It is “extremely difficult” to obtain the investment needed to commercialise regenerative medicine treatments, the House of Lords Science and Technology Committee has heard.
As part of the third evidence session in the committee’s inquiry into regenerative medicine, industry representatives shared their experiences of setting up or working with companies that are developing regenerative medicine treatments.
Paul Kemp, chief executive of the regenerative medicine product company Intercytex, and Anthony Hollander, a rheumatologist at the University of Bristol and co-founder of stem cell spin-out company Azellon, both told the committee about the difficulty in securing long-term investments for regenerative medicine technologies.
“The challenges of funding are, at the moment, extremely difficult in this sector,” said Kemp. “I think what’s happening now is that companies are staying small, staying academic, and getting a lot of the basic science started before they raise equity investment.” He added: “Once you’re on the equity investment treadmill, it’s a full-time job raising funding in this environment.”
He added that many regenerative-medicine areas are not yet ready for commercialisation since there are still gaps in the basic science. This often leads to a risky race to the clinic to impress investors, he warned.
Hollander argued that, because regenerative medicine is a young discipline, the challenges in commercialising it are unique. “We’re trying all the time to persuade investors that this is a fantastic and an exciting area to be in, and indeed we believe it, but actually none of us really know how they’re going to make their money out of this over the next five to ten years.”
Hollander also discussed the successive stages of funding his company, beginning with a Wellcome Trust university translation award, followed by a Technology Strategy Board grant for regenerative medicine, which he described as lucky timing, and then moving into investment from venture capitalist firms and investors with personal interests in the therapies being developed.
“It’s been a tough job, one’s living on a knife-edge all the time: of whether you can get the work done you need to before the next round of funding can come in,” he told the committee.
He went on to suggest “some kind of partnership in funding from government would be an interesting way forward”.
Hollander said that that investors are generally looking for partnerships, which the TSB is good at funding. However, he warned, the TSB’s funding cycles create peaks and troughs, making it a question of luck in terms of whether the timing works out. He suggested that more response-mode funding from the TSB might be a way of building confidence.
The committee also discussed the issue of how to stimulate more activity between universities and companies. Kemp suggested that the TSB’s Cell Therapy Catapult might be a possible source of such leadership, but expressed industry misgivings about the project.
“I think the catapult has potential to really help the industry, but I think there’s potential to damage the industry. It could become a state-funded competitor to industry, depending on what it does, because there are a lot of little industries set up to service the regenerative medicine community…There’s some caution in the industry towards the catapult that the catapult could go down the direction that puts some of us out of business.”
Kemp said he is pleased with the management in place at the catapult, describing them as very willing to help, but described it as “early days”.