ACES 2009: the value of Open Innovation

Andrew Lynn of TiGenix/Orthomimetics

The biotech industry was practising Open Innovation long before Harvard Business School assistant professor Henry Chesbrough coined the term in a famous article published by the Sloan Management Review in the Spring of 2003.

Indeed, as one of the pioneers of the sector, UCLA spin-out Amgen realised in the 1980s that it needed partners to get its first recombinant protein product, erythropoietin, to market. Since the landmark deals with Johnson & Johnson and Kirin, Amgen has extended its network to more than 100 collaborations, not only with large companies, but also with academia and start-ups.

It is now turning its sights increasingly to university technology spin-outs, as underlined by sponsorship of a new €5,000 prize for the ACES (Academic Enterprise Awards Europe) winner in the Biotechnology category. The prize was awarded to Imperial College London spin-out Bioceramic Therapeutics during a ceremony on December 10 at the Hotel de Ville, Paris.

At the ceremony, Amgen International Vice President Marc de Garidel discussed the topic of Open Innovation with Andrew Lynn, Chief Business Officer of Tigenix and former CEO of Cambridge University spin-out Orthomimetics, an ACES winner in 2008. Together, they gave the delegates a sense of the importance of Open Innovation from both ends of the research pipeline.

“If you want to develop best in class technologies, you’d better look everywhere,” de Garidel said, “and not just inside your company’s research organisation. History shows that for many companies half of their innovation pipeline comes from outside.”

That is a sea change for most large corporations, which have used prowess in internal R&D as a barrier of entry to competitors. But with the explosion of new ideas, particularly in universities, and an increasing number of spin-outs and start-ups, the value of barriers of entry has to be balanced against other competitive advantages, such as time to market. Companies find their research environment is becoming more porous and they rediscover the value of the abundant new knowledge generated by universities.

As Lynn explained, “Orthomimetics would not be here without Open Innovation.”  The company was formed on the back of a collaboration built around Cambridge University’s expertise in the regeneration of hard tissues such as bone, and MIT’s research in soft tissues, such as tendon and cartilage. At its inception, the company was able to tap the pools of venture capitalist and business angels in both Cambridge, UK and Cambridge, Massachusetts.  

Orthomimetics was recently acquired by the Belgian company TiGenix, a move that was also underpinned by Open Innovation. “It has its roots in a collaboration between the two start-ups to develop a new product,” said Lynn.

For a large company like Amgen, Open Innovation does not mean looking into every new technology. Rather, the company focuses on areas of unmet medical need where it believes it can have the greatest impact. “Choices have to be made, but generally we tend to keep a quite opportunistic approach, whilst looking for true breakthroughs,” said de Garidel. This means it is driven by the possibility of a new treatment for a disease, rather than existing in-house expertise in a specific area.

As examples of what Open Innovation has contributed to Amgen’s pipeline, de Garidel cited biomarkers, monoclonal antibodies and – despite the fact the company built its reputation in protein therapeutics – small molecule drugs.

“Our Open Innovation model is very flexible,” explained de Garidel. “We may have collaborations that are purely on a service base, others that leads to [us] taking a controlling stake, and sometimes, to buying a spin-off if we want to control the technology.”

The company’s venture capital arm, Amgen Ventures, created in 2005 with $100 million under management, is one way it funds and manages these agreements.

Of course, collaboration does not mean that competition is at an end, and in a competitive environment, Open Innovation has to be properly managed. As Andrew Lynn observed, “Orthomimetics found it easier to collaborate with pharmaceutical companies which develop complementary molecules, rather than with medical devices corporations, for which our company appears to be a competitor.”

“Collaboration requires a lot of engagement from both sides,” added de Garidel. “You need to have champions, both in your company and in the partnering institutions. Failures are often explained by a lack of alignment.” Arguments over the sharing of intellectual property often expose such a lack of alignment.

The good news, according to de Garidel, is that changes in European universities are now underpinning collaborations that are of benefit to both sides. “European universities are better structured to deal with open innovation.” They have become more reluctant to conduct research almost free of charge for large national champions, as was often the case in the past. But fast moving players such as Amgen prefer the new paradigm of formal licensing agreements made with tech transfer offices or spin-outs. “The negotiations may be tougher but both partners have better financial and operating control [there]after. Speaking with [a] competent professional at the tech transfer office may avoid a lot of difficulties down the road.”