Scientists venture into capitalists' terrain

February 20, 1998

Manchester University biologists have raised Pounds 20 million and formed a company to exploit their research. Kam Patel reports

Within the next three months entrepreneurial biologists at Manchester University will have finalised a Pounds 20 million seed fund for their research. And within a year the scientists hope to have spun out four biotechnology firms.

That is remarkable enough, but even more impressive is the fact that the funding and the promise of commercial ventures has been made possible on the back of a 'hot-house' for exploitable research which has not even been completed yet.

Called the Manchester Biosciences Incubator (MBI), it is the brainchild of Mark Ferguson of the university's school of biological sciences. The creation of such incubators nationally is one of the recommendations of the health and life sciences Technology Foresight panel, which Professor Ferguson chaired. At present, the Manchester incubator is the only one close to formally opening its doors for business. But other universities, including Edinburgh, Cambridge, York, Oxford and Dundee, are keen to develop similar initiatives. The broad aim of the incubator scheme is to encourage greater interaction between academic research and industry to develop and exploit promising research. The approach is widely regarded as being particularly suitable for the fast-moving field of biotechnology in which British researchers are among the world leaders.

MBI, which last year formed itself into a company, is building a Pounds 12 million state-of-the art centre to house the incubator. Funds have been made available by the European Regional Development Fund, the university itself and private sources. When completed in December it will cover 7,000 sq metres and boast 20 high-specification laboratories, each home to 20 researchers, to give a total MBI workforce of 400. The building will be linked to the university's Stopford Building, home to the school of biological sciences and the medical school.

For Professor Ferguson, MBI's chairman, one of the big selling points of the incubator will be its close proximity to these schools with the promise of interaction. To help oil the wheels, the restaurant will sit at the junction to encourage the exchange of ideas between researchers at the incubator and the two schools. Ferguson says: "It will be a fantastic, brilliant building. It has been very carefully engineered to ensure it is flexible and expandable. The pace of developments in biotechnology means we cannot predict what we will be working on even over the short term and the building has to be able to change with the nature of the work."

MBI engineers and the incubator architects Fairhurst toured examples in the United States to have a look at best practice in laboratory design and construction. Two laboratories - "virtual incubators" - have already been built to test the design. "There is real work going on in them so we can isolate any design or layout problems before the rest of the laboratories are built," says Ferguson.

Some sections of the incubator will be available for renting by firms, further encouraging an academic-industrial climate at the facility. But this space will only be made available to firms for five years, as Ferguson expects to expand his team.

The incubator researchers may be awaiting the completion of their new home but they are not hanging around. They already have a portfolio of 30 research projects which they are pushing ahead with in the laboratories of the school of biological sciences. As Ferguson says: "Nobody in their right mind would build a Pounds 12 million facility and then wait two or three years before having a decent folio of research projects to be getting on with." As far as he is concerned, the researchers will be at work the day they move into the incubator which is scheduled for completion in December.

Projects include the development of novel collagen-based biomaterials which could find application in the repair of chronic skin wounds, bone and cartilage lesions. MBI's analysis of the market potential of these materials found that in the US 70 per cent of chronic wounds are skin related, with 3-4 million cases being reported a year. The demand to reduce the cost of treating these lesions, which can range from $1,250 to $60,000, is immense. And the collective US market for products targeted at fracture repair and reconstruction of damaged joints, including hip and knee replacement, where the materials could also find use, is estimated at over $2 billion for 1996.

Another MBI research programme is looking at novel treatments for movement disorders such as Parkinson's disease, for which there is no cure. Existing treatments for Parkinson's rely on L-DOPA, a neurotransmitter, but there can be severe side effects, with other movement disorders, which can eventually become as debilitating as the underlying disease. MBI is taking a two-pronged approach to the problem by looking to the development of treatments that do not rely on L-DOPA as well as those that can mitigate the side effects of L-DOPA. According to the American National Parkinson's Foundation, each affected patient spends an average of $2,500 a year on medications, and the cost to the US is estimated to exceed $5.6 billion annually, an indication of the market potential for any successful developments by MBI on this front.

For commercial reasons, Ferguson is unable to indicate which of the projects under way will form the basis for the four companies MBI hopes to launch within the next year. But the prospect of their launch is a further indication of the promise Ferguson believes biotechnology holds for the future, not only for society but as a powerful engine for wealth creation. He says: "We have set up MBI because in the biological sciences there is now a very fast pace of discovery. And many of these breakthroughs can have commercial potential."

But MBI is also intended to address the frustration Ferguson feels at the lack of funding for taking promising developments to the market, from both the public and private sectors: "What we have done is grasped the problem and set in train an initiative which provides excellent facilities, excellent advice and a seed fund for taking forward projects." Project ideas will be considered by the incubator from researchers anywhere in the world. Industrial interest in enterprise is already high, with big-name pharmaceutical and biotechnology firms. Firms considering collaborative work with the incubator team include possible merger partners Glaxo Wellcome and SmithKline Beecham; Japan's Sankyo and Takeda; and the US-based Gen.

Ferguson has set demanding targets for the incubator: "Some projects will work and other will not. My view is that if 50 per cent of the projects do not fail in the first year we will not be doing our job properly; we want a very fast, efficient throughput of projects. The team is not going to be afraid of taking risks and there will be no stigma attached to failure of projects. We are confident that those projects that do succeed in the incubator will be tremendously successful in the market place."

With those successful projects, MBI will consider either forging an alliance with a major drugs firm or spinning off a company to take the research to market. One major benefit of the incubator at this stage will be that much of the crucial business considerations will also have been finalised. For a spin-off company a management team will be put together and business plans developed within MBI at an early stage: "It is all about increasing the likelihood of success. We will have sorted out internally much earlier a lot of the problems usually experienced at this stage," says Ferguson.

The Pounds 20 million seed fund for research which he hopes to finalise soon is being provided by investors in MBI including venture capital firms, banks and pension firms. In return the investors will get a percentage of equity in each company MBI spins off over five years. Ferguson is determined not to disappoint them: "We are after action. A million people can write papers and reports but what we about is making things happen."

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