Science and TechnologyWritten evidence submitted by Plant Bioscience Limited

Plant Bioscience Limited is an established, for-profit, technology transfer company formed to bring about the protection, development and commercialisation of innovations emerging from public research laboratories, for ultimate public use and benefit. PBL was incorporated in 1995 by The John Innes Centre and The Gatsby Charitable Foundation. It is now owned in equal parts by The John Innes Centre, The Sainsbury Laboratory and The Biotechnology and Biological Sciences Research Council (BBSRC) who became a shareholder in 2004.

PBL operates on a fully contingent basis—that is to say PBL invests funds and resources in patent protection and, in some cases, technical development of emerging innovations, and generates income streams primarily by marketing and licensing, to industry, the corresponding intellectual property rights, and very occasionally by forming new companies. The revenues PBL receives from successful commercialisation are shared with the source public research organisations, on a technology-by-technology basis. PBL is specialised in the biological life sciences, and in particular, though not exclusively, in the plant and agricultural sciences. The company has an active portfolio of technology prospects, sourced from its shareholder organisations, and also from Universities and research institutes not just in the UK, but around the world (eg Spain, USA, Argentina etc).

As day-to-day practitioners in the business of commercialisation of academic research we welcome the Science and Technology Committee’s present inquiry.

1. What are the difficulties of funding the commercialisation of research, and how can they be overcome?

Flexible, accessible, relatively low-level, early stage development funds

There is a critical lack of flexible, rapidly accessible funds to develop innovations to the level that intellectual property positions are well established and that industry can take on the use and/or development of the innovation. A few schemes such as BBSRC Follow-on Fund are helpful, but since the DTI/BIS Public Sector Research Exploitation Fund scheme expired we have seen a big gap open up. Generally speaking, the typical level of required funding on a per-project basis is relatively small (eg less than £50,000). This funding needs to be on the “public side” (unlike TSB which requires company participation) so that progress can be made with what are inevitably extremely immature innovations, before committing them to private sector. Premature engagement with industry partners is not the best route to ensuring ultimate success in technology transfer—IP positions are weak, become comingled, and the selected industry partners may not have the ongoing resources, capability or commitment to achieve broadest exploitation.

Research Intensive PSREs outside University system

Universities still receive support for innovation and technology transfer activities under HEIF, but Public Sector Research Establishments (such as Research Council sponsored Institutes) do not (since the demise of the BIS PSRE Fund Scheme). The UK Universities’ support for innovation under HEIF is annual, and formula based. In which respect it is (at least for the moment) both “permanent and predictable” which was one of the main recommendations of the 2003 Lambert Review of Business University Collaboration. However there is a significant sector of UK’s strategic research conducted in institutions outside the University system and where funding both for commercialisation capacity/resources and for case-by-case technology development is anything but “permanent and predictable”.

UK Public Research—Basic vs Applied

For many very good reasons, UK public science funding and academic research career development is designed to encourage and fund the highest quality science. Indeed, as technology transfer practitioners, we would prefer to see world-class, outstanding scientific breakthroughs than a lot of incorrect second guessing of what industry and/or end-users actually do or don’t require. In any case, by the time public research has come up with a potential solution for a particular industry need, the world has often moved on. But in the drive for scientific excellence, the capacity within the public research sector to take basic discoveries forward (even a few steps) has been eroded over the past few decades. Initiatives such as Technology and Innovation Centres (TICs) (about which see later comment under Q4) may fix some of this need in the future, but we believe big gaps will remain. This point is not so much about “funding commercialisation of research” as where to carry out the necessary early stage development to the point that innovations can be adopted by industry or other developers/users. We find it often quite challenging to find public sector researchers interested and able to conduct some of the applied proof of concept work that is needed even if funding can be found.

2. Are there specific science and engineering sectors where it is particularly difficult to commercialise research? Are there common difficulties and common solutions across sectors?

Bioscience development timescales are typically long term. Public research innovations are generally very early/immature “discoveries”. As mentioned in Q1 above, academic research, and the way that UK academic research is funded, and to some extent (still!) the academic research culture, is not oriented to taking their innovations much beyond the discovery stage. Big industry generally won’t take on early technology and dealing with smaller companies is fraught with non-technical risk.

Moreover in biosciences, with the long timelines for development and commercialisation (and regulatory) steps, patent protection is essential to justify investment, but patent life (20years) is short relative to these timelines. Academic discoveries need to be adopted by industry within the first one to four years of first filing patents, or there maybe be too little patent life left, which puts enormous pressure to get undercooked innovations into industry, or otherwise invested in. Additionally, within this one to four year period is the stage in patent prosecution (30 months after first filing a patent) when it is necessary to elect each country (worldwide) where the patent should be applied—at which stage there is a very significant cost of attorney fees, filing charges and translation costs (tens of £ thousands). Many public sector research organisations abandon most or all patent territories at this stage, unless the technologies already partnered or licensed.

Could the PCT system (Patent Cooperation Treaty) be persuaded to defer the national phase entry date to, say, five years after priority filings, instead of 30 months? Also to extend patent life to longer than 20 years from priority filing for products requiring the long development/deregulation tracks such as in the biosciences.

3. What, if any, examples are there of UK-based research having to be transferred outside the UK for commercialisation? Why did this occur?

Plenty of examples in the biosciences. Technology transfer has to be blind to national boundaries if UK innovations are to succeed in finding suitable industry partners. Agribusiness is international in any case, and UK is a relatively minor market with weak/no capacity within farming and food industry to import and develop early academic research discoveries. The lack of public sector plant-breeding (even just to create preliminary breeding “foundation” material, not finished crop varieties) means that a large amount of UK research output in terms of knowledge created on plant/crop genetic goes unexploited. If public sector could actually create the breeding materials that seed breeders could then work with, a significant gap could be plugged. A rare (arguably, accidental) example of success in this sense is the recently released Beneforte broccoli.1 For technology-intensive innovations such as agrochemicals, and GM crops the only feasible commercialisation partners (with sufficient scale and competence) are non-UK based.

4. What evidence is there that Government and Technology Strategy Board initiatives to date have improved the commercialisation of research?

Don’t know/too early. Our view is that TSB funding schemes rarely coincide with the actual needs on the day-to-day basis. Academic research innovations do not happen “to order” and valuable opportunities are missed as no appropriate funding calls are open at the right time. Moreover TSB funds are slow to obtain and involve far too much bureaucracy. Smaller, flexible, responsive funds are desperately needed. Under the DTI/BIS PSRE Explotation fund programme, we were able to obtain funds which we could expend ourselves, reactively and flexibly, on a wide range of different development projects. The results of were reduced-risk technology and stronger IPR and led to a dramatic increase in the success rate of industry uptake, a big efficiency in the use of funds (because funds were under our own control, expensed with minimum overheads), and –crucially- a shortening of timescales.

Too early to comment on the Technology Innovation Centre initiatives but our view is that these would likely be a too static, hard-wired approach although they may be of some benefit for certain technology/industry sectors. Public sector innovations are generally very diverse, somewhat unanticipated, with applications in unexpected fields distant from the field of origin, and hence require a flexible, tailored and hands-on incubation and development approach.

5. What impact will the Government’s innovation, research and growth strategies have on bridging the valley of death?

Unknown.

6. Should the UK seek to encourage more private equity investment (including venture capital and angel investment) into science and engineering sectors and if so, how can this be achieved?

If it does, then realistic expectations for investment return need to be established with the investment sector. Successive dilution of founders’ position is unsustainable for long-term incentivisation of public sector innovators to use this route to develop and commercialise their innovations. Just as importantly, the difficulties of achieving “exit” need to be addressed before pumping more into starting new ventures in the technology-intensive sectors—there is insufficient critical mass in the market to allow liquidity.

Previous seed fund schemes (University Challenge etc) had capped funding (£250k), and led to undercapitalised ventures starting too soon, resulting in, at best, debilitating trickle funding. There is need for access to funds able to inject £2 million–10 million at start-up. This might lead to fewer ventures being started but might give them a better chance of crating further value and successfully attracting next stage funding at reasonable valuation.

The “jobs and regional economy” agenda: In our opinion, there is too much expectation from stakeholders, government etc to use public sector innovations to form start-ups around new technology. Early stage academic sourced technology is almost always very high-risk already, without compounding that with risk of finding the right management/staff and funding of the right amount on the right terms. Not to say start-up route is never the right way forward, but rather it is the rarer exception and licensing is a more suitable route, more of the time.

7. What other types of investment or support should the Government develop?

As mentioned, the principal gap we see is the very early stage no-strings funding for value-adding technology development, not necessarily much per individual project, to establish IPR and technical proof of concept independently of (premature) commitment to private sector (whether industry or equity investors). Preferably these funds should actually be in the hands of the technology transfer practitioners, such as the DTI/BIS PSRE funding scheme used to accommodate.

A fund dedicated for private investment into specific projects to invest in development of early stage innovations having licensing as the explicit outcome—a different model for private investment into early stage public sector technology—to represent an alternative to traditional model of investment into equity vehicles (start-up companies etc). Based on loan and revenue sharing mechanism, for example.

Useful Actions

Longer than 20 year patent term under PCT (Patent Cooperation Treaty) and/or defer national phase entry to anytime up to five years from priority filing.

February 2012

1 www.ifr.ac.uk/info/news-and-events/NewsReleases/111004broccolilaunch.html

Prepared 11th March 2013