Science and TechnologyWritten evidence submitted by the Yorkshire Cancer Research

1. Yorkshire Cancer Research is a regional cancer research charity and a member of both the Association of Medical Research Charities (AMRC) and the National Cancer Research Institute. The charity has an annual income in the £4–6 million bracket and has tended to over-spend on its charitable activities in recent years as a result of its healthy reserves position.1

2. The charity engages in the commercialisation of its research portfolio mainly through its Commercial Development Award (CDA) funding stream. It currently has investments in four spin-out companies and a pipeline of other projects hoping to start down the commercial road. The charity only raises and spends money in Yorkshire. Its aim is to commit around £500,000 annually to this activity.

3. The charity’s Commercial Development Officer, Morgan Williams, was one of the joint authors of the AMRC report “Benefitting from innovation: intellectual property advice for medical research charities” which was published in October 2011.2

4. The charity faces a number of key difficulties in commercialising the output of its research portfolio. A number of these challenges are not financial but relate to the attitude and knowledge levels of the researchers it funds, the time and skill levels available within University technology transfer units and the tension between the academic desire to publish for career advancement and the almost certain fact that without formal intellectual property (usually patent) protection there will be no commercial venture. We work with these challenges daily.

5. There are financial issues we face. As a research funder, we have many calls on our charitable funds and we carry a range of Awards across the research spectrum from basic science through Clinical Awards and onwards to our CDAs and other items of spending which are closer to the patient (eg surgical master-classes to re-train surgeons in techniques which are proven to save more lives.) With a limited pot of money to apply to commercial development projects, we can rarely afford to undertake a commercial project without contributions from others.

6. Various examples illustrate our current difficulties. Two of our existing spin-out companies have been trying to raise capital for their next stage of development over the last 18 months to two years. In each case over 200 separate sources of commercial funding have been approached without success. One of these companies has a world-leading position in prostate cancer stem cell technology. The other is working on cancer vaccine development. Both are routinely described as “too early stage” by investors. The charity’s investment into these two ventures is £838,206 and £265,750 respectively. Other co-investors in these ventures have similarly limited resources. Whilst the second of these ventures is now in the “deep freeze” and may come back to life in a more favourable funding climate, the former is truly lodged in the “valley of death” and may shortly face the prospect of selling its assets for what it can get for them and closing down. Whilst this may not result in the long-term loss of the key IP rights, which may be sold, those rights may be sold abroad.

7. A third venture came to us for funding almost two years ago. This company has invented a new type of speech valve which will be of great help to patients who have had their larynx removed, usually as a result of throat cancer. The new device will be capable of “staying in” patients for perhaps three or four times longer than the current market leader. So in addition to improving life quality for patients, it will save the NHS a significant sum. We have offered this company investment of £100,000 provided they can find the balance of the £400,000 they need from other sources. So far they have not been able to do this and our money remains in the bank. The most common objection from commercial investors is that the market is limited in terms of size because there are only so many speech valves implanted and replaced each year.

8. A number of our spin-out companies have been founded and funded with co-investment from the White Rose Technology Seedcorn Fund (WRTSF).3 The WRTSF is now fully invested and is essentially no longer able to help when we look at new opportunities.

9. Another venture that we wished to pursue was a third incarnation of the Yorkshire Enterprise Fellowship (YEF) Scheme.4

10. Our discussions revolved around the concept of us awarding the Scheme £240,000 to fund specific cancer technology Fellowships at a value of around £40,000 each. With matched funding from ERDF, the cancer “sub-fund” would have provided around 12 cancer specific Fellowships. With the demise of Yorkshire Forward plus a number of changes to the scheme flowing through the ERDF requirements, the third incarnation foundered. Whilst we continue to talk to various parties about whether we can collaborate to found a similar scheme, we anticipate the key block to progress is likely to be a lack of money to help fund such a replacement venture.

11. Recently, we have opened discussions with the Sciences Bridges China (SBC) project which is currently hosted at the University of Bradford.5 We are exploring the possibility of the charity being the sponsor of two cancer technology specific Open Innovation Workshops where we would locate and then screen Yorkshire-based or developed cancer technologies that would be suitable for the SBC OI Workshop treatment. Those candidates would then be taken to China for the Workshop to meet with Chinese regional government funders and a range of possible financial and/or commercial partners. Whilst it seems likely we can impose terms which will guarantee healthy returns to us for non-Chinese markets, the Chinese market terms (remembering that by 2020 this will be the largest market in the world) will hugely favour the Chinese and technology and jobs will likely flow out of the UK for those projects which gain funding through this route. We feel this may be a price worth paying to give these technologies the best chance of success in their progress towards the patient.

12. A recent better news story concerns another spin-out company we fund, this time looking to perfect a plasma-based diagnostic test for early stage lung cancer. A funding round of £535,000 has recently been completed with the help of the Finance Yorkshire (FY) Seedcorn Fund which contributed £325,000.6 The charity’s share was £150,000 taking its total investment in this company to around £550,000.

13. For us, when we interact with the commercial world, the expression we hear too much, and which is often the reason why commercial investors refuse to participate in a venture with us, is “too early stage”. To us this means that the technology is not yet sufficiently advanced to persuade them to share the risk with us. On other occasions (see the speech valve case we refer to above) the potential level of financial return is not adequate to persuade partners to share the risk with us.

14. Our motivation to undertake this type of translational funding is because we want to move certain of the fruits of our research down the road towards the cancer patient. We believe that is what our donors want us to do. We have to do this on commercial terms as provided for in the relevant regulatory framework. We are trying to bridge the “valley of death” but we need help to do this.

15. Funds such as WRTSF and FY are required to invest their funds on commercial terms but their rationale is to make money. Being a charity, whilst we have to make these investments on commercial terms and hope for a return at some point, the “profit” motive is ultimately subservient to the patient benefit agenda; all these investments have to be made in line with our main charitable object.

16. The perception we have is that the requirement to generate profit is (naturally) influencing the attitude to risk in those who have control of these funds. Funds created with motivations in similar balance to those of the charities who do fund this type of activity might help in getting more cash out of the door.

17. Our inability to help deliver a third incarnation of the YEF Scheme frustrates us, because we saw the cancer sub-fund that would have been created as a commercial “pump priming” scheme, which would allow us to nudge cancer technologies on their first step along the road and then act as a feeder for our financially larger CDA scheme. (The scientist involved in the spin-out referred to in paragraph 12 above was awarded a YE Fellowship and used the money made available to unscramble a multi-party funded patent problem which was one of the necessary pre-conditions to attracting commercial investment.)

18. One of the beauties of the YEF Scheme was that in addition to direct financial awards, the Scheme allowed Fellows to receive mentoring and guidance from professionals and technology entrepreneurs who had “been around the block” with early stage technology ventures.

19. Schemes of this type, funded by central government, would be an excellent addition to the funding landscape.

20. Another issue that we face is the “disconnect” between science and commerce. In three of our spin-outs, we see the key scientific figure struggling to balance the time required to continue their academic work and duties with the time necessary to further the interests of the relevant company. Our perception is that, notwithstanding whatever contractual arrangement is agreed between the institution and the company, the key scientific figure struggles to be able to give the relevant amount of time and attention to the commercial activity.

21. Again, our perception is that, as yet, the “value” of commercial development within the academic community has yet to be fully recognised and appreciated. It is possible that the assessment of impact due to form part of the REF will bring a greater acknowledgement of the value of commercial development. This is an area where we feel we can have little impact. We can though, and do, seek to educate the researchers we fund on our view of the value of intellectual property developments and their key role in any process to commercialise the research that we fund.

1 www.yorkshirecancerresearch.org.uk/

2 www.amrc.org.uk/research-resources_intellectual-property

3 www.whiterose.ac.uk/node/31

4 www.yorkshire-forward.com/helping-businesses/improve-your-business/innovate/enterprise-within-universities and
www.yorkshire-forward.com/news-events/news/press-releases/yorkshire-enterprise-fellowship-programme%20

5 www.brad.ac.uk/science-bridges-china/what-is-science-bridges-china/

6 www.finance-yorkshire.com/funding/seedcorn/

Prepared 11th March 2013