UK’s Wellcome Trust to fund tech transfer projects in mainland Europe

Europe’s largest medical research charity, the Wellcome Trust, is to expand its technology transfer activities beyond the UK, with plans for mainland Europe to access £55 million in translation funding. The plans were revealed at a meeting with Scandinavian researchers in Stockholm organised with Science|Business as part of the ACES academic entrepreneurship awards.

The Trust, which has an active endowment of about £13 billion, will grant two- to three-year translation awards to bridge the funding gap from early-stage technologies to the point where they are derisked and taken up for development by the market.

Evidence from the World Economic Forum meeting in 2008 backs up the Wellcome Trust own analysis that it is on the right track by branching outside the UK to fund translational research in health and medicine. At the Forum there was a progress report on how European governments were doing at achieving the goal to become knowledge-based economies set by the Lisbon Agenda in 2000.

“One of the interesting things is the top-ranking countries in terms of developing an innovation and R&D environment are Sweden, Denmark, Finland, and the Netherlands,” said Richard Seabrook, Head of Business Development in the Wellcome Trust’s Technology Transfer Division. “It’s important for us to be operating in the most appropriate places.” He added that the other countries need to pull up their socks and catch up.

 “We want to see more activity in Europe in the translational part of the Trust,” said Seabrook. He said translational projects are those in which the basic hypothesis-driven science has been achieved and that are now going through that difficult transition to early-stage product development so they can be attractive to a downstream commercial partner.

“At the end of our funding, the idea will be sufficiently developed, the risk will be reduced and the value will be added to make it attractive for a licence deal, for a start-up situation, or if it’s an orphan or tropical disease drug for it to be ready for adoption by a public–private partnership or non-governmental organisation,” he said. “The key thing is that we don’t subsidise the shareholder, and we have particular methods by which we fund companies.”

News of the plan to become active in mainland Europe coincided with the award  of the first such funding for a US company. Achaogen of San Francisco has received £4.1 million from the Trust’s Seeding Drug Discovery Initiative to advance development of two antibiotics.

At the same time, Professor Steven Bloom of Imperial College London, who received £2.3 million from the Trust in January 2007 to advance development of an anti-obesity treatment, saw Thiakis Ltd, the company he founded to commercialise his previous research, sold to Wyeth Pharmaceuticals in a deal worth a potential $150 million.

Funding streams

Wellcome is currently UK-centric, funding the most biomedical research in the UK. Seabrook said the Trust intends to spend £4 billion on R&D over the next four years. That includes cancer projects—which Wellcome traditionally has shied away from—in both translational and basic science.

Currently, of the Wellcome Trust’s R&D funding, around £50 million a year is devoted to translational research. Of that, 80 percent is disbursed within the UK, and 20 percent overseas including infectious diseases projects in Singapore and antibiotics in the United States. “We’re in the early stages of increasing our activity in Europe,” Seabrook said.

There will be two funding streams for translational research in mainland Europe, each with £20 million per annum: a general translation award and a seeding drug discovery award. Both are open to businesses and academic institutions.

One reason for the dedicated fund for small molecule, preclinical drug discovery is that there is a seemingly ready-made exit downstream: large pharmaceutical companies that need to boost their pipelines.

From 1998 to 2003, biotechnology R&D expenditures stayed relatively flat, but new chemical entities (NCEs) from biotech rose while those from big pharma decreased, said Nick Dunster, Senior Business Analyst at the Wellcome Trust. That indicates biotechs are doing things in a more efficient manner, he added. Dunster cited other figures showing that of the 145 NCEs in 1998, 20 were university inventions licensed to biotechs and five were university inventions licensed directly to pharma.

“This gave us confidence that certain academic groups can do early-stage drug discovery and can produce these entities that could be accessed by big pharma downstream,” said Dunster.

The Trust has provided translational funding to 145 projects over the past five years, awarding an average of £600,000 to each. During that time, there were six exits via mergers and acquisitions. Six products were launched, there were four non-exclusive licence deals, and 10 products are in the clinic.

The technologies funded include diagnostics, enabling technologies, medical devices, vaccines, regenerative medicines, and therapeutics. Wellcome prefers to invest in products rather than platform technologies.

“The key thing is the basic hypothesis should have been proven. We want to take it to the point where it is sufficiently attractive for someone to invest in. That varies depending on whether it’s a drug or a diagnostic,” said Seabrook.

Most of the funding is seed funding. Projects seeking follow-on funding have to apply as a new project and compete for money. But the Trust prefers to not be part of the follow-on funding.

Applications and due diligence

The Wellcome Trust’s process for considering translational research projects from application to acceptance or rejection is typically about three months. Projects in Europe will be funded by invitation only, and Wellcome plans to spread the word to attract appropriate applicants.

There are four submission dates per year, with a preliminary application deadline upcoming in March 2009. The preliminary application is 10 pages. About 40 to 60 applications are expected, which will be weeded down to a short list of 8 to 10 applications. Then a group of experts will conduct a confidential due diligence process for 4 to 6 weeks.

The entire process is set up for quick decisions and feedback to the applicants, said Glenn Wells, Business Development Manager at the Wellcome Trust, which has 400 experts contracted in the UK, Europe and the United States to help with due diligence and to lend their expertise to projects.

The end result for funded projects isn’t necessarily a launched product. “The most likely outcome is to give it to another company or foundation,” said Wells. “We have to sufficiently derisk the technology to make someone else interested at the end of the day.”

To improve the chances of that happening, Wellcome gets involved in project management and expects  award holders to meet agreed milestones. “We like to take on open management style of working with award holders,” Wells said. “At end of day we may bring something to the table.” He said Wellcome expects award holders to be aware of a path to market.

“You need to understand how you’re going to achieve the business outcome you’re after,” he said. “We want to see new creation of IP throughout the project so there are things we can build on to push your technology out.”

How does the Wellcome Trust measure success? “The key thing for us is to stimulate healthcare innovation. Our success isn’t stimulated primarily by wealth creation,” said Seabrook. “It’s how many products have been launched that are benefiting from our funding, how many products move into the clinic, and whether someone downstream funds it. We have six products approved and for sale in the five years we’ve been operating.”