APPENDIX 10
Memorandum by PowderJect Pharmaceuticals
plc
EXECUTIVE SUMMARY
— PowderJect is the fourth largest
biotechnology company in Europe by revenues and the UK's only
commercial vaccine manufacturer.
— The biotechnology industry already
generates significant revenues for UK plc and in the future will
contribute to the balance of payments through the export of its
products and services.
— The climate in the United States
remains the most pro-biotech with an excellent science base, easy
access to capital at all stages of development and a large integrated
market. In contrast, the market in Europe remains fragmented.
— Within the UK, there remain gaps
within Government policy to promote biotech. For example, there
are no major initiatives to promote the sustainability of larger
companies.
— Where regional grant aid funding
is available, such as in regions like the North West, it is often
managed by a broad group of bodies and gaining access to such
funding is becoming increasingly difficult and time-consuming.
There must be a more efficient, direct method of consolidating
this activity.
— In those areas where the Government
is seeking to develop "regional excellence" and a positive
environment, innovative policies need to exist to help bridge
the education gap between the level of skilled workers available
and industry needs.
— Other initiatives, such as the development
of a national biologicals manufacturing institute for teaching
and public-private partnerships in vaccines manufacturing for
the developing world, should also be explored.
— While the difficulties associated
with funding cycles are market-driven, there could be scope for
some form of loan-scheme to be available for companies which need
to raise capital during difficult market conditions.
— It is important that the role of
intellectual property and the "seeding of patents" into
industry is professionally undertaken. Early stage companies need
experienced IP management to ensure that their inventions are
properly protected.
BACKGROUND ON
POWDERJECT
PHARMACEUTICALS
PowderJect is one of the world's largest independent
vaccines companies and is the UK's only vaccine manufacturer.
The Company is headquartered in Oxford, UK. PowderJect expects
to achieve sales of over £100 million for 2001 and is the
fourth largest biotechnology company in Europe by revenues1
Table 1
CORPORATE SUMMARY
| Locations: | United Kingdom—Oxford (Corporate, R & D); Speke, Liverpool (Manufacturing)
Sweden—Solna, Stockholm (Manfacturing, Sales)
United States—Madison, Wisconsin (R & D)
|
| No employees: | 1,000 (750 based in UK)
|
| Product portfolio: | Vaccines for influenza, yellow fever, traveller's diarrhoea, cholera, tuberculosis, polio, tetanus
|
| R & D platforms: | Needle-free powder injection technology
DNA vaccines
Oral rCTB delivery
|
| Therapeutic focus: | Vaccines and immunotherapeutics
|
| Major partnerships: | GlaxoSmithKline, Aventis
|
| |
Table 2
R & D PIPELINE
| Clinical: | Arilvax® (Yellow Fever—US—Phase III), Dukoral® (Traveller's Diarrhoea—EU—filed March 2002), hepatitis B DNA prophylactic and therapeutic (Phase I with GlaxoSmithKline)
|
| Preclinical: | PJ Fluvirin®, PJ Diphtheria/Tetanus, PJ hepatitis B, PJ Influenza DNA vaccine, PJ HSV DNA vaccine, HIV DNA prophylactic and therapeutic (with GSK), HPV DNA vaccine (with GSK)
|
PJ = PowderJect powder injection vaccine.
| |
1. THE CONTRIBUTION
WHICH BIOTECHNOLOGY
INDUSTRIES CAN
MAKE TO
RELATIVE GDP GROWTH
AND THE
PERFORMANCE OF
THE UK AS
A KNOWLEDGE-BASED
ECONOMY
(a) The Contribution of biotechnology in the UK
Biotechnology is a key area for the UK economy. It plays
to the UK's strengths in high-quality research and its expertise
in the pharmaceutical industry. The industry already generates
significant revenues for UK plc (£1.84 billion in 20002)
and in the future will contribute to the balance of payments through
the export of its products and services.
PowderJect's projected revenues for the year 2001-02 are
expected to be over £100 million (£40 million in 2000).
This represents an average of £100k per employee, a figure
higher than the current average of £80k for healthcare companies3.
Over 50% of the Company's revenues are generated through the export
of products. PowderJect has invested heavily in R&D, with
total R&D expenditure for the year 2000-01 of £30.9 million.
PowderJect has also made substantial contributions in terms
of PAYE and NIC contributions, as well as in VAT. Over the last
three years, total PAYE & NIC contributions have exceeded
£6 million, while VAT payments have totalled more than £3.5
million. For most of this period PowderJect has been a loss making
company.
PowderJect is a major player in the UK biotech sector and
has a significant role to play in the supply and development of
vaccines for the UK. Vaccines already play a vital role in human
healthcare, and their importance is likely to increase as the
pharmaco-economic benefits of vaccines become more visible. As
the only national commercial vaccine manufacturer PowderJect is
a strategic asset for the UK.
— PowderJect is the UK's leading flu vaccine manufacturer
with significant market share and is one of three suppliers of
flu vaccine in the United States. Fluvirin is the first preservative-free
vaccine to be licensed by the FDA.
— PowderJect is the sole supplier to the UK Government
Department of Health of BCG tuberculosis vaccines and complementary
tuberculin tests.
— PowderJect is one of only two suppliers in Europe
of yellow fever vaccine.
— The Company has just filed for EU registration
its travellers diarrhoea vaccine, Dukoral®.
— In R&D, the Company is investing in its DNA
vaccine programmes in collaboration with GlaxoSmithKline and has
a DNA hepatitis B vaccine in Phase I clinical trials. Results
have demonstrated the ability to induce cellular immune responses
which may be critical for treating chronic viral infections.
— A HIV vaccine is also in preclinical development.
The DNA vaccine platform has potential applications in prophylactic
and therapeutic vaccines, in particular in infectious diseases,
allergy and cancer.
— PowderJect is one of the major pharmaceutical
manufacturers in the North West employing over 650 people at its
plant in Speke. This facility is one of the few in the world to
be approved by both the FDA and MCA regulatory authorities.
The Company is investing heavily in R&D directed at the
vaccine markets of the future, both in prophylaxis and therapeutics.
For example, new DNA vaccines for HIV and Hepatitis B are in development
which have the potential to prevent or treat disease.
This DNA technology can also be applied in the development
of new therapeutic vaccines for cancer and allergy, disease areas
which have significant incidence. In particular, the successful
development of cancer vaccines could have a major impact on healthcare
and significantly reduce the cost of cancer treatment. In manufacturing,
PowderJect has made major investments in its production facility
at Speke.
(b) Comparison between UK, US and Sweden
PowderJect is well placed to draw comparisons between the
UK, US and Sweden in terms of regulation, encouragement for new
start-ups and government relations. There are significant differences
between the three countries. The climate in the United States
remains the most pro-biotech with an excellent science base, easy
access to capital at all stages of development and a large integrated
market. In contrast, the healthcare market in Europe remains fragmented.
In relation to vaccines there is no integrated vaccination policy
and Member States adopt their own policies on vaccination.
Although the UK remains the European leader in biotechnology,
Government investment lags behind some of the other member States
eg Germany. In Sweden, the research base is strong and the number
of venture capital companies is increasingly rapidly. However,
the Swedish taxation system has one of the world's highest tax
rates on salaries and capital income which acts as a barrier to
recruiting top talent from abroad.
RECOMMENDATIONS
— There is no integrated healthcare policy within
Europe. In relation to vaccines, each Member State has a different
vaccination policy. This impacts on the capability of vaccine
companies to service the smaller, niche markets such as TB.
— Within the UK, there remain gaps within the Government
policy to promote biotech. Current policies appear to be fragmented
(eg academia, incubator initiatives) and there is no integrated
policy which allows the development of a full "life-cycle"
approach—from the research base, through development, scale-up,
early clinical trials and through to full commercialisation. There
are no major initiatives to promote the sustainability of larger
companies.
— In contrast to Germany, UK grant funding levels
are low and there is no Government scheme that matches the German
BioRegio scheme.
2. The relationship between industry, higher education
and research, including the effectiveness of the Government's
Science and Technology programmes in creating a positive environment
for the industry
PowderJect's experiences in the transfer of technology from
a university to a start-up have generally been positive. The Company
has had a constructive relationship with the University of Oxford
since inception and has witnessed a sea-change in attitude to
academic-industrial collaboration during this period. The work
carried out by Isis Innovation, the University's technology transfer
company, has been instrumental in bringing about this change.
— Oxford University has the highest amount of externally
funded research income in the history of UK higher education (over
£130 million in 1999-2000, with over £20 million from
industry).
— The Said Business School was opened in September
2001 and is one of the UK's leading management and business schools.
— Oxford University is the leading UK university
for commercial spin-outs.
The association between the University and PowderJect has
been extremely beneficial to the University.
— PowderJect has contributed over £1.5 million
in research funding to the MEU at Oxford University in the last
three years.
— The University of Oxford has received over £10
million from the partial sale of its equity holding in PowderJect
to date.
Although there are a range of different grants available
in the UK and Europe, the relatively low amounts of money available
as balanced against the amount of work involved in securing the
grant, means that other sources of income are more attractive.
In the UK, many of the grants are available for early stage businesses
eg start-ups, or technology transfer eg Biotechnology Exploitation
Platform and the Biotechnology Mentoring and Incubator Challenge.
In Europe, grants through the Framework V Programme or Eureka
have generally not been in alignment with PowderJect's R&D
needs.
RECOMMENDATIONS
— PowderJect recognises the importance of such grants
in stimulating technology transfer and early stage company activity,
but believes that more can be done to stimulate late-stage company
development.
— In regions like the North West, where regional
grant aid funding is available, it is often managed by a broad
group of bodies and gaining access to such funding is becoming
increasingly difficult and time-consuming. There must be a more
efficient, direct method of consolidating this activity.
3. The relative competitiveness of the UK as a location
for R&D, exploitation of research and for manufacturing
PowderJect is the only UK manufacturer of vaccines. Its world-class
biologics manufacturing facilities, which are located at Speke,
Liverpool, have received approximately £60 million of investment
over the last five years. They are amongst the largest in Europe,
and are approved by both the US FDA and European regulatory authorities
(including the MCA). Capabilities include cell-based and live-virus
manufacturing, as well as category three containment. There is
significant potential for capacity expansion at the Speke site.
The global market for biopharmaceutical manufacturing is
expanding. Production of biologicals requires extensive technical
expertise and long-term commitment to quality and infrastructure
development. The manufacturing sector requires a specifically
trained workforce with high capital expenditure for the manufacturing
plant. In addition, cutting-edge process technology, analytical
sciences and regulatory compliance are all necessary requirements
for a strong manufacturing base. At present, the UK is under-performing
in manufacturing and the focus of clusters in regions like the
North West on manufacturing would be extremely beneficial to the
UK. This would complement the focus of other clusters, such as
London and Oxford on R&D. In particular, the Speke-Liverpool
area has a strong underpinning life science research base, pharmaceutical
and GMP tradition and a strong base of skilled workers in manufacturing.
RECOMMENDATIONS
— In order to remain competitive within vaccine
manufacturing it is essential that PowderJect can attract highly
skilled personnel to Liverpool.
— In those areas where the Government is seeking
to develop a "regional excellence" and a positive environment,
innovative policies need to exist to help bridge the education
gap between the level of skilled workers available and industry
needs.
— The UK remains competitive with its high-quality
R&D. PowderJect is supportive of the steps taken by the DTI
to enhance funding of the science base.
4. The importance of "clusters", the characteristics
of successful clusters and locational factors for the industry
PowderJect believes that clusters are essential to the development
of the UK biotech industry and that a number of criteria are necessary
for the development of successful clusters. These have been reviewed
in the DTI Report "Biotechnology Clusters"4, and PowderJect
endorses the critical factors highlighted for cluster development.
Table 3
CRITICAL FACTORS FOR CLUSTER DEVELOPMENT
— Entrepreneurial culture.
— Ability to attract key staff.
— Availability of finance.
— Premises and infrastructure.
— Busness support services and large companies in
related industries.
— Supportive policy environment.
Through its Oxford and Speke sites, PowderJect has first-hand
experience of two regions—Oxfordshire and the NorthWest.
OXFORD
Oxford represents a well-developed cluster and remains a
focus of new company start-ups. While many of the above factors
have continued to be strengthened, such as the increasing role
of business angels in financing start-up companies, efficient
technology transfer through Isis Innovation and the ability to
attract key staff, a number of issues remain. Premises for companies
at all stages of development remain at a premium, and although
availability of premises for early-stage companies has been partially
addressed through incubator organisations such as Oxfordshire
BiotechNet, there remain shortages of high-class R&D facilities.
Significant difficulties have also been encountered in the
continued operations of Oxfordshire BioLink, the regional biotechnology
association. While policy decisions at central government level
have given a commitment to such organisations, funding has been
extremely difficult to obtain at regional level. Despite the obvious
inherent advantages in the Oxford cluster, PowderJect's experience
is that it remains difficult to generate support from the main
stakeholders to develop a long-term vision for Oxford.
NORTH WEST
In contrast, in the North West region, PowderJect has been
impressed with the commitment to biotechnology and pharmaceutical
industries. Although the cluster is at a much earlier stage of
development, there is a real "buzz" and enthusiasm from
all the stakeholders. The European Union has designated Merseyside
an Objective One Area with a total of £2.1 billion earmarked
for regeneration. Over £30 million will be available for
funding biopharmaceutical initiatives, including MerseyBio, the
local incubator and mentoring organisation. While the number of
biotech SMEs in Liverpool is low, there is the potential to build
on local expertise in biologicals manufacturing and develop Merseyside
as a key area of expertise in manufacturing. This would attract
other SMEs to the area, particularly if they originated from regions
where such manufacturing expertise is lacking. The award of a
grant to create a National Biomanufacturing Centre for the production
of Phase I clinical biologicals and biopharmaceuticals on behalf
of the UK research and SME biotech community is a positive step.
RECOMMENDATIONS
— Further initiatives, such as the development of
a national biologicals manufacturing institute for teaching and
public-private partnerships in vaccines manufacturing for the
developing world, should also be explored.
— Building critical mass in biomanufacturing in
Merseyside will speed up the evolution of a major cluster in the
North West as well as enhance the rate of regeneration in the
area. This, in turn, will drive inward investment.
5. Sources of finance and the means of securing soundly
based risk finance in high-technology exploitations
The experience of PowderJect in raising funding has been
variable. Securing early stage start-up funding was extremely
difficult and required a number of different approaches, including
venture capital investment, government grants, bank overdraft
facilities and income from corporate partnering.
While the financing environment is better understood today,
many SMEs regard sustainable financing as a critical barrier for
success. Over the last five years there has been increased participation
from venture capitalists and the greater availability of early
seed funding from sources such as business angels. There have
been improvements in the sums raised pre-IPO through venture capital,
with sums between £20-£30 million now possible. One
advantage is that companies which are well-funded through venture
capital do not need to become publicly quoted so early in their
development, and can delay listing which in turn reduces risks
to non-specialist investors. In the past, companies have tended
to go public with products in Phase I clinical trials with product
launches between five and seven years away.
Despite these improvements, there remains a major gap between
the US and UK in the levels of funding. In the UK, it still remains
difficult to raise really significant sums of equity finance,
both pre-IPO and at IPO. Typically, funding in the UK allows for
2-3 years of operations. Financing is cyclical and windows can
open and close very rapidly. If the funding window is closed when
a company has to return to the market for further cash, significant
problems can arise. In the US, the capacity to raise significant
amounts of equity finance—from $100-$200 million—means
that companies can have large amounts of cash—up to $500
million—to ensure successful development of their products
without running the risk of running out of cash. They are therefore
insulated from the vicissitudes of the funding cycles. Such "war-chests"
also ensure that these companies can make strategic acquisitions
when the opportunity arises.
It should be understood, however, that the timescale for
developing a new biotech product is between 12-15 years with costs
in excess of $300 million per successful product launch. There
is a sense in the UK industry that there have been more significant
late-stage product failures than successes. While product failures
are inevitable, PowderJect believes that the success in the US
has been based on a significant critical mass, both in terms of
biotech companies and innovative products, such that the attrition
rate is balanced by a pipeline of successful product launches.
It is debatable whether the UK biotech industry has yet achieved
a critical mass of late-stage development companies that can support
a through-flow of successful product launches.
The activities of the animal rights activists have also had
a negative impact on the industry and ongoing financing. Apart
from the substantial difficulties encountered by HLS in securing
funding for its operations, there has been a complete lack of
support from UK financial institutions in respect of animal rights
extremists.
Finally, the biotech sector is expected to go through some
consolidation in the next few years. The experience of PowderJect
in acquisitions has been that it is considerably easier to acquire
either UK or US companies when compared with continental Europe.
For a variety of legal, regulatory and management reasons, it
is much harder to complete M & A transactions with European
companies.
RECOMMENDATIONS
— While the difficulties associated with funding
cycles is market-driven, there could be scope for some form of
loan-scheme to be available for companies which need to raise
capital during difficult market conditions.
— There is a similar perception that the UK financial
environment remains less competitive than in Germany, where many
start-up companies are able to acquire Federal Government funding
through "soft-loans". PowderJect questions whether there
is a level-playing field within Europe in relation to funding
start-ups.
— Given the need for a level playing field across
Europe, PowderJect believes that issues of legal, regulatory and
management barriers, which make it is much harder to complete
M & A transactions with European companies, needs to be addressed.
6. The role of incubators and other means of growing
businesses from a research base
PowderJect is strongly supportive of the activities undertaken
by incubators such as MerseyBio and Oxfordshire BiotechNet. Incubators
have become increasingly important in the generation of new start-ups.
This has been complemented by the greater flexibility in approaches
to technology-transfer undertaken by University-Industry Liaison
organisations such as Isis Innovation in Oxford.
RECOMMENDATIONS
— To ensure that the UK biotech industry retains
its premier position in Europe, it is essential that incubators
are adequately funded and staffed with the appropriate expert
personnel to carry out their roles effectively and efficiently.
— Apart from undertaking effective technology transfer
from academic laboratories to industry, it is important that the
role of intellectual property and the "seeding of patents"
into industry is professionally undertaken. Early stage companies
need experienced IP management to ensure that their inventions
are properly protected.
— PowderJect has built its research base both through
organic growth and acquisition of new, complementary technologies.
It is important that the infrastructure for research and development
is put in place and run by experienced management.
7. The impact of the legislative and regulatory framework
for science on industrial investment and location decisions
There are several aspects of biopharmaceutical regulation
and societal perceptions which directly impact PowderJect. These
are:
— The Animal (Scientific Procedures) Act 1986.
The continued activities of animal rights activists is having
a negative impact on the industry at a number of different levels
including the ability to develop new products, financing, recruitment,
inward investment and the general climate within which employees
can undertake their work. PowderJect supports the steps taken
by the Government to date on animal rights extremists and requests
that steps are taken to ensure that local police forces have adequate
funding to tackle extremist activity.
Another important area is the public perception of vaccines
within the UK. The ongoing debate on MMR within the UK has overly-influenced
the wider vaccine debate. Vaccination has substantial pharmaco-economic
benefits and PowderJect believes that such advantages will become
increasingly important with the introduction of therapeutic vaccines
in the future. It is important that the benefits and facts about
vaccination are clearly set out for the general public. PowderJect
believes that both industry and the Government has an important
role to play in this respect.
— The Directive on the Legal Protection of Biotechnological
Inventions (1998)
The Directive has yet to be implemented in the majority of
EU member States. PowderJect believes that is essential that this
Directive is converted into national law as soon as possible to
ensure harmonised patent legislation across Europe.
PowderJect is generally supportive of the financial incentives
put in place by the Government such R & D tax credits but
believes that the policy on National Insurance deductions on stock
options can lead to a heavy burden of National Insurance for employers
when their employees vest such options.
CONCLUSION
In conclusion, PowderJect is now a fully-integrated vaccine
company, excellently positioned to grow with its pipeline of next
generation vaccines and immunotherapeutics. It invested approximately
£30 million in R&D in 2000-01 and will continue to invest
at this level in the next financial year. The PowderJect story
demonstrates the importance of being entrepreneurial and adaptable,
of evolving the business strategy, and in planning to cope with
the unexpected.
PowderJect would like to thank the Committee for this opportunity
to submit written evidence on the UK Biotechnology Industry. Dr
Paul Drayson will be giving oral evidence to the Committee in
his role as Chairman of the BioIndustry Association. However,
if it would be helpful to the Committee, Dr Drayson (or another
of the Company's Directors such as Dr Clive Dix, PowderJect's
R&D Director) would be happy to also give oral evidence on
behalf of PowderJect.
REFERENCES
1. Goldman Sachs Investment Research Report, May 2001.
2. "Results of the 2001 UK biotechnology statistical
study"—Spirit Consulting/Andersen, February 2002.
3. Ibid.
4. Biotechnology Clusters, DTI (1999).
Annex
Background on Powderject Pharmaceuticals
PowderJect Pharmaceuticals was founded in 1993 by Dr Paul
Drayson as Oxford Biosciences and the name was subsequently changed
to PowderJect Pharmaceuticals. Oxford Biosciences was a spin-out
company from the University of Oxford founded on technology developed
by Professor Brian Bellhouse at the Medical Engineering Unit,
Department of Engineering Science. The core technology is based
on the needleless injection of powdered pharmaceuticals using
a supersonic flow of helium gas to painlessly inject particles
of medicine into the skin.
Early Strategy: As a start-up business, Oxford Biosciences
focused on becoming an application technology provider through
the demonstration of technology proof-of-principle.
— As with all technology companies, the dilemma
is the need for cash to develop the technology set against the
need to show that the technology works in order to raise the money
in the first place.
— There is no easy solution to this and in the early
years the Company used corporate partnering as a solution. This
strategy requires a strong patent position on the core method,
with pharmaceutical partners funding product development to validate
the technology and offset R&D costs. Key components of the
supply chain were sub-contracted to offset capital investment
costs. Finally, branding was used to develop the company profile.
The effectiveness of this strategy was fully vindicated by
the exclusive licensing of the core technology to large pharmaceutical
companies first, in March 1998, with a $300 million DNA vaccine
collaboration with Glaxo Wellcome, followed in February 1999,
with a $100 million bio-pharmaceutical collaboration with Ares-Serono.
The rights to supply components of the technology were also exclusively
licensed with BOC to develop the helium cylinder in 1996.
Table 4
EARLY FUNDING HISTORY OF POWDERJECT
| Funding 1993-95 | Funding 1996
|
| Seed investment—£80k | 2nd round venture capital November 1996
|
| Income from corporate partners—£1.0 million
| — £1.5 million with further drawndown facility
|
| Research grants—£70k |
|
| Lloyd's bank overdraft—£150k |
|
| 1st round venture capital November 1995 |
|
| — CWB Capital Partners |
|
| — £2.0 million for 15% |
|
| |
Pre-IPO: In 1995 the Company identified US competition in
the form of the Sanford particle gene delivery patents which had
been licensed to Auragen. Auragen was owned by W R Grace and focused
on DNA vaccines, cancer and gene therapy. The Auragen technology
had strong synergy with the PowderJect delivery technology. Rather
than enter into a competitive race, PowderJect proposed a 50:50
joint venture with W R Grace to acquire Auragen in December 1996.
Under the agreement, Grace contributed the DNA vaccine company
Auragen and a $7.5 million convertible loan note, while PowderJect
contributed management, delivery technology and $3 million. This
agreement valued PowderJect at £60 million.
IPO: In June 1997 PowderJect was listed on the London Stock
Exchange and following the listing acquired the remaining 50%
of the joint venture with W R Grace. By 1999 PowderJect was a
contract developer with its own R & D pipeline. The Company
had multiple product development collaborations, was a well-funded
publicly quoted company and the supply was nearing completion.
Table 5
POWDERJECT IPO AND SECONDARY FINANCING
IPO and Completion of Acquisition
Flotation—185p issue price
— £35 million raised, post money valuation £110
million
— Conversion of $7.5 million Grace loan note into PJP
equity
— Spent £9 million to purchase remaining JV stock
giving full ownership of genetic vaccine business
Secondary offering February 1999
— £50 million financing to fund development of
vaccine products
The transformation to a vaccines/immunotherapeutics specialist:
The challenge going forward was to find a way to evolve from a
technology development business to a profitable, fully-integrated
pharmaceutical company. There were two reasons for this—to
increase value and to gain more control. The Company also decided
to focus on vaccines rather than drugs due to the rapid growth
of the vaccines world market and the strong synergies created
by its R&D platform in developing new vaccines.
In September 2000, PowderJect acquired Medeva Vaccines from
Celltech for £35 million. The rationale for acquiring a mature
vaccine business was that when combined with PowderJect's vaccines
R & D strength, the combined business would be a world-class
vaccine business with significant value creation. The acquisition
gave PowderJect a range of marketed and late stage products, and
excellent production facilities. The acquisition was funded by
a fully underwritten Placing with convertible loan notes. PowderJect
was transformed into a full-capability integrated vaccines business.
In June 2001, PowderJect acquired SBL Vaccin, Sweden's leading
vaccine company. This acquisition boosted PowderJect's proprietary
portfolio and added marketing and sales capability. The consideration
for the acquisition was $50 million, of which $37.5 million was
funded via a vendor placing and $12.5 million from cash reserves.
— As a result of these acquisitions, PowderJect
now has market access and coverage of selected market segments
and regional markets.
— It has capabilities in vaccine sales, manufacturing
and R & D.
The transformation to specialist vaccines company was completed
in March 2002 with the divestment of its drugs business to AlgoRx
Pharmaceuticals.
The history of PowderJect also demonstrates the two main
business strategies available to biotech companies—the partnered
vs fully-integrated option.
Table 6
TWO BIOTECH BUSINESS STRATEGIES
| Partnered | Fully-integrated
|
| Positives—validiation, offsets risk, access to know-how and resources, near term income
| Positives—maximises future income, independence and control
|
| Negatives—reduces future income, subject to instant cancellation, slower development and loss of control
| Negatives—high risk, very capital intensive, difficult to assess assets, requires successful M&A
|
| |
|
