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Regenerative Medicine

Scotland

Collaborate Innovate

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Foreword

Over the last 8 years Scotland has made a very significant investment in building the human and physical

infrastructure required to leverage our leading position in the field of stem cell biology to support the

development of a thriving sector. This initial investment is nearing completion, has substantially delivered

and has started to make a real impact. However its full value will only be realised as the world-wide

regenerative medicine sector matures and near term scientific, technical and industrial impediments are

overcome. Our competitors in other parts of the UK and across the world are continuing to invest in this

space in order to imbue their nascent industries with comparative advantage.

With these considerations in mind the community has undertaken a review of the current state of play, in

order to determine what now needs to be done in order to drive the growth of the Regenerative Medicine

industry in Scotland and embed significant long-term benefits to the economy and health of the nation.

This document sets out a strategy which has been developed in collaboration with the academic, business

and clinical communities. It is intended for high-level discussion and to provide a framework for future

collective direction and investment.

Marc Turner, Professor of Cellular Therapy and Medical Director SNBTS

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Section Page

Forward 2

Executive Summary 4

Background. 5

Progress. 8

Caerus 10

Challenges and Opportunities 11

Strategy Refresh 16

Critical Issues 17

Guiding Philosophy 20

Strategic Objectives and Actions 22

References 25

References 30

The Scottish Centre for Regenerative Medicine

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Executive Summary

Scotland has internationally competitive strengths in stem cell research and has made very significant public sector

investment over the past 8 years in building physical and human capacity to support the development of the

Regenerative Medicine sector. The case for Regenerative Medicine products is compelling when considered in the

context of an ageing population and the projected increase in the prevalence of chronic degenerative diseases

such as cardio-vascular disease, diabetes mellitus and liver failure. Unless a breakthrough technology, such as

regenerative medicine is developed the burden on health and social care systems is likely to prove challenging.

Scotland’s strategy under the Stem Cell Intervention Framework (SCIF) concludes at the end of 2012, however on a

global basis, the regenerative medicine sector has not yet matured to the point where private equity is sufficiently

available to build on this public investment and create a viable, self-sustaining commercial sector. A strategy

refresh is required to ensure that Scotland’s competitive position is not eroded; that other countries who continue

to invest do not dominate; that IP and talent is not lost and that the payback from public investment is realised.

The Regenerative Medicine community proposes to build on the investment thus far by focusing on extending the

comparative advantage Scotland now enjoys to deliver long term economic, health and social benefit to the

nation.

Our Vision is to develop a globally recognised regenerative medicine industry in Scotland, building on excellent

academic research and collaborating with a robust commercial sector to deliver all aspects of the innovation value

chain in order to translate health-related benefits to the economy of Scotland and to healthcare internationally.

The Regenerative Medicine value chain needs to be fully embedded in the wider Scottish Life Science value system

in order to contribute to building a coherent innovation ecosystem for life sciences as a whole.

Our Strategy Refresh addresses supply side issues by continuing to build an inclusive community of companies and

public sector organisations which can appropriate value from intermediate points along the value chain in the

short to medium term whilst maintaining a long-term focus on the development of a new generation of

therapeutics.

It recognises that the international calibre of Scottish academic science and clinical medicine cannot be taken for

granted, that we need to be cognisant of the consolidation and focussed investment apparent amongst our

international competitors and that further investment and enhanced collaboration across the Scottish academic,

business and healthcare communities is key to building critical mass.

It addresses demand side issues including the contribution NHS Scotland can make to the creation of market pull

through piloting and adoption of new technologies and also takes cognisance of the contribution the sector can

make in the long-term to the health and quality of life of the Scottish people.

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Whilst individual components of the Scottish offering in terms of the academic, commercial and clinical sectors are

all vital strengths, in our opinion the basis of our competitive advantage is our ability to bring these assets together

in a chain linked value system, built on all key aspects of life science innovation in Scotland, capable of translating

products through to clinical application - across the so called ‘Valley of death’ for new product development. As a

nation we need to hone this value system through smart, targeted investment in both the individual components

of the chain and the linkages between them. We need to leverage this position to drive products through to

commercial and clinical translation faster than our competitors, and we need to aggressively pursue opportunities

for international collaboration and business.

Background

Scotland has significant intellectual capital in the field of stem cell and developmental biology and is ranked

number one in the world for stem cell research2. Prominent contributions to the international field include the

cloning of Dolly the sheep and the discovery of the pluripotency factor Nanog. In 2004 Scottish Enterprise (SE),

working with leading academics, companies and clinicians, developed an ambitious long-term plan to support and

enhance the development of the emergent field of stem cell biology and the eventual realisation of commercial

and clinical benefits. That strategy, known as the Stem Cell Intervention Framework (SCIF) has leveraged around

£90m of public sector investment in order to support the development of manufacturing infrastructure, the

attraction and retention of key talented people, funding for flagship projects and the promotion of Scotland’s stem

cell / regenerative medicine capacity on the international stage (Figure 1).

Hepatocytes derived from skin cells using iPS technology, David Hay MRC-CRM

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Figure 1: The Stem Cell Intervention Framework

Three key components of the SCIF are:

Ø The establishment of the Scottish Stem Cell Network (SSCN) with the primary objective to address the key

market failures identified at the time - information deficiencies and sectoral fragmentation - by bringing

together academics, biotechnologists, clinicians, business and other professionals from across Scotland.

SSCN undertakes activities in 5 main areas: addressing fragmentation by providing networking

opportunities through meetings, website, newsletter and social media; supporting the translation and

commercialisation of stem cell research; promoting Scottish capability internationally in collaboration

with Scottish Development International (SDI); public engagement; and education and skills

development3.

Ø The establishment of Roslin Cells as a not for profit company with the initial purpose of developing cGMP

grade human embryonic stem cell (hESC) lines though this has broadened into supporting the

development of new clinical therapies derived therefrom.

Ø The development of the Scottish Centre for Regenerative Medicine (SCRM) with the vision of creating a

critical mass of academic, bio-manufacturing and clinical expertise to drive a translational agenda. The

GMP Cell Therapy facility has been designed and built to the highest standards required by the Medicines

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and Healthcare products Regulatory Agency (MHRA) for the manufacture of Advanced Therapy Medicinal

Products (ATMPs) for clinical use operated by Roslin Cells and the Scottish National Blood Transfusion

Service (SNBTS).

Figure 2: The BioQuarter Complex

In addition, the BioQuarter complex, with SCRM at its heart, brings together academics, business, clinicians and

patients to create a compelling competitive edge in cellular therapeutics development that few can emulate. In the

broader Scottish context investment in unique initiatives such as Generation Scotland, Health Sciences Scotland

and NHS Research Scotland provide a path to identifying and recruiting suitable patients for clinical trials.

Economic benefits are expected to be generated from collaborations (company-to-academia and company-to-

company); the creation of new companies (start-ups and spinouts); the attraction of inward investor companies to

Scotland; and from companies diversifying their activities to create new products and services to support the

industry sector. Crucial to realising these benefits is the aim of attracting companies and inward investment by

making Scotland the preferred location for regenerative medicine development (vide infra: Sections 9 and 10).

Arial View of BioQuarter

MRC- Centre for Regenerative Medicine BioIncubator

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Progress

An inclusive “Monitoring & Evaluation Framework” was developed by consultants SQW to enable progress against

the projected economic benefits from the SCIF to be regularly tracked against the 2004 baseline. Monitoring was

suggested across 6 areas: human capital (“people”), physical capital (“things”, infrastructure), intellectual capital

(“know- how”), financial capital (“money”), market capital (“global positioning”), and social capital (“growth of

networks”). An updated assessment was produced in 2011 (Figure 3).

Figure 3: SCIF Monitoring and Evaluation Framework

Economic impact

The SCIF was approved as a bold long-term investment. Medium-term economic impact (by 2015) was expected to

come from three main areas of activity: recruitment and retention of academic staff; company creation through

start-up and spinout activity; and via licensing of research. Progress is significantly ahead of expectation (Figure 4),

apart from licensing activity. This is lower than originally anticipated, reflecting the trend in this sector as hESC

lines – and now the processes and products created with those cell lines – cannot be patented in Europe4.

Figure 4: Progress against medium term targets 2012

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This does not appear to have adversely affected the development of the industry thus far, however this problem

needs to be addressed through continued progress in the development of research and clinical GMP grade induced

Pluripotent Stem cells (iPSC) and related technologies.

Innovation and company growth

One of the key highlights of the focus on stem cells has been in the emergence of a comprehensive commercial

supply chain, supporting the development of new therapeutics as well as new tools and technologies.

The company base in 2003/4 consisted of one therapeutic company, and two companies developing stem cell tools

and reagents.

In 2011, 24 companies are engaged in the sector, forming a comprehensive supply chain. This supply chain

includes spin-outs or start-ups e.g. Deliverics, Sistemic and Pharmacells and major multi-nationals e.g. Charles

River and Life Tech.

Inward investment

Attraction of inward investment from companies using or developing stem cell technology has been a major focus

of Scottish activity. A detailed understanding (“segmentation”) of customer types and their needs has been

developed, supporting detailed, intelligence-led proposition marketing. This has been combined with joint team-

working, with support from SE, SDI and the SSCN. A number of existing inward investors are developing products

and services for the stem cell market, including Charles River, Aptuit (Catalent), Millipore and Life Technologies

whilst BioReliance has recently been acquired by Sigma Aldrich. There is an opportunity to use Scotland’s stem cell

expertise and the additional components of the Regenerative Medicine value chain already in place to help anchor

these companies In Scotland.

Progress to clinic

Scotland has collectively delivered two cell therapy products into clinical practice: the first, the pancreatic islet

programme is a collaboration between the Scottish Liver / Pancreas Transplant Unit and the SNBTS which

commenced in January 2011. From a standing start, it has grown to represent 50% of the UK’s activity with 10

transplants carried out in the last 12 months. The programme has achieved a transplantation rate from donor to

recipient of 70%, which is on a par with the world pioneers in Edmonton and well above the UK average of 50%.

The second, an EBV Cytotoxic T lymphocyte (CTL) bank has been established in Aberdeen to treat patients

internationally with post-transplant lympho-proliferative disease. This is one of the first cellular therapies in the

country to achieve a MHRA Manufacturing Licence. The first CTL have been released to treat a child with refractory

EBV-driven non-Hodgkin’s lymphoma.

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In addition there are several clinical cell therapy studies ongoing, including the ReNeuron trial of a neural stem cell

product for patients with stroke in Glasgow; a trial of corneal epithelial stem cells which has recruited its first

patients in Edinburgh; and a study of CD133 cells in chronic liver failure which is due to open in Edinburgh in May

2012. Advanced Cell Therapies (ACT) are intending to open a second site for their European clinical trial of hESC

derived retinal cells in Scotland in 2012. In comparison the California Institute of Regenerative Medicine, despite

its $1.2bn investment thus far, has just announced the start of its first clinical trial5.

These cell therapy programmes and the expanding commercial sector are the result of far-sighted investment in

human and physical capacity building over the last 8 years. Scotland has positioned itself at the forefront of

international developments in this field. Indeed the development of cellular therapeutics and regenerative

medicine has become a cornerstone of the Scottish Life Sciences Strategy6 as it has in a number of other

countries7,8, reflecting the predicted sector growth and the resultant long-term economic, health and knowledge

benefits that are likely to accrue to countries capable of competing in this space.

Caerus

We believe Scotland has reached a critical inflection point or Kairos – the right or opportune moment where the

investment made over the last 9 years can be brought together to form the bedrock on which to build a strong and

sustainable regenerative medicine industry in Scotland (Figure 5).

Figure 5: Caerus

We believe that the success of the Scottish Regenerative Medicine Strategy will be judged by the delivery of 3 outcomes:

Ø It must contribute to the near and medium term recovery of the Scottish economy

Ø It must establish a comparative advantage which leads to economic assets which are embedded for

the long term

Ø It must have a direct long-term beneficial effect on the health of the Scottish people.

These outcomes reflect the imperatives laid out in the Scottish Government’s Economic9 and Life Sciences

Strategies6 (vide infra).

In Greek mythology Caerus was the personification of opportunity. He is an allegorical representation of the critical, favorable or advantageous moment. He is usually pictured as running and with wings to fly like the wind. He has scales balanced on a razor to illustrating the fleeting instant in which opportunities appear and disappear. In rhetoric Kairos is a passing moment which must be driven through with force if success is to be achieved.

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Challenges and Opportunities

Contributing to the Scottish economy

Like all advanced economies Scotland has suffered from the global financial crisis of 2007 and the ensuing

recession9. In 2010/11 Scotland’s Gross Domestic Product (GDP) was around £145bn and grew by 0.5% in the 3rd

quarter of last year (or by 0.9% on a rolling annual basis)10.

The Life Sciences Industry in Scotland is recognised by both the Scottish and UK Governments as having high

growth potential and the capacity to contribute significantly to the country’s economy in the future. Scotland is

home to the UK’s second largest Life Sciences cluster, one of the largest in Europe with more than 640 companies

employing more than 30,000 staff11-13. It contributes around £1.5bn of added value (GVA) per annum and turnover

worth £3.1bn to the Scottish economy14. An aspirational target has been set for 2020 to double added value to

£3bn and turnover to £6bn6. Given that the market for Regenerative Medicine therapies is predicted to grow from

$8bn to $35bn by 20188,15, a substantial contribution to this growth target can and should be made by the

Regenerative Medicine sector.

Over the last 10 years, much greater evidence has been developed to analyse the potential benefits of investment

in new diagnostics and therapeutics, as well as the timescale to realise these benefits. For example, a 2008 Report

for the MRC, Wellcome Trust and Academy of Medical Sciences showed that every £1 invested in new medical

research by Government in medical science offers a 34% annual return (in perpetuity), but that it takes an average

17 years for the profit to be realised16. It is important to be clear that sustaining and supporting research,

development and innovation in this space is therefore a long-term commitment.

The global burden of degenerative disease is enormous17 and is continuing to grow particularly in low and middle

income countries. A sustainable position in the global market for Regenerative Medicine therapeutics is likely to be

of very significant financial value. Realistically, even by 2020, only a limited number of new therapeutics are likely

to be fully-approved in the major international markets. However significant commercial revenues can be

generated in the near and medium term from intermediate points in the value chain for example:

Ø Sales of reagents and other tools for supporting regenerative medicine research and development.

Ø Sales of assays for new approaches to drug discovery and toxicology studies.

Ø Provision of supply chain services (including niche and volume manufacturing) to companies

developing near-to-market therapeutics.

Ø Provision of services for quality assurance and regulatory advice.

Ø Clinical trialling.

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Developing a robust supply-side industry will help to ensure that the economic benefits are appropriated in

Scotland and are not lost. The complexity of ‘manufacture’ of living cellular therapeutics means that experiential

“know-how” and human capital generally are very highly valued. As such, by being recognised as a location with a

well trained and experienced workforce already working in the Regenerative Medicine sector, Scotland will benefit

from a significant cumulative advantage. In addition, cell therapy products made under a controlled Good

Manufacturing Practice (GMP) process, have a unique profile, a function of (inter alia) the biological

characteristics of the starting human material, the reagents and environment, the culture process and testing

systems used et cetera. As the product progresses through the development and regulatory pathway it becomes

increasingly expensive and time-consuming to switch to new facilities and processes. Finally, it is the

complementarity of the various components of the Scottish Regenerative Medicine value chain which are difficult

to move or imitate. For these reasons, once committed to a location, a developer has reduced ability to relocate.

Thus a strong supply side will help to anchor new products and services in Scotland thus retaining value in the

longer-term.

The Regenerative Medicine strategy therefore needs to address supply side issues by continuing to anchor an

inclusive community of companies and public sector organisations which can appropriate value from

intermediate points along the value chain in the short to medium term whilst maintaining a long-term focus on

the development of a new generation of therapeutics.

Creating a sustained competitive advantage

Whilst Scotland has made significant investment in, and has considerable strengths in, the Regenerative Medicine

sector, it is clear that other countries are aggressively investing in this sector.

Ø The UK Life Sciences Strategy18 lays out plans for building a life sciences ecosystem in the Oxford –

Cambridge – London triangle, including investment by the Technology Strategy Board in a Cell Therapy

Catapult Centre in London

Ø The University of Cambridge has launched the ‘Cambridge Stem Cell Initiative’ which brings together 25

academic and clinical research laboratories funded by the Medical Research Council (MRC) and the

Wellcome Trust (WT).

Ø Similarly the Francis Crick Institute is scheduled to open in London in 2015 as collaboration between

University College London, King’s College and Imperial College London with support from MRC, WT and

Cancer Research UK. The Institute has a broad vision to promote multidisciplinary research and support

connections between researchers, between disciplines and between academic institutions, healthcare

organisations and businesses.

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Ø The UK Cell Therapy Catapult Centre which is being

developed with a focus on driving a small number of cell

therapy products from research bench through to Phase

IIb clinical studies over the next 5 years and to hold or

share IP in order to create a set of investable propositions.

It will not in and of itself have cell therapy manufacturing

capability at least in the short to medium term. It is

therefore currently unclear (to us) how the economic

outcomes of such a strategy will be embedded in the UK.

Ø Internationally, there are several high profile examples of

public sector led initiatives leading to substantial

investments in Regenerative Medicine8.

Ø California has authorised public funding of up to $3bn

since 2004 to support the California Institute for

Regenerative Medicine. As of July 2010 £1.1bn of grants

had been committed with $884m of matched funding

leading to the estimated creation of 24,654 FTE jobs, the

payment of $157.2m in tax revenues to the State

Government and $44.4m to local government.

Ø The Canadian Stem Cell Network (SCN) is nearing the end of its second 7 year funding cycle and has

established a number of legacy organisations. In 2005 it created a researcher-owned for profit company

called Aggregate Therapeutics which enjoyed first look IP rights to invention disclosures across 16

institutions. Despite aggressive promotion, the company was found to be financially unsustainable in the

absence of public funding for early stage development. SCN have subsequently established the Centre for

Commercialisation of Regenerative Medicine (Box 1).

Ø The Australian Stem Cell Centre was founded in 2002 and ceased operations in September 2011. Two

legacy organisations continue its work, Stem Cells Australia established by the Australian Government

with a grant of $Aus21m in November 2012 and the National Stem Cell Foundation of Australia

established in 2011.

The Hauser Report identified that the role and structure of Technology and Innovation Centres varies according to

the innovation system, economic and social landscape of the countries they operate in19.

Box 1: Canadian Centre for Commercialisation of Regenerative Medicine.

In 2005 the Canadian Stem Cell Network created a researcher-owned for profit company called Aggregate Therapeutics which enjoyed first look IP rights to invention disclosures across 16 institutions. Despite aggressive promotion, the company was found to be financially unsustainable in the absence of public funding for early stage development. SCN have subsequently established the Centre for Commercialisation of Regenerative Medicine with $C15m of federal funding on a non-profit, graded model with its own laboratory space for development and validation.

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The Scottish research and business base remains highly competitive but we need to be cognisant of the

consolidation and focussed investment apparent amongst our international competitors. We believe that

further targeted investment and enhanced collaboration across the Scottish academic, business and healthcare

communities is key to building a more robust business base, accelerating new product and service development

and facilitating faster growth of Scottish Regenerative Medicine companies. There is a race between nations to

bring these new cellular technologies to market quickly in order to gain first mover advantage and act as a

platform from which to try to establish a dominant market position in the future. Scotland has a key competitive

strength in its chain-linked system capable of translating products across the so called ‘valley of death’ from

research laboratory through to initial commercial and clinical application.

Delivering better Healthcare

Like most other developed economies the age structure of

Scotland’s population is changing. Between 2000 and 2010 there

was a 14% increase in the number of people over 45 years old.

Approximately 17% of the population is currently aged 65 and

over and 2.2% are over 85 years old. By 2035 the proportion of

people aged over 65 years is projected to rise to 23% and those

over 85 to 5% of the population20.

Scotland also has a relatively high burden of ill health. Whilst life

expectancy is improving, it remains lower than that of most of

the EU27 countries21. In 2010 28% of deaths were caused by

cancer, and the majority of the rest by degenerative conditions

including ischaemic heart disease (15%), cerebrovascular disease

(9%), other cardiovascular diseases (7%), respiratory diseases

(7%), liver and other gastrointestinal disease (6%), neurological

disease (3%), renal failure (2%) and diabetes mellitus (2%). The

evidence suggests that people are living longer with chronic and

sometimes multi-factorial disease. It is estimated that in the

coming decades just under 2/3rds of people over the age of 65

will suffer from a life-limiting disability. Moreover health

inequality in Scotland is profound – the healthy life expectancy

in the Scottish Index of Multiple Deprivation 15% most deprived

areas is 8-10 years below that of the Scottish average22. The

direct impact of degenerative disorders on the health of

Box 2: Public Health Burden of Acute Coronary Syndrome in UK.

Cardiovascular disease is the commonest cause of premature death accounting for 30% of all deaths amongst men and 22% amongst women.

Whilst survival post myocardial infarction is improving, there are more people alive with chronic heart failure and reduced quality of life.

In 2009/10 there was a total 26,778 Acute Coronary Syndrome (ACS) events in Scotland leading to 4,682 deaths.

It is estimated that these lead to around 17,730 hospitalisations, 270,000 work days and 58,860 disability adjusted life years lost.

Economic impact is estimated as £650m in direct health economic expenditure and economic losses and £1.764bn in wider societal costs of care23.

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individuals and the resultant burden on the broader health,

economic and social system is exemplified in Box 2 and has been

recognised as a serious long-term challenge24 leading to a shift the

emphasis of care away from a reliance on secondary care to

preventative and anticipatory care in the primary and community

sectors of our healthcare system25. This will be a serious challenge

over the coming decades unless we can take advantage of new

Regenerative Medicine approaches to improving functional

capacity in patients with degenerative disorders. Even relatively

modest improvements in tissue and organ function may suffice to

move large numbers of patients from dependency to independent

living with benefits including their own quality of life, impact on

their families, wider impact on the Scottish health and social care

system and the ability to return to work (Box 3).

The pressures facing healthcare systems in developed economies

worldwide are similar, even where there are wide differences in

underpinning financial structure. For example, the current US

budget projects a doubling of the Medicare and Medicaid budget

over 10 years from $733bn currently to $1.5tr in 2022.

However, the role of the healthcare system in supporting the

development and adoption of this new generation of diagnostics

and therapeutics also needs to be appreciated. Cellular

therapeutics have much more in common with blood transfusion,

tissue and organ transplantation than with standard

pharmaceuticals including issues of donor selection and screening,

procurement, bespoke manufacturing, immunological matching and recipient follow-up. Expertise in these areas

along with access to centralised clinical data bases allowing careful patient stratification, clinical trials capability

and resources for intense patient monitoring are critical assets which can be used to attract new companies and

investment into Scotland in order to progress development of their products.

The Nicholson Report26 has recognised the contribution the NHS can make to the wider economy through

supporting growth in the domestic life sciences industry, exporting innovation, ideas and expertise, improving the

health and economic productivity of the population, and adopting innovation to improve effectiveness, efficiency

and productivity.

Box 3: End Stage Liver Disease.

In Scotland there has been a rapid increase in end stage liver disease – deaths from cirrhosis have doubled in the past 10 years.

The only curative treatment is liver transplantation. In the UK there are almost 500 people waiting for a liver transplant compared to 300 five years ago. Unfortunately deaths on the waiting list are increasingly common.

Patients with a UKELD score above 49 typically have a poor quality of life with frequent hospital admissions and a poor prognosis, where-as those with a score less than 49 can frequently be managed as outpatients.

Regenerative therapies targeted at patients across this ‘tipping point’ could achieve significant clinical benefit for a modest (20-25%) improvement in physiological function.

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The Regenerative Medicine strategy also needs to address demand side issues including the contribution NHS

Scotland can make to the creation of a market through piloting and adoption of new technologies and the

contribution the sector itself can make to economy, health and social care of Scotland in due course.

Strategy Refresh

With these considerations in mind we initiated an engagement process with the stem cell and regenerative

medicine community around the development of a strategy refresh focused on enabling Scotland to leverage the

investment made thus far in human and physical capital to drive the field forward towards commercialisation and

clinical impact. Speed is of the essence if we are to maintain our competitive position.

A meeting was held on the 27th January 2012 involving colleagues from across the academic, commercial and

clinical sectors and from across Scotland. There was discussion around the scope of the sector, the development of

a vision statement, the identification of strengths, weaknesses, opportunities and threats, and the derivation of

critical issues. These were subject to further virtual engagement both with the invited group and the broader

community from February – April 2012 and informed by the Progress to Therapy meeting 21st – 23rd March 2012.

Field Statement - Regenerative Medicine Scotland: Collaboration, Innovation, Translation

It was considered that the term “Regenerative Medicine” captures the essence of the developing field and reflects

demand pull rather than academic (stem cells) or technological (cellular therapy) push. As a brand it is reasonably

well established nationally and internationally and is intuitively understood by the public. However the field is

broad in scope and covers near term applications of tools and technologies in (inter alia) disease modelling, drug

discovery, toxicological screening and diagnostic reagents as well as longer-term therapeutic applications in small

molecules and pharmaceuticals, cellular therapies, gene therapy and tissue engineering.

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Figure 6: The Regenerative Medicine space and overlapping fields

Vision Statement.

We will develop a globally recognised regenerative medicine industry in Scotland, building on excellent

academic research and collaborating with a robust commercial sector to deliver all aspects of the innovation

value chain in order to translate health-related benefits to the economy of Scotland and to healthcare

internationally.

Strengths, Weaknesses, Opportunities and Threats

Strengths Translational capability. Commercial supply chain in relevant products and services. Infrastructure. Reputation, passion and commitment. Political support. Scotland as a dispersed cluster. Global Scots.

Weaknesses Scale / critical mass. Lack of investment. Too inward focused. Poor integration. Lack of communal focus. Weak PR.

Opportunities Huge unmet need / market potential. Scotland’s population. New sources of funding. Leverage existing academic, business and clinical excellence. Philanthropy Public outreach / PR Recognise and exploit IP.

Threats Competition: UK and global. Lack of finance: public and private. Negative public and political perceptions. Lack of pull through by NHS. Regulatory barriers. Loss of human capital to better financed regions.

Cellular Therapy

Tools and Technologies

Pharmaceuticals and

Small molecules

Tissue Engineering

Disease modelling

Diagnostics

Gene Therapy

Regenerative Medicine

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Critical Issues

A number of issues were identified by the community as critical to the delivery of the Vision, which were

condensed into 5 Critical Issues:

I. Research

Scotland has a strong track record in stem cell and

developmental biology, but also in clinical medicine and related

fields such as chemistry, engineering and informatics. It

currently attracts 11% of the total annualised spend on

Regenerative Medicine by the UK Research Councils and

Technology Strategy Board27. However, recruitment and

retention of the best scientists is subject to strong international

competition and needs to be a continued focus of investment.

Collaboration across complementary skills in Scotland’s

Universities can leverage large tranches of funding such as that

supporting the BloodPharma programme, but take time to

build and can be complex to manage (Box 4). More of these

cross-disciplinary programmes are required if we are to build

world-leading companies of the future.

II. Commercial

Scotland has a supply chain of organisations with a strong track

record in translating research to the market. Anchoring and

building local companies is key to building a vibrant and

innovative business sector, attracting inward investment and

embedding the economic benefits for Scotland. However, 96%

of these are SMEs which often don’t have the resources to

engage in extensive negotiations with public sector

organisations or identify potential opportunities and partners

on the national and international stage. Supporting business

access to University knowledge and facilities, to the NHS

Scotland clinical environment and to other companies in the

national and international environment is key to supporting the

birth and growth of SMEs in this sector.

As SMEs are particularly vulnerable to financial failure and acquisition before their true potential has been realised

Box 4: BloodPharma.

Blood Transfusion was arguably the first cellular therapeutic. Much of the pioneering work was carried out in Scotland in the early 19th Century by John Leacock and James Blundell.

Two centuries on, problems with sufficiency of supply, transfusion transmitted infections and averse effects persist, particularly in developing countries.

SNBTS along with the Universities of Edinburgh and Glasgow, Roslin Cells and the English and Irish Blood Services have been granted £6m in funding from the Wellcome Trust and Scottish Funding Council to develop GMP-grade red cells from hESC lines for clinical use.

We expect to create a Special Purpose Vehicle this year to leverage further funding for scale-up and clinical trialing.

This work has potential significant benefits to international healthcare and to the Scottish economy, but is also builds generalisable expertise in the development of this new generation of complex scalable cellular therapeutics.

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– often by non-UK competitors, it is critical to develop companies of scale which are significantly embedded in the

Scottish economy. Creating this service sector will attract domestic and international businesses to develop their

products in Scotland and retain the economic benefits.

III. Clinical

Scotland has a unified healthcare system with excellent data linkage, an infrastructure for managing and

supporting clinical studies and state of the art clinical trialling and imaging facilities. However innovation is usually

patchy and slow, procurement is increasingly focused on cost saving and support for the research and

development agenda is a low priority. The development and implementation of regenerative medicine strategies is

imperative if we are to reduce the long-term burden of chronic disability. Without recognition by the NHS of its

broader and long-term role in supporting innovation and facilitating economic development, and the need to

develop strategic partnerships with the sector to facilitate the growth of a local market as a springboard to global

markets will be slow and poor. Scotland’s historic reputation for Medical excellence could and should be leveraged

on the international stage.

IV. Finance

As is the case with most emerging technologies, much of the investment in stem cell sector to date has been

funded by the public and charitable sectors. For example on a UK basis the public sector has invested £200m since

2003 and the charitable sector £38m8. The relative lack of funding from the private sector is in part due to the

early stage of commercialisation reflected in the size and structure of the industrial sector. Worldwide there are

only 391 companies operating in regenerative medicine the majority based in North America (47%) or Europe

(37%) – the latter predominantly in UK, Germany and France. 91% of these companies are SMEs and on average

have only filed 1-5 patent applications to date8. The recent Finance, Innovation and Growth European Policy Brief28

emphasises the critical role of Government investment in research, development and supporting innovation and

this is reflected in continued public sector investment in the Regenerative Medicine sector elsewhere in the UK

and internationally. Ways need to be found to continue to leverage public, private and philanthropic investment

over the next few years as a bridge across the so-called ‘valley of death’.

V. Collaboration

In 2004 fragmentation of the community across professional, institutional and geographic boundaries with

resultant information silos and lack of a collective voice was recognised to be a key problem and one that has been

largely addressed by SSCN. Whilst that organisation is coming to the end of its public funding there is concern

within the community that, in the absence of SSCN or a legacy organisation, that connectivity and voice will

dissipate and a unique collective asset will be lost.

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Guiding Philosophy

Whilst individual components of the Scottish offering in terms of the academic, commercial and clinical sectors

are all vital strengths, our key competitive advantage is our ability to bring these assets together in a chain-

linked value system capable of translating products across the so called ‘valley of death’ between research

laboratory and clinical application.

As a nation we need to hone that value system through further investment in both the individual components of

the chain and the linkages between them; we need to leverage this position to drive products through

commercial and clinical translation faster than our competitors; and we need to aggressively pursue

opportunities for international collaboration and business.

We believe that this strategy will facilitate the development of a globally recognised regenerative medicine

industry in Scotland with the following benefits:

Ø contribute to the near and medium term recovery of the Scottish economy

Ø establish a comparative advantage which will leads to embedded, long-term economic benefits to

the Scottish economy

Ø have a direct long-term impact on the health and quality of life of the Scottish people.

Strategic Objectives

Our Vision is to develop a globally recognised regenerative medicine industry in Scotland, building on excellent

academic research and collaborating with a robust commercial sector to deliver all aspects of the innovation value

chain in order to translate health-related benefits to the economy of Scotland and to healthcare internationally.

The Regenerative Medicine value chain needs to be fully embedded in the wider Scottish Life Science value system

in order to contribute to building a coherent innovation ecosystem for life sciences as a whole.

Our Strategy Refresh addresses supply side issues by continuing to build an inclusive community of companies and

public sector organisations which can appropriate value from intermediate points along the value chain in the

short to medium term whilst maintaining a long-term focus on the development of a new generation of

therapeutics.

It recognises that the international calibre of Scottish academic science and clinical medicine cannot be taken for

granted, that we need to be cognisant of the consolidation and focussed investment apparent amongst our

international competitors and that further investment and enhanced collaboration across the Scottish academic,

business and healthcare communities is key to building critical mass.

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It addresses demand side issues including the contribution NHS Scotland can make to the creation of market pull

through piloting and adoption of new technologies and also takes cognisance of the contribution the sector can

make in the long-term to the health and quality of life of the Scottish people.

Whilst individual components of the Scottish offering in terms of the academic, commercial and clinical sectors are

all vital strengths, in our opinion the basis of our competitive advantage is our ability to bring these assets together

in a chain linked value system, built on all key aspects of life science innovation in Scotland, capable of translating

products through to clinical application - across the so called ‘Valley of death’ for new product development. As a

nation we need to hone this value system through smart, targeted investment in both the individual components

of the chain and the linkages between them. We need to leverage this position to drive products through to

commercial and clinical translation faster than our competitors, and we need to aggressively pursue opportunities

for international collaboration and business.

Collaboration and integration

There has been, over the last year or so, a significant increase in the investment and activity aimed at developing

new products and therapies utilising stem cell technology in the UK; the Cell Therapy Catapult Centre; the Strategy

for UK Life Sciences7 and most recently a Strategy for UK Regenerative Medicine27 published by the MRC, BBSRC,

EPSRC, ESRC and TSB. Scottish Enterprise has also invested, with the UK Stem Cell Foundation, to create a new

fund to support Scottish research.

All of these initiatives provide opportunities for Scotland. Edinburgh has been identified as a partner for the

Catapult, the UK Life Sciences strategy points to best practice in Scotland’s NHS and the MRC – Centre for

Regenerative Medicine will play a key role in the Research Councils plans for Regenerative Medicine. Indeed the

key areas for action under this strategy, such as clinical delivery, product development, therapeutics and

underpinning research are already areas where Scotland has a lead.

On a global level there is the California Institute for Regenerative Medicine (CIRM) and the Kyoto University

Institute for Integrated Cell-Material Sciences (iCEMS) both of which have signed collaboration agreements with

Scotland. There is also the newly formed Canadian Centre for the Commercialisation of Regenerative Medicine

(CCRM) which aims to drive commercialisation forward and is focused on international collaborations. Scotland is

party to a collaborative project to forge closer economic ties with Canada in regenerative medicine.

Scotland must be capable of interacting with, having influence over and integrating into its own strategy the value

that these initiatives will generate. Unless Scotland has an organisation coordinating activity the centre of gravity

for leadership, at least in the UK, will be dominated by the Cell Therapy Catapult and Scotland will be left to follow

rather than play a leadership role. To succeed we must collaborate on a global scale and have a single entity

managing the interface. Within Scotland we must connect the academic, commercial and clinical environments to

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drive translation forward but in doing so we must also consider the donor, manufacturing, patient continuum.

These represent different cultures and values but together are essential for success.

This proposal calls for a single organisation to be formed, with a strong brand identity, that would be the single

point of contact for interaction within Scotland, driving strategy and ensuring Scotland is globally connected and

leveraging the many external initiatives to best deliver. Effective coordination and collaboration within Scotland is

key. The way we collaborate and can make things happen is a recognised strength which we must hone and

develop. This will provide the ‘hook’ to attracting companies to move here or conduct their clinical trials here. The

organisation would have a focused ‘sales’ function, (working alongside SDI) expert in what Scotland can offer the

world, empowered to negotiate and measured against specific targets for inward investment. By attracting

companies to invest here Scotlands’ service sector growth will be supported by private rather than public funds.

Strategic Actions:

1. Ensure Scotland is seen as the “go to” location in Europe for companies looking to undertake clinical trials and

associated high-value manufacturing for new cell therapies. Build on Scotland’s proven clinical development and

supply chain expertise by attracting significant additional inward investment.

By end of 2012, establish a dedicated, multi-skilled professional sales team to support and enhance existing SDI-

led sales activity. This will:

Ø potentially deliver 2 new clinical trials per year to Scotland;

Ø provide significant additional business to Scottish supply chain companies, with a potential economic

impact of £500m by 2020;

Ø support and enhance the marketing efforts of individual companies;

Ø work closely with, and build on the early success of, Health Sciences Scotland

Build on international linkages. Participation in CIRM calls, by mid 2013 establish stronger linkages with key

international locations e.g. Canada, China, India

2. By mid 2013, establish one or more “high growth potential” companies based in Scotland, focused on

developing new therapeutics in regenerative medicine

These companies will act as a focus for commercial development, provide an opportunity to attract and retain

strong management teams and scientists; and act as a magnet to attract investors. These companies should focus

on commercialising some of the therapeutic development programmes already in clinical development in the

academic and NHS environment, maximising the potential for the company top succeed, and maximising the

potential for a new generation of therapies to benefit the health and wealth of the Scottish population.

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3. Facilitate growth in the number and size of Scottish SMEs participating in regenerative medicine markets

Building on the success of the Scottish Stem Cell Network and Roslin Cells, by the end of 2012:

Ø Drive greater linkages between businesses and the academic and clinical communities across Scotland

through a single, knowledgeable “point of contact”

Ø Work with the industry to scope, develop and deliver multi-partner, multi-disciplinary collaborative

research and development programmes to address key challenges and bottlenecks for the industry. The

aim would be to establish 1 programme within the first 6 months of operation, and approximately 2 new

programmes per year thereafter.

Ø Improve the focus on business of these sectors and provide connectivity with other parts of the life sciences

and physical sciences communities.

Ø Provide problem-solving capability both on a technical and quality / regulatory level either directly or

through linkage to other companies and institutions.

Ø Drive products through the Translational Funnel

Ø Provide access to regulatory, patent and legal expertise;

Ø Work with Universities, the NHS and other organisations to accelerate and ease the transfer of IP, for

example by preparing IP circulars under the Easy IP scheme

4. NHS Scotland as a ‘smart customer’ and early adopter

NHS Scotland has the infrastructure to support the growth and development of the Regenerative Medicine sector

and facilitate the development of a local market. Rapid adoption is essential to the future long-term health and of

the Scottish people; and the development of credible, viable reimbursement mechanisms by a major healthcare

provider will encourage reimbursement in other healthcare environments globally.

Ø Working in partnership with the NHS, initiate pharmacoeconomic impact assessment for three candidate

therapies by the end of 2012, building on the REALISE Roadmap, and establish potential reimbursement

models for these therapies;

Ø Enhance the role of SNBTS as an interface with NHS Scotland in terms of Cellular Therapeutics adoption.

Ø Encourage the SMC to take the most progressive approach to product approval in the developed nation

world;

5. As highlighted in the UK Regenerative Medicine strategy, continue to focus on support for triadic partnerships

and networking between academia, business and the health service both on a local and national basis and as a

driving force for the sector.

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6. Continue to build research excellence in Scottish Universities in order to gain further understanding of disease

mechanisms and to feed the pipeline of potential novel therapeutics.

Work with the Scottish Funding Council to ensure Scottish Universities capture a significant proportion of UK

funding for regenerative medicine, for example:

Ø Ensuring that the Scottish Centre for Regenerative Medicine is one of the main centres of the UK

Regenerative Medicine Platform;

Ø Ensuring Scotland retains and enhances its position for regenerative medicine funding in the UK;

Continue to encourage an “industry-led, joined up Public Sector” approach to supporting initiatives like the Blood

project, to help overcome barriers to collaboration between Scottish Universities, the NHS and businesses

Recommendation

We believe that Scotland requires an organisation, or organisations that provide the following functions over

the next 5-10 years:

Ø Not for profit, core funded and focused primarily on supporting economic growth in the Regenerative

Medicine sector.

Ø Strong brand identity and presence.

Ø Linkage across the academic, commercial and clinical sectors.

Ø cGMP and development laboratories.

Ø Strong focused sales team

Ø The ability to establish and manage multi-partner collaborative projects.

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References

1. Rumelt R. Good Strategy / Bad Strategy. Profile Books, London. 2011.

2. ScienceWatch

3. Ekogen. Evaluation of Scottish Stem Cell Network (SSCN) Final Report. February 2012.

4. Court of Justice of the European Union: Judgment in Case C-34/10. Press Release no 112/11, Luxembourg 18

October 2011.

5. California Institute of Regenerative Medicine www.cirm.ca.gov/Video_SpotlightLeukemia

6. Scottish Life Sciences Strategy 2011: Creating Wealth, Promoting Health. 2020 Vision.

7. Department of Business Innovation and Skills. Strategy for UK Life Sciences. December 2011.

8. Department of Business Innovation and Skills. Taking stock of regenerative medicine in the United Kingdom.

July 2011.

9. The Scottish Government Economic Strategy 2011.

10. www.scotland.gov.uk/Topics/Statistics/Browse/Economy.

11. Life Sciences Key Sector Report – Scottish Government, Nov 2009.

12. www.healthsciencesscotland.com

13. www.sdi.co.uk/sectors/life-sciences/sub-sectors/stem-cell-research/strengths.aspx

14. Scottish Enterprise and Scottish Government Analysis using source book definition of Life Sciences.

15. Tissue Engineering, Cell Therapy and Transplantation: Products, Technologies & Market Opportunities,

Worldwide, 2009-2018.

16. Health Economic Research Group Brunel University, Office of Health Economic, RAND Europe for the Medical

Research Council, Wellcome Trust and Academy of Medical Sciences: Medical Research: What’s it worth?

Estimating the economic benefits from medical research in the UK. November 2008.

17. World Health Organisation – Health statistics and health information systems.

www.who.int/healthinfo/statistics/nortality/en/index.html

18. Department for Business, Innovation and Skills: Strategy for UK Life Sciences.

19. Dr Hermann Hauser. The current and future role of Technology and Innovation Centres in the UK.

20. UK National Statistics. www.statistics.gov.uk/hub/population/ageing/older-people/index.html accessed March

2012.

21. General Register Office for Scotland. www.gro-scotland.gov.uk/files2/stats/high-level-

summary/1198/j1119804.htm accessed March 2012.

22. The Scottish Health Survey: Older People’s Health. 2011.

23. Charles River Life Sciences Survey 2011.

24. Building a Health service Fit for the Future, Scottish Executive 2005.

25. The Scottish Government. Achieving sustainable quality in Scotland’s healthcare: a ’20:20’ vision. September

2011.

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26. Department of Health: Innovation Health and Wealth, Accelerating Adoption and Diffusion in the NHS.

December 2011.

27. A Strategy for UK Regenerative Medicine. Technology Strategy Board, March 2012.

28. Finance, Innovation and Growth: European Policy Brief February 2012.

29. Scottish Enterprise Business Plan 2012-2015