Europe has untapped medical innovation – but needs high speed connections to make it work
The head of Johnson & Johnson (J&J) Innovation in Europe says the region is ripe for more life sciences investment, but warns that the UK, its biotech leader, could miss out without greater transport spending.
Richard Mason is head of J&J Innovation for the EMEA region, and identifying and investing in the most promising early-stage drug ideas outside the company is one of his key roles.
This ‘open innovation’ strategy is being pursued by all the big pharma companies – and now it’s simply a matter of who executes best on this approach.
J&J Innovation made a big splash in this arena a few years back by launching its own innovation centres in life science hotspots around the world – Boston, California, Shanghai and, for the EMEA region, London.
This is one of the boldest efforts in big pharma to create relationships with entrepreneurs, scientists and leading institutions and to help them advance their ideas.
The EMEA offices of J&J Innovation opened in the heart of London in 2013, within walking distance of an ecosystem of medical research: world-renowned research hospitals such as UCH and Great Ormond Street, the medical and nursing colleges, and new academic research powerhouse, the Francis Crick Institute.
London and the UK are undoubtedly the region’s leaders in biotech investment and start-ups, but Mason and his colleagues are scouring the whole of the Europe and Middle East region for great scientific ideas.
When I raise the idea that the UK and Europe still lag far behind the US in terms of the funding available to biotech firms, as well as a less-developed start-up culture, Mason says this can be seen as an advantage.
“Yes, there are fewer venture capitalists in Europe, there is less venture capital available, but perhaps that means it is less of a feeding frenzy to find good innovation.”
The innovation centre helps start-ups and academics across the region with early-stage research funding, licensing and collaborations, and financing from seed to Series B equity investments.
The ultimate goal is to spot the best emerging companies, technologies and molecules before one’s rivals.
This approach helps to spread the risk of R&D, and minimises the need to spend big – possibly over the odds – on mergers and acquisitions.
J&J recently paid out $30 billion to acquire rare disease specialists Actelion. This big-ticket purchase was at least in part symptomatic of in-house R&D and in-licensing being unable to keep pace with insatiable shareholder expectation.
J&J is currently the fourth-biggest R&D spender in the sector, devoting $7 billion to discovering and developing new medicines in 2016.
Compared to such multi-billion-dollar expenditures, the money big pharma spends through its open innovation is a drop in the ocean – but typically these early-stage investments could take a decade to come to fruition, if at all.
A big investor
Mason was hired by J&J Innovation in 2015 because he knows the process from the other side.
Supported by life sciences venture capital firm Medicxi, he developed XO1 and its lead candidate ichorcumab (a novel anti-thrombin antibody), selling it to J&J’s pharma division Janssen just 21 months after the company was set up.
Once the deal was complete, Mason took up the offer to join J&J to become a talent spotter for similarly promising early-stage innovations.
He and his colleagues are banking on a combination of agility and financial firepower to make J&J Innovation a leader in the market.
It certainly has more equity to invest than most private VCs; while many of its investments are typically $15-25 million in Series B funding rounds, it has made much bigger payouts.
In March this year it put in $900 million to a Series B funding of Grail, a company focused on detecting cancer through gene sequencing technology.
At the other end of the scale, J&J has invested in a small company in Cambridge (UK), called Inivata, which is developing an early-stage liquid biopsy detection of cancer in the blood.
“By being investors we are close to the innovation, and we’re intimately involved in the companies. We can’t passively wait for the future to arrive; we have to play a role in shaping that future – even if some of the results are many years away,” he says.
Apollo Therapeutics Fund
Working in ‘open innovation’ means collaborations with multiple partners, including rival companies, is a good way to operate.
J&J has teamed up with GlaxoSmithKline and AstraZeneca and with the University of Cambridge, Imperial and UCL, to create the Apollo Therapeutics Fund.
This £40 million fund is a clear attempt to create greater scale in biotech funding in the UK, funnelling together resources from some of the biggest players.
Mason says this collaboration is proof that UK universities and their technology transfer offices [TTOs] can be as agile and commercially-minded as their counterparts in the US.
Cambridge’s growing pains
In mid-2017, any conversation between two Brits working in business rarely fails to touch on the near-inescapable issue of Brexit. However on this rare occasion, neither I nor Mason mentioned the ‘B’ word. Instead he warns of another danger for the UK economy: a lack of forward thinking and investment in infrastructure, particularly transport networks.
He says creative solutions are needed. As a resident of Cambridge himself, he knows first hand about its growing pains as its population expands, swelled by more biotech and tech workers.
Mason says: “Why hasn’t Cambridge put in a tram network, or why isn’t there a high-speed rail network connecting Bristol and Norwich?”
While the so-called ‘Golden Triangle’ of Cambridge, Oxford and London is often cited as the UK’s biotech region, Mason sees another east-west axis.
“That [Bristol – Norwich] route could take in Swindon, Oxford, Milton Keynes, Bedford, Cambridge and Thetford. That’s your east-west innovation corridor, where it is all happening.
“At the moment, someone who lives in Cambridge will never take a job in Oxford and vice versa, because of the transport issue. But what we really want are those brain power centres colliding continuously.”
He says investment in transport and infrastructure could also start to solve the UK housing crisis, because people could live along this route and commute more easily.
“At the moment it is really difficult, and Cambridge housing prices are very high, like London, and I’m sure Oxford is the same. That is where the UK needs to get its act together, and very quickly.”
The next phase – disruptive innovation
Mason says the EMEA unit is already ‘moving the needle’ for J&J in finding transformative innovation, but he wants to see it take its ambitions to the next level.
“Our challenge is, what’s next? How do we take it to the next level, and how do we keep it fresh and ahead of our competitors?”
In addition to open innovation, most big pharma companies are now looking to be part of ‘disruptive innovation’ in healthcare – those new technologies from outside the traditional biopharma field which could transform healthcare over the next 10-20 years.
“There are massive disruptions going on in healthcare, and we should make sure that we’re involved at an early stage,” says Mason. “Our core areas are in medical devices, consumer health and pharmaceuticals, but we’re interested in other innovations happening out there.
“The global burden of disease is so great, we need to avoid the things that are avoidable, so that society can pay for the people who have the conditions which aren’t avoidable.
“Look at type 2 diabetes and obesity – that is a disease you can literally run away from! That’s an entirely avoidable disease and yet it is consuming ever more resources around the world.”
Mason’s enthusiasm for disruptive innovation reflects some truly ‘out-of-the-box’ thinking elsewhere in his company.
Most notable are the company’s groundbreaking initiatives to ‘prevent and intercept’ diseases before they even occur. These could completely overturn not just the normal healthcare model, but also the existing pharma business model. Nevertheless, J&J believes this is the logical conclusion to the growing burden of healthcare.
He concludes: “There is a whole industry emerging under our noses, of people who are dealing with preventable disease with prevention through lifestyle modification. A lot of that is very disruptive, so I’d also like to see us embrace that.”