research by the UK Medical Research Council but was commercialised in the US. It is now the world’s best-selling medicine with annual sales for AbbVie of $13bn.
When promising spinouts emerge they often sell out to foreign buyers before reaching their full potential — leaving the UK without any large biotech companies on the scale of US groups such as Amgen, Biogen and Gilead.
Hopes for the future have been raised by a new generation of young UK life science companies, including Oxford spinouts Immunocore and Oxford Nanopore which have attracted hundreds of millions of dollars of investment over the past two years.
But Dr Stoten said it took those companies 10 years to get to that point; he hopes the improving financing landscape will allow OxStem, EvOx and Vaccitech to move faster.
“We can grow these businesses more quickly by allowing people to focus on developing products rather than lurching from one fundraising round to the next,” he said.
EvOx believes it has come up with a new way of delivering medicines to hard-to-reach parts of the body. Its technology aims to hitch a ride on tiny particles called exosomes which the body uses to transport molecules between cells. Matthew Wood, professor of neuroscience at Oxford, who has led development together with colleagues at Karolinska Institutet in Stockholm, says exosomes could provide a way to clear the “blood-brain barrier” which prevents 98 per cent of current drugs from reaching the brain. “Getting drugs into the brain is one of the major roadblocks which stops us treating a huge number of diseases including Alzheimer’s and many cancers,” said Professor Wood.
Vaccitech’s lead product is a “universal” flu vaccine which would work againstall varieties of the virus. This would eliminate the need for a new vaccine each winter tailored to the latest strain — a constantly moving target which often results in patchy efficacy. “We’ve targeted two proteins inside the virus which do not change, even as the virus mutates the proteins on its surface,” explains Adrian Hill, director of the Jenner Institute at Oxford, which has led development. “This means the vaccine should work against all human, avian and swine influenza strains.” Early trial results have been positive. Vaccitech is also working on vaccines to fight cancer by turning the immune system against the disease.
OxStem is developing regenerative medicines for age-related diseases such as dementia, heart failure and macular degeneration — the leading cause of blindness in the developed world. But whereas other regenerative therapies involve the creation of new “designer” cells to repair damaged tissue or eliminate disease, OxStem believes it can develop drugs that reprogramme the body’s existing cells to do the same job. “We’re activating the body’s natural repair system,” says Michael Stein, chief executive, arguing that injectable stem cell therapies will be too expensive and unstable for wide uptake. OxStem marks a sixth spinout for its co-founder Steve Davies, Oxford professor of chemistry.
This Article first appeared in The Financial Times, 11th May 2016.
© The Financial Times Ltd.