BioWorld International Correspondent

VIENNA, Austria - Europe has an excellent science base but it is getting harder and harder to interest investors in early stage research. That leaves research institutes with no choice but to pick winners themselves and pay for proof-of-concept studies to get technology to a stage in which it can be licensed.

"Recent criticism from investors includes comments such as, it is too early stage,' it is low value,' the technology is weak,' it is too risky,'" Edwina Wright, director of intellectual property at the Medical Research Council Technology (MRCT) in the UK, told delegates here Thursday on the final day of the Cordia-EuropaBio Convention. She spoke at a session titled "Identifying Pre-Competitive Technology Platforms," which explored the various mechanisms European research institutes are putting in place to commercialize their research.

Those criticisms led MRCT to set a precedent and fund proof-of-concept studies for one of its spinout companies, Gendaq Ltd. The company was successful in attracting $9.5 million in venture capital in April 2001, and was subsequently sold to Sangamo BioSciences Inc. in June 2001 for $40 million.

"Since then we have established a pilot scheme with £1 million dedicated to strengthening patents and carrying out commercial proof of principle," Wright said. To date, the scheme has funded 10 projects.

"It is getting harder to find commercial partners, so you need to find new ways to add value to early stage technologies," Wright said. But she added: "Every time we plug a gap, the gap moves. The more we do to develop our technologies, the more licensees will expect from us."

Christian Policard, director of research valorization and industrial partnership at the Institut Pasteur in Paris, agreed. "The technology transfer business is very competitive, and we need to adapt, moving from basic licensing to more investment to bring technologies further on." The institute boasts an income of €73 million from licenses last year, equivalent to 39 percent of its annual budget, but is finding it more and more difficult to attract interest from pharmaceutical partners.

That has led the institute to start doing its own preclinical, and in some cases, clinical development. "We do this to decrease risk [for licensees] and to collect more value from our activities," Policard said. "If you take something to Phase I it costs more money, but I think it is necessary to continue to grow our licensing income."

In addition to licenses, the Institut Pasteur is trying to increase the number of companies that it spins out. Like many of its European peers it has set up a bioincubator, BioTop, and created a seed fund, BioDiscovery. "We have companies with strong patents, but they are early stage, and in the current climate it is difficult for them to raise money," Policard said.

Institut Pasteur is trying to consolidate its technology transfer processes worldwide. It has just opened an office in Boston and will open another one in Osaka, Japan, soon.

Lionel Segard, of the Institute National de la Sante et de la Recherche Medicale (INSERM) in Paris, said a lack of commercial motivation among scientists remains a barrier to technology transfer. In March 2002, the institute set up INSERM Transfert, a private company to encourage technology transfer and spinouts.

"We created a structured technology transfer policy, introducing the industrial mindset and explaining its importance to scientists," he said. "We have put patenting next to publishing as being an equally important [activity] for our researchers."

Meanwhile, the state of Saxony in eastern Germany is trying to improve technology transfer by putting academics alongside start-up companies in two new bioincubators it is setting up in Leipzig and Dresden.

"This is a different style of incubator, where 12 new chairs of biotechnology will be created and be accommodated in the same building as start-up companies," said Ann De Beuckelaer, director of BioSaxony, the state's inward investment body.

Rather than a scatter-gun approach, BioSaxony has made assessments to identify which research is most likely to yield value. "In Dresden for example, we already have a strong competence in engineering, based on the microelectronics sector. This will be combined with biotech expertise that is also in place to develop molecular bioengineering," De Beuckelaer said.

The issue of pulling partners with different competencies together to extract value from research also is exercising large companies such as IBM. "IBM Research has plenty of patents, but what is the real value of them?" said Erich Ruetche, of IBM's Zurich Research Center.

The company wants to work with life science companies to link life sciences and information technologies. "We have to partner with multiple organizations to bring interdisciplinary research projects to the stage where we can extract value. We need to partner early to link in complementary skills, to validate the technology," Ruetche said.

However, IT and biotech industries have different intellectual property strategies, which can make it difficult to get collaborations to work.

"This is a field of tension, and you have to state your intentions early on," concluded Ruetche.