CRUK Joins Investment Flurry to 'Rescue' EU Drug Discovery
By Nuala Moran
LONDON – Cancer Research UK (CRUK) is joining forces with the European Investment Fund (EIF) to launch a £50 million (US$80 million) fund to invest in early stage assets and "rescue an ecosystem under threat."
The Pioneer Fund, which will take cancer drugs from discovery through to Phase II before they are out-licensed, is the fifth significant fund to be announced in Europe in the past month. In common with the Pioneer Fund, the £200 million Project Sigma set up by the charity the Wellcome Trust and the new Index Ventures $199 million fund will focus on bridging the valley of death between early discovery and the Phase II-ready programs favored by pharma for in-licensing, while the £100 million Welsh Life Sciences fund will invest in start-ups across the piece. (See BioWorld International, March 21, 2012, and March 28, 2012.)
Keith Blundy, CEO of Cancer Research Technology Ltd. (CRT), the technology transfer arm of CRUK, said the gap has arisen because of lack of venture capital funding for biotechs.
"We have a long history of doing early drug discovery, and we used to pass things on to small companies," Blundy told BioWorld International. "But the small companies aren't there anymore. We've got the [compounds] but not the resources to advance them."
CRUK is the largest single funder of cancer research in Europe, with an annual budget of £332 million. It claims to have made contributions to nearly 50 drugs currently in the clinic.
With the £50 million fund, CRT now will develop programs in-house, using its existing drug discovery unit and its own clinical trials facilities. Blundy said he expects to be able to develop seven or eight products over the life of the Pioneer Fund.
The fund will operate independently of CRT and the EIF, with its own scientific advice and decision-making structure. It is not limited to investing in compounds discovered by CRUK-funded scientists, and will not have preferential access to them.
"We need a mixed economy and [the Pioneer Fund] has to be synergistic," Blundy said. Programs could come from other academic groups in the UK or from industry. "Biotechs could make an approach, [Pioneer] could invest in research which isn't ours, but two-thirds of programs will have some CRUK origin," Blundy said. CRT will re-invest any profits in further research.
The EIF is a European Union body charged with helping small companies to access finance, both from venture funds and through loan guarantees. Its £25 million contribution to the Pioneer Fund is its largest investment to date in technology transfer.
Richard Pelly, chief executive of the EIF, claimed the Pioneer Fund model of out-licensing will be more capital efficient than creating companies. "This investment targets a stage of the investment spectrum often neglected by the market," Pelly said.
The EIF has designed a number of new types of SME funding instruments, and the Pioneer Fund is seen as a model for future investments elsewhere in Europe.
While the fund will not create any new companies, last month's funds from Index Ventures and the Wellcome Trust will do so. Index Ventures will put its cash into small companies that have only one or two assets to reduce the amount of money that goes into building corporate infrastructure, in a bid to make early stage venture capital more effective.
The Wellcome Trust intends to take and retain large stakes in the companies founded by its Project Sigma fund and maintain its investment long term.
Blundy said he believes the outbreak of new funds is symptomatic of a breakdown in the early stage discovery ecosystem.
"I don't think that gap can ever by fully closed," he said. "We will keep thinking of other potential funding mechanisms."
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