Sean Mulvany

Some interesting articles in this week’s Economist on innovation at http://www.economist.com/news/briefing/21569381-idea-innovation-and-new-technology-have-stopped-driving-growth-getting-increasing and http://www.economist.com/news/leaders/21569393-fears-innovation-slowing-are-exaggerated-governments-need-help-it-along-great. In short, the view is that the era of transformational change (steam, jets, telephones, etc) is behind us. We’re doomed to incremental innovation that will result in perpetually slow economic and productivity growth.

I don’t agree. I think that many of this era’s breakthroughs like computing and robotics will take time to bed down as measured in 10s of years just like the major technologies of the past. If economic growth is slowling in the developing world, I think automation and the ability to replace people with machines is a  growing contributor – see “Race Against The Machine” by Byrnjolfsson and McAfee, for example. There’s also the ongoing impact of several years of recession.

The narrative that things like sanitation, especially the toilet (see current cover of the Economist) just arrived and improved human health over night is simplistic. The precursor, the privy, was around for a very long time. Like steam (the Greeks and Romans had simple, toy steam engines), it took a long period of tinkering before it became a useful and widely used appliance. The humble U-bend being the key breakthrough in the case of the toilet. As such, it’s too early to tell if this is a fallow period in innovation. Proxy measures like changes in economic growth or productivty rates likely have a complex mix of causes.

The Irish Government has been engaged in a Research Prioritisation Exercise over the last year seeking to develop a strategy to best deploy resources in publicly funded research and development. Whilst I’m not part of this exercise, I suspect that there has been discussion in relation to how the state would support new therapeutics. What follows are my views in respect of broad international trends in therapeutic discovery and early development and how the Irish university sector might respond.

International Trends
Large pharma has had a difficult decade. Despite launching many blockbuster drugs in the 90s and investing hugely in R&D, the industry has largely failed to replace these high earners as they rapidly reach the end of their patent life and replaced by generics. R&D expenditure peaked at around $37Bn in 2008, yet the number of New Molecular Entities (NME) has, at best, remained constant.

The trend in the response of large pharma companies over the last three years has been to abandon early stage R&D and focus on acquiring or partnering therapeutics from small biotech & pharma companies. The strong preference for pharma companies is to focus on those therapeutics that have shown efficacy in patients (Phase IIa or later) and the percentage of deals occurring for Phase I and earlier NMEs is low at 5% or less of total deal volume at present. However, the level of deal activity seen for these earlier stage therapeutics is growing for two reasons. Firstly, the available pool of unpartnered/non-acquired Phase IIa and later NMEs is diminishing. Secondly, as pharma has divested itself of internal discovery and early development capability, it is increasingly driven to source this externally.

The Growing Role of the University in NME Development
In a recent review of the source of 252 NMEs approved by the FDA from 1998-2007 (Kneller, Nat. Rev. Drug Disc. 9:867), the author observed that “of the 252 drugs studied …. universities that transferred their discoveries to biotechnology companies (U→b) were attributed 40.3 (16%), and universities that transferred their discoveries to pharmaceutical companies (U→P) were attributed 20.4 (8%)”. Furthermore, the author observed that “The data indicate that drugs initially discovered in biotechnology companies or universities accounted for approximately half of the scientifically innovative drugs approved, as well as half of those that responded to unmet medical needs”.

Large pharma have recognised this dynamic. In a move to capitalise on the fountain of new therapeutics knowledge, teaching hospital/clinical infrastructure and associated spinouts and small companies, pharma has begun to move to formalise large, multi-year alliances with institutions (Scudellari, Nat. Med. 17:3). For example, Pfizer announced a $85M, 5 year alliance with UCSF in November. AstraZeneca has a 2 year deal with U Penn and J&J have a 5 year deal with MIT – all to pursue the discovery, development and early clinical evaluation of NMEs. This trend demonstrates a desire on the part of pharma MNCs to create longer term collaborations with universities to gain from their drug discovery capability.

How Irish Universities Might Align With International Trends
My view is that there is a wealth of capability and technology platforms available across the University sector in Ireland after successive rounds of PRTLI, SFI and other state funding initiatives. What is lacking is an overarching network that allows consolidation of these resources and simplifies access by pharma and biotech companies. One model might be that of Fraunhofer in Germany. The benefits of such a shared services framework are:

i) a formalised and facilitated R&D network to support indigenous therapeutic spinouts and existing companies in the space
ii) a critical adjacency to encourage backwards integration of earlier stage R&D efforts from pharma/biotech MNCs and associated FDI
iii) a compelling base that can be leveraged to obtain philanthropic/charity/FP7 and other non-exchequer therapeutic discovery/development investment
iv) an engine to grow wealth and job creation in the therapeutics space

The specifics of how such an initiative would be structured would have to be negotiated between relevant stakeholders, of course. However, the time may be ripe to consider it.

My interest has long lain with therapeutics. The promise of new treatments to improve lives and alleviate suffering captivated me as an undergrad and I made for the nearest pharmacology department. Subsequently, I was lucky enough to have the opportunity to work discovering new treatments of affective disorders as part of an SFI funded cluster and in a university spinout.

Over the past four years I’ve worked in Enterprise Ireland supporting TTOs and academic inventors commercialise promising therapeutic candidates in the hope that this activity would lead to jobs and wealth creation through licences and spinouts. With the recent relaunch of the Commercialisation Fund, I feel it might be timely to take stock of some of the issues in taking early stage candidates from the lab towards the patient. As a disclaimer, what follows are my own thoughts/concerns and I refer to applied development of therapeutics not basic research and discovery.

What has driven my pause for thought is the observation that there appears to be a critical mismatch in terms of numbers of therapeutic licences and spinouts in comparison to the amount devoted to university research in this area. What all too often happens is that potential treatments to diseases languish after initial discovery on a shelf because the grant funding runway has been exhausted and the attempt to move therapeutic candidates out of the university somehow fails. There is an element of this in all technology areas – not every piece of applied research can yield a winner. However, the problem seems especially acute with respect to therapeutics. Licence to established companies does not appear to be a viable route based on the observation that none has happened of late (though I’d be happy to be corrected on this). Startups appear a more viable route by the simple expedient that there are some in existence, though they (with few notable exceptions) appear to have a torrid time in surviving never mind growing.

I certainly don’t feel this state of affairs has anything to do with the quality of the research but, rather, to do with challenges I outline below. These stem from three interlocking factors that need to be addressed in parallel in order for any spinout to gain momentum – people, assets and funding.

People: Putting together the right mix of people that will both execute on the development plan and be credible to funders and prospective partners is crucial. Yet, building a team to develop new drugs is surprising difficult in Ireland. Whilst over 50% of GNP comes from the export of pharmaceuticals, the available skillsets are in manufacturing not drug development.

Assets: In the case of new therapeutics arising from universities, they are likely to mostly be “early stage” considering the very high costs of appreciably developing them are beyond most/all funding available at third level.

Funding: It’s almost an axiom to say that developing new drugs is the most expensive and risky of startup types. These qualities make it especially difficult to raise monies sufficient to reach a value inflection point. A first port of call is often the local VC community and they, it seems to me, add the lack of a credible team and the usually early stage nature of the molecule to the the risk/cost feature and pass on the opportunity to invest. Non-dilutive financing in the forms of grants and awards are a partial answer. However, the long timelines to obtaining these, their narrow programmatical uses and low application success rate limit their utility.

I’m not sure what the solutions to the above challenges are beyond calling for more resources, though I do have some thoughts that might comprise later entries. In the meantime, however, some form of debate would be welcomed. Otherwise, a scenario may arise where the following question is posed – should development of therapeutics in the university be abandoned as they are unlikely to be given adequate chance of progression out of academia and into the clinic?