BioWorld International Correspondent

LONDON - The biotech industry increasingly is reluctant to in-license research before its commercial value is demonstrated, widening the gap for technology transfer.

Now, public institutions are responding by funding proof-of-concept studies to add value and bridge the "valley of death" that has opened up between academic research and its route to commercialization.

"Simply doing target validation is not enough any more, because there are plenty of targets out there. You need some compounds, toxicity data and so on, or you are not going to license it," said Gabor Lamm, CEO of EMBL Enterprise Management Technology Transfer GmbH, the technology transfer arm of the European Molecular Biology Laboratory. He was speaking at a session called "Bridging the gap between discovery research and the biotech industry," at BIO 2006, held in Chicago earlier this month.

But spending government or public money on activities that were financed previously by commercial investors creates tensions over how research projects should be singled out for investment and by whom, if the researchers should be involved in the proof-of-concept study, and what outputs are appropriate measures of success.

One of the most mature proof-of-concept programs is the £50 million (US$89.3 million) scheme set up by Scotland's development agency, Scottish Enterprise, in 1999. Since then £28.1 million has been invested in 172 projects, with more than 400 jobs created, 22 new companies formed and 23 licensing deals signed, said Eleanor Taylor, head of that proof-of-concept program. About 40 percent of the portfolio is in life sciences.

"The question is, are we adding value?" Taylor asked, speaking at the same session. "We did two evaluations; one in 2003 said we were onto something good and suggested how to improve. The second, carried out this year, said the scheme was good value for the money."

Despite that endorsement, hurdles remain. One is the ownership of intellectual property.

"It is easier if the institutions own it, but you need to have the academics working with you," Taylor said. The creation of suitable management teams is a problem, as is keeping the academic researchers involved. "They can get uncomfortable about the idea of commercializing research. There is a feeling that technical failure is not a problem, but commercial failure is."

Given that the Scottish Enterprise scheme is funded from public money, the issue of positioning and communicating the risks and rewards that academics can expect also is an issue.

In contrast to the relatively well-endowed Scottish scheme, the EMBL Technology Development Fund has $300,000 annually to invest in four small or two large projects. Those include prototype development, screening for leads to EMBL targets and preclinical validation of compounds, Lamm said. "Applications are reviewed externally and internally, and we say yes or no within four weeks."

In France, Inserm-Transfert, the technology transfer arm of the national research organization Inserm (Institut National de la Sante et de la Recherche Medicale) does not have a dedicated fund for proof-of-concept studies. Instead, it pre-selects research programs it believes are suitable and then applies for funding from other French agencies, such as the National Cancer Institute, said Joel Crouzet, director of Inserm-Transfert.

"Scientists must go through Inserm, and the selected programs are then modified before being put forward to the agencies for funding," Crouzet said. "We have to get the scientists to focus on milestones and not the plan for the next publication, and we have to make sure the project is clear cut."

Projects are co-managed between the scientists and a project manager who looks after the IP and does prospecting for external partners. In 2005, of the 83 projects submitted, 23 were pre-selected and 16 got funding.

David Brener, director of the Canadian Institute of Health and Research, cautioned that public institutions could go too far up the value chain. "There is a significant risk of over-reacting: There is too much pressure to commercialize, to demonstrate the value of public funding of research. But you can't start the process [of scientific research] from the stance of asking, 'What is the likely [financial] value?'"

Lamm agreed. "We have to be aware. We don't want to commercialize everything because we still need [the scientists] to do basic research - and in any case, there are things that don't have commercial benefits," he said.