LILLE, France – Academia's position as the major source of new innovation for pharma and biotech has, arguably, never been more secure. But the process of transferring innovation from an academic to an industry environment remains suboptimal, particularly in Europe, where the innovation ecosystem for biotechnology is less mature than that of the U.S.

The topic cropped up during several sessions on the opening day of the BioFIT meeting at Lille Grand Palais congress center Wednesday.

Peter Gruss, a former president of Germany's Max Planck Society, highlighted Europe's great exception to the general rule that the region is unable to innovate at scale. The innovation cluster around Cambridge University in the U.K. is bettered in the global rankings only by the Stanford-Bay area and the Boston-Cambridge hub in the U.S. Cambridge University spinouts have a five-year survival rate of more than 97 percent, he told delegates during his plenary address. "This, I think, is remarkable."

There is, of course, a gap between the ideas or basic research generated by academic scientists and what industry is willing to invest in. "The gap exists for more reasons than just money," said Iain Thomas, head of life sciences at Cambridge Enterprise, the tech transfer arm of Cambridge University.

Earlier this year, Cambridge Enterprise teamed up with its counterparts in two other U.K. colleges, Imperial College London and University College London, to launch Apollo Therapeutics, a £40 million (US$50 million) investment fund that aims to accelerate the translation of novel discoveries into new therapeutics.

Its aim is "to make the uninvestable investable," he said. Three pharma partners are also involved: London-based firms Astrazeneca plc and Glaxosmithkline plc, along with Johnson & Johnson, of New Brunswick, N.J. They have a limited first right of refusal to take on projects at market rates.

Not every big pharma firm would have been open to such a complex, sophisticated structure. "It is not random – there is some geography to it – that we chose the partners we chose to work with," said Thomas, who was speaking during an earlier session on university participation in VC funding. Its first projects have already been funded.

'INTENSIVE CARETAKING'

Gruss helmed the Max Planck Society for a dozen years – from 2002 to 2014 – during which time it established several initiatives in Germany to bridge the gap between academic discovery and industry. The Bonn-based Life Science Incubator GmbH received 54 applications to an initial call for applicants for its life science incubator program. The Dortmund-based Lead Discovery Center GmbH is now entering research collaborations with big pharma companies – including Boehringer Ingelheim GmbH and Roche Holding AG – as well as with smaller biotechs, to translate basic research findings into industry-quality projects. "Targets and hits you cannot sell any more," Gruss said.

An industry-academic research collaboration between Paris-based Sanofi SA and the Max Planck Society provides annual funding between €50,000 (US$53,000) and €250,000 for projects that get through a joint evaluation process involving both partners. "It really merges the interests of the academic partner and the business partner," Gruss said.

While Germany has put in place seed capital and other supports to bridge the innovation gap across lead generation, lead optimization and early preclinical research, it still lacks both venture capital and sufficient public equity funding to foster the sector's development.

Those are well-rehearsed themes at this point – but he also pointed to another category of investor that is missing not only in Germany, but throughout Europe. "I call it intensive caretaking venture capital companies," he said. He identified Third Rock Ventures and Longwood Ventures as U.S. exemplars – firms in which the venture partners are genuine company founders, who identify groundbreaking ideas and scientists around which genuinely innovative startups can be built.

"They are doing exceedingly well," he said.

Gruss himself has experience of both industry and academia – in addition to his Max Planck role, he is a non-executive director of Allschwil, Switzerland-based Actelion Ltd., currently the subject of a $26 billion bid from Johnson & Johnson. That transaction would represent a milestone for the European sector – if it does transpire, it would dwarf any other exit achieved by a European biotech to date. (See BioWorld Today, Nov. 29, 2016.)

KEEPING THE INNOVATION ECOSYSTEM GOING

It does point to a limitation in European biotech, however. "How many Actelions can you build in Europe?" asked Jesper Bos, partner at Merck Ventures, the VC arm of Darmstadt, Germany-based Merck KgaA. "You are running up against a brick wall in Europe," Bos commented during an earlier panel on university participation in VC funds.

European firms typically can raise no more than €80 million to €150 million. "There's simply a limit to what we can do in Europe," he said.

Merck Ventures manages a €300 million evergreen fund, half of which is focused on early stage health care investing. "We only invest in first in class with high unmet medical need," he said. "My sweet spot for exits is pre-IND," he said.

Bos acknowledged the attractions of "patient capital," a form of investment that involves larger quantities and longer time frames than are associated with traditional venture investing. But it still represents a form of investment that needs an exit. "We have to keep in mind everyone is IROI [internal return on investment]-driven," he said. "To me, the role of venture capital is not to provide patient capital but to provide innovation capital."

Recycling cash generated through exits "keeps the innovation ecosystem going," he said.

Apart from European Commission-backed research programs, such as the Innovative Medicines Initiative and the Horizon 2020 Program, most initiatives to spur innovation operate at a national level – and Europe's various biotech clusters compete with each other for international attention and investment.

There is room for greater international collaboration, said Johan Cardoen, managing director of the Flanders Institute of Biotechnology (VIB), based in Ghent, Belgium. "Not all innovation or IP is developed within one institution," he said during a plenary panel on the competitiveness of European biotech.

The Brexit question inevitably pops up during any discussion about the prospects of European – and British – biotech. "For the life science sector, I don't think we should be too pessimistic about the effects it will have," Piyush Unalkat, head of technology transfer and IP investments at the Brussels-based European Investment Fund, said during the panel. About 8 percent of the U.K.'s £3 trillion gross domestic product consists of cash sitting on corporate balance sheets, he noted.

"Maybe in the U.K. there will be initiatives to get that cash moving and pumped back into the economy," he said.

The meeting continues Thursday.