Sponsored byUniversity of Manchester Spotlight 10 July 2020 Testing times Biotech has a bright future in the UK but there are still challenges ahead, says Zuzanna Brzosko, chief executive of Sixfold Bioscience DANIEL ROLAND/AFP via Getty Images Sign UpGet the New Statesman's Morning Call email. Sign-up Since the start of the unprecedented global Covid-19 pandemic and countrywide lockdowns, biotechnology has been at the centre of investor, political and wider public attention. Given its importance in the fight against the coronavirus and strong long-term fundamentals, investors and government continue to back the sector. However, in the context of the pandemic and political uncertainty, even our relatively well-capitalised industry may need additional support to prepare for the rocky road ahead and ensure it retains its leading position. The UK biotechnology sector is larger and more vibrant than ever, with the number of research and development-intense companies soaring by 65 per cent between 2016 and 2019. The UK industry has a leading position in Europe, accounting for over a quarter of the continent’s total venture capital funding. Built on the UK’s unique assets – academic excellence; strong skills base; the largest single payer health system; and exemplary regulatory and ethical standards – the sector has been accelerating, thanks in no small part to the increasing support from the government to nurture biotechnology innovation. Covid-19 has thrown the sector into sharp focus, with unparalleled pace of research and amount of funding directed at developing testing, vaccines and therapeutic approaches to combat the pandemic. Already back in March, a small Southampton-based company, Synairgen, announced that it received an expedited regulatory approval to conduct a Phase II clinical trial of its anti-Covid-19 drug. This is testament to the speed at which our ecosystem can move by connecting private and public stakeholders. The speed of funding decisions is also truly extraordinary for an industry that typically relies on stringent, but slow, peer-review processes. Whether this strategy proves successful, maintains high quality and, ultimately, leads to improved outcomes for patients, remains to be seen. Coronavirus research has further highlighted the strength of the UK’s biotech position internationally. Five out of the eight recently announced EU coronavirus innovation projects, worth €117m, have a UK partner, and two academic groups from Imperial College London and Oxford University are spearheading the research efforts for a vaccine, supported by the industry-led vaccine manufacturing group and a partnership with AstraZeneca. Private biotech investment and fundraising has so far largely shrugged off the global pandemic. Data published by the UK BioIndustry Association (BIA) reveal that the sector raised a total of £894m in the first half of 2020, surpassing the £831m raised in the same period in 2018, a record-breaking year. Pharmaceutical companies also continue to pay to access biotech innovations. For example, Eli Lilly & Co, entered into a licensing and collaboration deal worth $830m with Oxford-based Sitryx. Meanwhile, certain UK biotechnology shares have provided some of the better returns in the market over the last few months. But just six well-established companies contributed 93 per cent of venture capital financing in March to May 2020, signalling early-stage biotech companies may be taking the hit, with deals abandoned or postponed by investors. The government’s £500m Future Fund can help these ventures that do not qualify for emergency bank loans due to not being profitable. The government also showed they were prepared to listen, with some of the strict eligibility criteria loosened following an initiative from the 36 CEOs of top UK start-ups. Many biotechs have not been able to adjust to remote working. Research and development productivity has suffered, and the suspension of academic research, which often underpins biotech output, has been costly to the universities and biotechs alike. Not as costly as the disruption of clinical trials though. Over 1,400 trials were stopped because of Covid-19 since December 2019, including 200 cancer trials suspended from March to April alone. Valuable research, including clinical progress in life-threatening diseases that affect millions of patients, has been halted. It is important to ensure that the UK research ecosystem is back up and running as quickly as possible. Looking beyond, the global recession that economists are predicting combined with the aftershocks of Brexit could mean a much longer-lasting disruption to the sector. A generous £1.25bn government support package for innovative firms has been welcomed by the industry and hopes are high that the sector has government backing also in the longer-term, with the updated Life Sciences Industrial Strategy confirming commitment to boost spending on R&D to 2.4 percent of GDP by 2027. To date, there have been multiple well-designed and executed initiatives that have contributed to the sector’s growth and functioning. To name a few, the R&D tax credits encourage companies to invest in innovation; the Patent box incentivises companies to keep and commercialise intellectual property in the UK; and the recently re-instated Biomedical Catalyst is a tried and tested funding scheme, shown to leverage up to £5 of private investment for every £1 of public money and increase employment. While there is a lot to be optimistic about, including our strengths in genomics and the cell and gene therapy space, there are areas for improvement. Academic research and intellectual property are critical to the biomedical sector, with transfer technology offices (TTOs) playing an important role in connecting these two worlds. Unfortunately, the UK’s TTOs are frequently perceived as barriers. We need processes that identify the best research in a timely and investable format, aligning incentives with those of the industry and placing higher value on the long-term benefits over short-term gains. Innovation must be taken forward by skilled management teams but the UK often struggles to build and retain sufficient commercial biotech talent. Both intellectual property and talent are mobile and facilitating their movement could be hugely beneficial to the sector. Top talent often follows the money to the US, in part because late stage funding remains relatively shallow in the UK. The London markets are also less favoured than New York’s NASDAQ for biotech IPOs. The constrained investment sometimes results in the premature exit of promising technology to global pharma, limiting the impact of our sector on the UK’s economy. So we have a thriving ecosystem of small biotechs with good representation from large cap pharma but few strong mid cap companies. It should be our ambition to create an environment in the UK, where successful biotech companies are not only founded but also grown and sustained. › Growing strong Subscribe For more great writing from our award-winning journalists subscribe for just £1 per month!