Simon Best emerged as one of the UK’s top life-sciences entrepreneurs more than a decade ago as CEO of Roslin Biomed, a Roslin Institute commercial offshoot that held intellectual property rights to the technologies behind Dolly the sheep, the first mammal cloned from an adult cell in 1997.
Two years later, Best merged the company with Geron to form Geron BioMed, then became a chief executive for various companies. Today, he is an entrepreneur-in-residence at venture-capital firm TVM Capital.
Now Best has begun tackling a new commercialization challenge — helping the University of Edinburgh and other institutions within the Edinburgh BioQuarter bring their vaccines, products, and technologies to market.
Best chairs the committee charged with overseeing the commercialization program at the 100-acre BioQuarter. The panel has begun searching for a CEO to oversee the effort day to day.
Over 15 years, Best has assumed executive and non-executive roles with life-sci companies that have raised a combined £130 million. Not all of Best’s companies have been successes; he was also the CEO of Ardana, an Edinburgh-based drug developer that was placed into administration last year after running out of cash.
At the BioQuarter, Best heads a committee that includes top executives from the university, as well as other partners in the BioQuarter, including the UK’s National Health Service Lothian, whose university hospitals division oversees the Royal Infirmary of Edinburgh; Scotland’s economic development agency, Scottish Enterprise; and Alexandria Real Estate Equities, the publicly traded Pasadena, Calif., real estate investment trust that focuses on developing laboratory properties.
BioQuarter’s partners plan to invest a combined £850 million ($1.4 billion) in various projects. Of that total, £600 million has already been spent over the past five years, while the remaining £250 million will be spent on future projects, starting with two now under construction: The £60 million Scottish Centre for Regenerative Medicine, intended to advance research into the uses of adult and embryonic stem cells in treating disease, and set to open in the spring or summer of 2010; and the Clinical Research Imaging Centre at Little France, a £10 million facility designed to serve the needs of the Queen's Medical Research Institute at Little France.
Also set to rise at BioQuarter is a new Hospital for Sick Children, as well as at least two further significant clinical facilities whose details have yet to be announced.
BioRegion News recently spoke with Best about the BioQuarter’s commercialization effort, and the challenge of transforming the campus into an engine for successful commercial products developed from its own research. Following is an edited transcript of the interview:
Can you give an update on what has been happening with the development of the BioQuarter commercialization board?
The most important developments are really the fact that we're getting, if you like, staffed up. We've already got a very strong board, which is obviously what I've been asked to chair. And that includes representatives of two major investors in the UK, that's John Shields, who is a partner [principal for science and technology] in Abingworth Ventures, which is one of the remaining sizeable UK venture firms that invest in biotech, and then Russell Greig from SR One, which is the GSK corporate venture house, who has also come on the board. There's no guarantee that by board participation, they're not under any commitment to invest money. But the fact that they're willing to invest their time and expertise is very helpful, and I think signals the fact that some of the potential projects and assets that we've got merit the attention of big players like that.
The board also includes [Alexandria Chairman and CEO Joel Marcus] and one of his senior people, but also Carl Weissman, the chief executive of the Accelerator, which [was] originally an Alexandria project, in Seattle, who has been through the fairly recent experience of building a particular model of a tech transfer facility in another interesting cluster on the West Coast. Beyond that, we have other key stakeholders involved, from the university, from the hospital, from the National Health Service, and from Scottish Enterprise.
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The board is now assembled. I'm in place to lead it. And literally, we're at the stage now of long-listing chief executives. We're getting very good candidates, including CEOs, or people who have been CEOs, of two or three companies that have achieved decent exits in the UK, and there haven't been that many of them, but we've gotten some people interested in this who can see that it really does have the potential to generate some very interesting companies. We'll be short-listing over the next few weeks, and hopefully making an appointment by, I guess, the end of October, to start in Q1 next year.
What is the status of the brick-and-mortar projects planned for the BioQuarter?
The first building, which is the Centre for Regenerative Medicine, broke ground several months ago, so it's coming out fairly quickly, and will actually be opened next summer. And we're putting in place the financing for the first two multi-occupancy buildings, which will be the incubator space. And we have several inquiries, fairly early stage, from potential inward investees, from both service companies and product development companies looking to come in and potentially take space on the site.
We've got the whole process gearing up, as we staff up, to really look at the internal pipeline. We've done a very thorough [intellectual property] and project review of everything that's coming out of the program in what's known as the Queen Margaret Research Institute, which is this bringing together 850 top medical researchers as an engine of the spinout side of the BioQuarter. And that's thrown up a lot of very promising projects, some of which I was already aware of, because they've been coming through for a year or two. But [there has also been] a lot of interesting new stuff that I think the chief executive can really get his or her hands into and really look to pair up with assets from outside and potential money. So there's quite a lot happening, but the pace of development will really speed up once we've got the chief executive in place.
What would be the duties expected of the CEO? Would the CEO oversee the campus, or strictly commercialization?
For the commercialization program he or she will work with the board to coordinate the stakeholders of the real estate, but really the commercialization. The CEO will be responsible for inward investment into the site, and how to commercialize the assets generated from the site, some of which are mature enough, and strong enough, and fundable enough to actually form companies purely based on our own IP.
But I also see a very critical role for the chief executive to have the right sort of Rolodex to be able to match up some of the late pre-clinical early clinical, and indeed research assets that we have coming out of the institute, and the hospital, and the university, to sort of match those with assets that perhaps have not been taken forward as much as they could, from big pharma or big biotech. And if paired with the pipeline that we've got, might then form a fundable critical mass. We want a CEO that has got the right connections on both sides of the Atlantic and indeed Asia, so he or she can match our assets with other things that are out there to build fundable propositions.
Any chance that CEO might be yourself?
No, no. Good try! I've done three sizeable ventures. I was a CEO for 16 years. I'm also a very experienced chair, both on the corporate governance and the strategy side. I'm very happy to take on that challenge. And believe me, we have some very good candidates, both some people I've directly worked with before, and others who got a very good reputation.
To what extent does the CEO you are looking for have to be more of a science person, and to what extent more of a money person?
I think that's probably the wrong juxtaposition. They don’t necessarily have to be science people, as long as they are, like most successful CEOs in our industry, people who have experience and confidence to understand the science, and be able to ask the right questions of the scientists, and to help shape science programs towards productization. We certainly haven't set 'must have PhD in a relevant scientific discipline' as a must-have criterion.
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When you say money, I think that's probably the wrong emphasis. I think we want people who have actually built companies, and know what it takes to create products, whether that's service offerings, medical devices, diagnostics, or therapeutics. We want people who actually understand the multidisciplinary project management challenges required to actually get products out there. I think that's more important than whether they happen to have also been on the finance side of the fence. These will need to be people who have raised money for other projects on a big scale, certainly.
What sort of mix of commercialization projects does BioQuarter look to nurture? More on the medical device side? More on drug development?
I think it will be quite diverse. We haven’t gone in with a cookie-cutter idea of what the mix should be. We basically want to look at which of our assets, on a global basis, are truly the most competitive, and fundable, and then build a portfolio from there. That doesn't mean we're not going to be astute on portfolio balance and risk management. We will want to see a mix of service and lower-risk projects, as well as higher-risk ones. But in that sense, I think in the present funding environment, the portfolio balance will take care of itself.
The brutal reality is, funding — and certainly in the UK at the moment — getting funding for anything other than service or fairly near-term, low-risk product type companies, like certain types of medical devices or diagnostics, is almost impossible. So I think that the market discipline is to have a fair number of lower-risk projects in those sorts of categories. I think it will take more imagination, and creativity, and international networking to put together fundable propositions in therapeutics.
And that's why I stress that we will be recruiting a CEO with the right sort of experience and Rolodex to build packages based on what we've got, partially on what can be acquired or collaborated to outside. So inevitably, it will take longer, I suspect, to put together really sizeable critical-mass therapeutic projects. But we certainly have the raw material to do that, and I'm sure there will be some very exciting ones, particularly in areas like regenerative medicine, where very clearly our heritage is strong and our patent portfolio is strong. Our links to the leading edge of the US are strong via the links with Geron that have been around for a decade, and that will continue. I think there will be some high-risk, high-reward things. But they'll take longer to do, and will require more creativity.
You mentioned just now, and you said in Scottish Enterprise's statement announcing your new position, that BioQuarter has all the raw materials for commercialization. What, then, has been BioQuarter's challenge in trying to get commercialization going there?
The raw materials don't include a big enough checkbook to capitalize companies beyond the formation stage. The raw materials include excellent science. The Edinburgh University College of Medicine and Veterinary Medicine, the sponsoring academic department for the BioQuarter and the research institutes in it, they recently scored number-one in the UK's research assessment of all publicly funded research. This year, Edinburgh blew everyone else away, including Oxford and Cambridge, Imperial College in London, [University College London], and other very strong places. There's just no question at the moment that Edinburgh is the top dog in the UK in medical research. The science of the raw material is there.
With the board I described, and the management of the CEO that I know we're going to be able to bring in, I think that the management and strategic input is there in terms of raw materials. We have the seed funding to manage the company formation, and the IP protection required to get these things off the ground. What's really missing is the scale of money that I think the projects and companies we're going to come up with deserve. But I think that we've got the raw material to craft fundable propositions.
The missing bit is the actual bringing in of the box to make things happen. And then, we need to overcome the only other obstacle that's out there, which is the fact that as Scotland is a less well-recognized and established cluster than the Cambridge, Oxford, and London clusters — it's an hour's plane ride away. But hey, that didn't stop San Diego creating a fairly effective cluster on the back of San Francisco and the Bay Area. And I just think we need to work at that, and I'm sure we can get there.
How much has the economic downturn of the past year complicated BioQuarter's development and commercialization efforts?
It has added to the challenge. To be honest, the challenge for life sciences in the UK actually had been building up for some time before. So I don't know that the downturn particularly made things worse. Clearly, debt financing hasn’t been typically part of the picture for building companies in the life science arena for many years beyond a bit of venture debt for companies that are relatively new to market stage. So it's really all about equity, and what the sort of risk appetite is for projects with long development cycles and R&D risk.
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I think actually that in a funny sort of way, the downturn might help, because one of the reasons why I think the life science industry in the UK, despite having strong science, has gone through an even tougher time than the US in the downturn is partly because in the period building up to the downturn, as the city of London really took off, pretty much unarguably, as a global financial center, part of its success was based on the fact that it appeared to be offering risk-hungry investors with a very wide range of options for high-risk, high-return investments. Obviously within the financial services sector, a lot of things that looked easier to understand — low-risk, high-return — didn't turn out to be very good propositions. So the fact that those are off the table may be helpful. But within the high-risk, high-return space, the city of London was offering all kinds of real estate plays, right across Asia, China, central Asia, a lot of mineral and oil plays, and a lot of other, apparently easier-to-understand and shorter time cycle of investment proposals, which have all now imploded.
So although we're in the process of repositioning life sciences as a fundable option, actually I think there's less competition now. [We could] do a better job of managing the risk offering up front, showing investors that the assets that we want them to back have actually been more de-risked than those that they were willing to back five years ago. And alongside the public money for the company formation, Edinburgh has money to attract a lot of money from the Wellcome Trust, from the research councils, and some of the medical charities, to actually fund translational programs that take programs right into early clinical development, and therefore [that's] significantly less risky than the kinds of assets that companies were starting out with five years ago. So in an odd sort of way, the downturn has reduced the competition for credible high-risk high-return investment proposals, and that's part of what we're going to be offering with the quality of board input that I described earlier, experienced investors, and so on, alongside an experienced CEO.
You cited London and Cambridge a little earlier. How will those regional biocluster efforts help affect what happens in Edinburgh?
The proposition that it was a no-brainer that investors would look at Cambridge first, I think, has disappeared, because of the very clear gains over the rest of the field that Edinburgh has made. The science and the IP engine speaks for itself. In terms of investment, well yes, to be sure, Cambridge has overall produced more companies, and it produced one of only two greater-than-a-billion-dollar market cap companies that the UK produced in Cambridge Antibody Technology, before it was acquired. So yeah, Scotland hasn’t managed to do that.
But Scotland has got other strengths at the BioQuarter, which actually Cambridge doesn’t have. Scotland is really the epicenter of the clinical research organization industry in the UK, and indeed arguably in Europe. Several of the big global [contract research organizations], including Quintiles, Aptuit, and Charles River, all have their European operations and sizeable operations in Scotland. That's a complementary asset that we can leverage. And some of the investment at the BioQuarter [is] very complementary with that. There's a very strong imaging capability at the University of Edinburgh medical school, which actually is state-of-the-art and is doing a lot of interesting collaborations with the CROs.
Scotland also has the UK's strongest diagnostics company, Axis-Shield, which is in Dundee, not far away, just up the road from Edinburgh. And we have pretty strong medical device companies, and a very strong medical device department across Scotland at Glasgow at University of Strathclyde. Although we will be parochially promoting Edinburgh and the BioQuarter, this is a flagship project for the whole of Scotland, which, let's face it, is a pretty small place, a hell of a lot smaller than the state of New York, and a bit bigger than Delaware, but probably in aggregate, Scotland is about the same size as Massachusetts. And we will be using the BioQuarter as this sort of emblem for the whole of Scotland and its strengths. And if you add all those up, they probably credibly trump what Cambridge can offer other than the number-two [university] in the UK for academic research.
On the commercialization front, what good early examples can you cite of vaccines, other products, or technologies that the CEO will be working to commercialize?
As the university has geared up for this, there have already been some companies, propositions moving forward. We will literally, in the next few months, be announcing the first company to come out of the BioQuarter, which is [developing] new software for an opthamological diagnosis, which has both hospital and high street optometry applications. It's, if you like, a software and service offering [from a] company that has a management team and some seed funding in place … That's the first one where the CEO will be there to help the final stages of raising the money to do that
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We also have a proposition moving forward in new imaging reagents that builds on the imaging expertise I mentioned before. That's a collaboration with an established European image specialist that's coming through in the first phase of this.
On the therapeutic side, we have in the metabolic disease and CNS area an indication switch — work that's done in the university that has identified a novel opportunity in metabolic disease and CNS for an old drug that was originally developed for something completely different. It's actually a pretty small product for its original indication, but we think is potentially something we could take straight into a phase 2 stage project for other indications. That's something that's interesting, and then has a pipeline of pre-clinical, proprietary compounds coming behind it. We have some very interesting novel metabolic disease targets, for which we within the BioQuarter have the chemistry and translational medicine and pre-clinical work. That asset is set up to move those forward very fast. It's a slightly earlier, but potentially very high-value metabolic disease target.
The [imaging reagents and metabolic disease/CNS] projects are not yet vested in actual entities. But the IP has been invested in. Business plans have been prepared. As the BioQuarter CEO comes in place, once he or she is satisfied about what they think the priorities to this selection are, that we can finalize business plans, and get out into the market to try and get these funded.
These are technologies from the university, for the most part, then?
Yep. They're all technologies from the university.
As these companies spin out, where will they land? Will they be locating in the BioQuarter or in the space to be built?
Scottish Enterprise is facilitating the financing and the construction of two multi-occupancy buildings. Those will take a couple of years to put up, and that's where they would go if they were ready. The university is a very big university; they have flexibility to provide transitional incubator space elsewhere on the science campus, which is a couple of miles away from the BioQuarter. And then there is some space within the medical school on the hospital campus, which we can use for the first few companies.
Alexandria [is] our partner in the BioQuarter. They, like a lot of other real estate-based organizations, are market dependent. That has slowed down the pace at which they were willing to invest in speculative buildings at the BioQuarter.
As we really push on the inward investment side, and we have several fairly advanced discussions with companies who would require quite substantial buildings and space. Alexandria Real Estate [is] then poised to step in to build projects for inward investment companies — these are established companies with sizeable businesses and the ability to fund the interest payments on debt financing for the buildings. And Alexandria [is] there to step in and use their expertise to do that. They're still actively involved in the project. And as fundable projects come about, and/or the debt markets return and are able to fund more speculative build, Alexandria will still be a key player.
How similar is the BioQuarter from other life-sciences megaprojects, such as the BioBusiness Park at Elk Run, Minn.?
I think what's different is really the fact that here, you have got every conceivable stakeholder in the UK health environment focused on one commercialization vehicle. Fundamentally, the National Health Service represents a huge proportion of healthcare delivery and a fair proportion of healthcare research in the UK. We have a big unit of the National Health Service as a partner in this. [We have] a teaching hospital right there, not 40 kilometers [about 25 miles] down the road, as in Elk Run. The top university in the UK right there. The development agency right there. And then, the major international real estate developer right there, as well as the board and the management.
In terms of every possible stakeholder that is required to make something like this work, and the muscle of the National Health Service, alongside academia and industry, that's kind of unique. The other things that make BioQuarter a bit different are the particular flavor of the academic strengths in Edinburgh. The translational medicine, the imaging, bioinformatics, where University of Edinburgh is arguably alongside of MIT, number-one or number-two in the world. So very critical sort of bio-support investment there.
It is certainly unique in the UK. It has some similarities with the [Elk Run] megaproject in the US, and others like [MaRS Discovery District] in Toronto, where Alexandria [is] also a player; and San Francisco-Mission Bay, where they've also been a player. There are some similarities, but there are also a fairly unique flavor, and range of partners all working together [that] I don’t think anyone else has got.
Earlier this year, a Scottish Enterprise official said that additional clinical facilities were being planned, but did not offer details. Can you shed any additional light on this project?
No. As the hospital grows — as they bring in the children's hospital, there's still some debate about what additional clinical research facilities would be appropriate alongside all of this. There's ongoing debate about that, but I don’t have any particular number or particular building I can identify for you on that yet.
Will development of the children's hospital give BioQuarter more of a focus on children's medical care?
It obviously gives the possibility for more integrated or stratified early evaluation, translation evaluation, and ultimately clinical development of products, including pediatrics, which obviously is becoming more important, for which the regulatory requirements are more demanding now on both sides of the Atlantic.