UK biotech buoyant, despite waves from across the Atlantic
Emerging UK biotech firms with strong science look set for a bright future, despite fears about US pricing and the ‘bubble’ bursting.
A resurgent UK biotech sector looks set to finish 2015 on a high, thanks to growing funding and confidence in its pipelines.
Last week saw the UK biotech and life sciences sector celebrate its achievements with the annual OBN awards, and these provided a snapshot of an industry in rude health – even rekindling long-held hopes that one or two firms could emerge as world-beaters.
The financial crisis of 2008 hit the UK and Europe biotech sectors harder than US counterparts, but confidence and capital have returned in the last few years via venture capital funding and initial public offerings (IPOs).
Last year saw nine UK companies float on the market with IPOs, raising £923.7 million, while UK venture capital funding also rose 71 per cent to £430 million.
2015 looks set to be another bumper year, with many more rising stars being honored at the awards held last Thursday at Oxford’s Ashmolean Museum.
One of the brightest hopes for the sector is Adaptimmune Therapeutics, an Oxford-based firm set up in 2008. The company is developing its own T-cell receptor technology, a novel immunotherapy platform which could rival the much hyped CAR-T technology in treating a range of cancers.
The firm won the Best Emerging UK Biotech Fundraiser award, thanks to its $191 million IPO in May. The company followed this up with two milestone payments from its development partner GlaxoSmithKline in September, after it expanded its phase I/II trial of a TCR-based therapy for synovial sarcoma.
A stablemate of Adaptimmune also hotly tipped for success (but which missed out on an OBN award) is Immunocore. The firm also specialises in T-cell receptor drugs, and raised $320 million (£205 million) earlier this year, making it Europe’s largest private life sciences financing.
Meanwhile, the award for Best UK Biotech Dealmaker went to Heptares, which was acquired by Japanese company Sosei earlier this year for $400 million.
Even though the firm has been acquired by a foreign firm, the research base is set to remain in the UK.
Heptares has developed its own structure-based drug design (SBDD), and Sosei aims to accelerate the biotech’s pipeline, which includes Alzheimer’s, attention deficit hyperactivity disorder and metabolic disease candidates.
Heptares/Sosei secured a major licensing deal with AstraZeneca (AZ) in August for its oncology candidate HTL-1071. The drug is A2A receptor antagonist, and enhances the ability of T-cells to destroy cancer cells, making it a good fit for AZ’s burgeoning immuno-oncology pipeline.
Hilary Clinton rocks the boat
However it hasn’t all been plain sailing – last week saw biotech shares slump after Hilary Clinton warned that she would move to cap US drug prices if elected President.
Share price losses across the sector amounted to more than 18 per cent over the week, and some fear this decline could continue. Some analysts suspect that Clinton’s brought a long-overdue bursting of the biotech bubble, as stocks have risen giddily over the last few years.
However other analysts believe the losses are more of a market correction than a bubble bursting.
That’s because, while some firms have become overvalued, investors are still confident the best biotechs have pipelines and business strategies that can deliver.
Adaptimmune was among the stocks badly affected last week, but nevertheless it has already raised enough capital to finance its research pipeline for some time.
Other emerging UK firms also look undeterred by the market scare – Cardiff-based Cell Therapy is preparing itself for an IPO, hoping to gain extra backing for its groundbreaking stem cell therapy Heartcel. The therapy has now completed phase 2 trials and is set for filing with the EMA in mid-2016.
Saku Saha is a fund manager at Woodford Investment Management, a investment fund set up by Neil Woodford, one of the UK biotech sector’s investor champions.
“We have said for some time that we believe that some areas of the quoted biotech sector, particularly in the US, are overvalued,” says Saha.
“The enthusiasm for the sector has led to several US biotech stocks trading on bubble-like valuations, but that doesn’t describe biotech valuations everywhere.”
He adds that in contrast to many NASDAQ-listed firms, many UK unquoted and early-stage biotech firms are currently hugely undervalued.
Woodford’s long-term commitment
The OBN awards recognised achievements across the sector, from the latest emerging cutting-edge therapeutics to diagnostics, medical devices, drug discovery, as well as the best-performing UK pharma companies in business development and licensing (BD&L).
In this final field, sharing the award were AZ, recognised for its many co-development and portfolio deals, and Shire, for its multi-billion mergers and acquisitions drive.
Also recognised for his contribution to the sector was Neil Woodford and Woodford Patient Capital Trust, his biotech-specific fund, with an emphasis on UK-based ventures.
Neil Woodford is probably the UK’s best-known fund manager, and built his reputation on betting wisely across sectors and avoiding market bubbles.
Woodford set up the fund with the conviction that the UK sector has underperformed, considering the world-class standards of its academic research, largely because of a lack of well-targeted capital investment.
The fund has £844.8 million invested in a range of companies, including Immunocore, Oxford Nanopore and Circassia, the latter achieving a record-breaking $332 million IPO last year.
The latest company to benefit from Woodford’s investment is AMO Pharma, a rare disease start-up whose two lead compounds target myotonic dystrophy and fragile X syndrome, respectively.
Woodford’s long-term commitment to UK biotech looks likely to play a vital role – not least because many of the sector’s companies will inevitably face some major clinical and financial setbacks mixed in with the successes anticipated over the next five-to-ten years.
Award categories and winners:
1. Best New UK Biotech Development Programme – sponsored by PCI
Winner: Summit Therapeutics – for the development of small molecule treatments for muscular dystrophy and the treatment of C.difficile infections.
2. Best Emerging UK Biotech Company – sponsored by J A Kemp
Winner: Touchlight Genetics – for the development of an enzymatic means of synthesising DNA.
3. Best Emerging UK Biotech Fundraiser – sponsored by Silicon Valley Bank
Winner: Adaptimmune – for securing funding for the development of modified T-cells carrying affinity enhanced TCRs to target specific cancers.
4. Best UK Biotech Dealmaker – sponsored by World Courier
Winner: Heptares – for the deal with Japanese biopharmaceutical company Sosei in February 2015 and the continued focus on creating novel medicines targeting G protein-coupled receptors.
5. Best New UK Medtech Development Programme – sponsored by Arthur J Gallagher
Winner: Accentus Medical – for the development of surface technology designed to reduce the risk of post-operative infection associated with titanium implants.
6. Best Emerging UK Medtech Company – sponsored by James Cowper Kreston
Winner: OxSonics – for developing and commercialising ground-breaking therapeutic ultrasound advancements.
7. Best Emerging UK Medtech Fundraiser – sponsored by EY
Winner: Oxford Nanopore Technologies – for the development of electronic based systems for the analysis of DNA, RNA and protein.
8. Best UK Medtech Dealmaker – sponsored by The BioHub Birmingham
Winner: Abingdon Health – for the acquisition of Molecular Vision Ltd, which underpins Abingdon’s aim to create a leading Dx company.
9. Best Emerging UK SynBio Company – sponsored by SynbiCITE
Winner: Oxitec – for developing pioneering solutions to control insects that spread human disease and damage crops.
10. Highest Impact Investor
Winner: Woodford Patient Capital Trust – for the massive boost given to early stage companies through the volume of their investments.
11. Best Pharma BD&L Team – sponsored by Premier Research
Joint Winner: AstraZeneca – for a robust business strategy and partnerships that access the best in scientific developments.
Joint Winner: Shire – for a range of acquisitions made to help improve their portfolio.
12. Best Public-Private Collaboration – sponsored by Oxford AHSN
Winner: Isansys & Birmingham Children’s Hospital