Richard Mason (pictured above) is a veteran of the UK biotech industry, including a spell as CEO of company XO1 set up by venture capital investors Index Ventures (now Medicxi) in 2013.
He sold the business and its lead asset, ichorcumab, a synthetic anti-thrombin antibody, to Johnson & Johnson less than two years later. After a spell as head of J&J’s European Innovation Centre (where he led a team seeking out the best early-stage drug and medical device programmes to in-license/acquire), he is now focused on setting up cutting-edge new biotechnology companies himself.
His own experience at XO1 is a particularly rapid example of how to create valuable new innovative drugs in a sector where stand-alone biotechs frequently take 15-20 years of loss-making before their first products reach the market.
UK’s ‘Golden Triangle’ is a match for Boston and San Francisco
Boston/Cambridge, Massachusetts and San Francisco are by far the biggest centres for start-up biotech to raise capital in the world, and have been magnets for big pharma looking to tap into innovative ideas and the best talent.
Cambridge, UK is often called Europe’s leading life sciences hub, but for Richard that’s too parochial.
“Is Cambridge Europe’s leading biotech hub? My answer is categorically no…it’s too small a geographic definition. That leading hub does exist in the UK, but it is the Golden Triangle, which is London, Oxford and Cambridge and everything in between.”
He said the combined expertise of world-class universities in these three cities, as well as the big pharma presence of AstraZeneca in Cambridge and GSK in Stevenage, plus all the biotechs in the region, make this a truly world-class ecosystem that has had a hand in the discovery and development of many of today’s biggest selling medicines.
“I can promise you, that is an ecosystem that can go up against San Francisco and Boston in terms of the quality of science and innovation.
“If you tell Americans that Cambridge and Oxford are different hubs, they’ll laugh at you – from a US perspective they’re virtually suburbs of London. The idea of trying to differentiate between these places that are 60 miles apart is just crazy. We need to see the big picture.”
Poor infrastructure is holding the UK back
Richard said the country is crying out for east- west rail and road transport infrastructure to link Oxford and Cambridge – getting between the two academic hotspots by car or by train still means having to travel via London, making the trip much longer than necessary.
“An east-west link would link Oxford and Cambridge, but that corridor could extend to Bristol and Wales in the west and Norwich in the east.
“There is so much academia, entrepreneurship and innovation on this axis, and creating those links would have long-term benefits for cross fertilisation of ideas and economic mobility in the country. That dynamism is currently held back by poor transport links and house price hotspots that cause big problems in Oxford and Cambridge.”
Germany is European biotech’s sleeping giant
“Germany is Europe’s great untapped player in biotech,” said Richard. “It has amazing scientists, brilliant universities, great history and a tradition of scientific discovery.
“For a number of reasons, such as taxes and red tape, the sector hasn’t really taken off there as much as it could have until now, but while Germany has produced far fewer biotech companies than you would expect, it’s definitely the place to watch.”
UK biotech can survive Brexit
There are enormous and well-founded concerns about the impact of a no-deal Brexit on the UK life sciences sector, and industry organisations such as the ABPI and BIA are lobbying hard to preserve links with the EU.
Nevertheless, Richard believes the UK will prove resilient, and that the government won’t put up new barriers to scientific talent entering the country, something the biotech sector relies heavily on.
“I cannot believe for one second that any government is going to make it difficult to bring in highly qualified PhD, postdocs, industrial leaders, entrepreneurs. No-one can be completely sure, but I can’t see why they wouldn’t want to come. There’s no tax harmonisation between EU countries currently anyway, which is always an issue internationally when thinking about re-locating etc. So I’m less pessimistic about the effect of Brexit on our industry than some people.”
Academics: hold on to your IP
Despite the growing cross-fertilisation of academic research and the commercial sector, some academics are making basic errors regarding intellectual property (IP), said Richard.
“Some great academic research is still being published before patents have been filed, or too much information being given away, including to other academics. Universities can help academics get a bit smarter about this – if academics do have plans to commercialise their work, the patents have to be filed before you publish, otherwise the IP could be lost.”
Richard said this could be part of a bigger effort to help facilitate more cross-fertilisation of researchers in universities with commercial research.
“It’s a matter of culture…the more you can expose academics to that entrepreneurial mindset, the better.”
Tempting leaders to leave pharma for biotech is hard
“It’s difficult to get people out of those big pharmaceutical companies – particularly now you’ve got AstraZeneca hoovering up all the scientists in Cambridge. If you’re an entrepreneurial scientist, big pharma offers a fantastic environment, which is well paid and really secure.
“Yes, being in a biotech start-up is a bit less comfortable, but that’s the thrill of it. But unless you are starting a company from scratch, it’s not as hair-raising as you might think. I think it’s probably more daunting for people to jump out of big pharma and into biotech than from academia.”
Neil Woodford’s problems haven’t damaged UK biotech
Neil Woodford had been a star UK fund manager over the last decade, and his views and investments in big pharma and biotech have been very influential. This reputation has unravelled rapidly this year after a run of poor market bets saw his investment funds crash in value, prompting investors to flee.
Richard said he’s not familiar with the ins-and-outs of Woodford’s demise, but nonetheless said life sciences should be grateful for his ‘patient capital’ support over the years. “Neil Woodford has done a huge amount for the life sciences industry in the UK, and supported it when others didn’t. So he should be applauded for that.
“In a way, it’s surprising how little impact it seems to have had. We should perhaps put that down to some welcome maturity in the UK public markets in understanding the life sciences. You could imagine in times gone by that a problem like this would make everybody scatter, but that doesn’t seem to have happened.”
European biotechs still rely on the US for IPOs
A significant missing piece of the finance puzzle for European biotechs is that they have to launch on the US Nasdaq exchange in order to raise major capital via an initial public offering (IPO).
“Yes, it’s still the default position to list in the US. That’s a major weakness in the ecosystem in Europe, which would take time to change. Having said that, there is a lot more private equity money moving into later stage investment in life sciences. If that’s happening, then public market investment might not be far behind. But for now the US public markets are indispensable for the sector.”
Europe will produce its own world class biotechs
Many people in life sciences venture capital have traditionally distanced themselves from the dream of creating a big biotech company in the mould of the US success stories of Amgen, Genentech and others.
That’s because the vision of creating a life sciences titan can be seductive. In the early days of UK biotech, this often led to major upfront investments in bricks and mortar which ultimately proved worthless when drugs failed.
“I used to be quite hard-nosed about the idea that maximum value creation was the goal, which meant biotech companies selling up as soon as they reached a certain point,” said Richard, “but I’ve mellowed slightly. Now I’m interested in seeing great companies being created and the value creation happening in an ongoing manner. I think there are real benefits to creating scale and building value for the long term.
“That can also give you knowledge consolidation, build the ecosystem and generate more high value jobs. But ultimately investors must see great returns, and our job is demonstrate that the greatest returns may come from a longer term and bigger vision rather than sell at the first opportunity.
“Some years back we all said that no new FIPCOs (fully integrated pharma companies, aka big pharma companies) would be created anymore, it would be just the existing major companies and the biotech start-ups. Well, that is happening now in the US, so now I believe we have to be more ambitious in Europe.
“I certainly think we’re going to see the Amgens of the world emerging in Europe. It’s going to happen, there’s no doubt in my mind, and I think a lot of people feel the same way.”