thebusiness ofbiomedicine€¦ · contents inspiredbynature 4 novabiotics betteroutcomesforall 8...

Issue 13 Winter 2012

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Cutting EdgeResearch fromScotland

TheBusinessof Biomedicine

Foreword

Exciting opportunities forbiomedicine in Scotland

Scotland’s universities have a long tradition of excellencein biomedical and life sciences research. This issuehighlights how this expertise has underpinned thedevelopment ofmany innovative Scottish biomedicalcompanies, turning exciting ideas into new drugs andother pharmaceutical solutions, which havemajorinternational impact.

These are challenging times for the pharmaceuticalindustry. The difficulty of producing safe new drugs that canmeet stringent safety regulations and be brought to markethas resulted in high risks and hugely increased costs.As a result, pharma has severely cut back on its in-houseresearch and development, and looks to reduce costs andrisk by outsourcing many aspects of the drug discoverypipeline. Thus pharma increasingly looks to identifypromising new drug candidates developed by smallerbiomedical and biotechnology firms that can test thefeasibility of newmethods and technologies. This providesa great opportunity for the biotechnology sector inScotland, thanks to the strength of basic research inScottish universities and the resulting pool of highly trainedand well educated personnel able to staff new biomedicalcompanies. If we are willing to invest in innovation, and arewilling to take risks and not insist on short-term financialreturns, many Scottish companies can flourish, effectivelyfilling a gap in the market created by the financial andtechnological realities of modern pharma.

While Scotland is exceptionally well placed to takeadvantage of the changing face of pharma, we shouldnever be complacent. Professor RolandWolf, while notingthat “Research collaborations between universities, thepharmaceutical industry and biotechnology companies arean integral and highly successful component of all Scottishuniversities,” suggests that there has been a slowdown inthe rate of forming new companies, and that “new waysare needed to support academics as founders ofcompanies in achieving the correct balance betweenacademic and commercial work.” (see Profile of CXRBiosciences on 0 and Viewpoint on Page 27).

The new Chief Scientist for Scotland, Professor AndrewMorris, highlights the many advantages in Scotland forconducting healthcare research, thanks to the strength ofbasic research and excellent healthcare and the efficientorganisation of healthcare informatics. However, ProfessorMorris also argues that Scotland must be careful to avoiddamaging internal competition and continue to improve

efficiency in the face of increasing external competition(see Profile of Aridhia on Page 8 and Viewpoint on Page 26).

NovaBiotics (Page 4) is a good example of an innovativecompany making a name for itself in a specialist area ofbiotechnology, backed by investors who are willing to waitfor returns. The Aberdeen-based company is developing arange of drugs based on antimicrobial peptides, including anew treatment for nail fungus – a market worth billions ofdollars a year. “We design the drugs and license the recipeto pharma,” says chief executive Deborah O'Neil.

Biomedicine is not only about drugs – it is also aboutoutcomes. Aridhia (Page 8) is a highly successful companyusing informatics as a powerful tool to fight chronicdiseases, developing solutions for healthcare – and self-care – based on intelligent analysis of healthcare data.

For drugs to be effective, it is critical that they are deliveredefficiently to their site of action and in the right doses. Thisis where Glasgow-based XstalBio (Page 11) comes to thefore, developing delivery solutions for new therapeuticproteins, vaccines and peptides.

There is no simple formula for success in the biotechnologysector, as our Profile ofMDBiosciences (Page 14)suggests. “We had no intellectual property (IP),” saysco-founder Professor Paul Garside. “But who says that youneed IP to spin out a successful biomedical company?”

MGBBiopharma (Page 17) is not just developing newanti-bacterial drugs, but a new way of doing pre-clinicalresearch – and a new way of building a drug developmentbusiness.

Aberdeen’s Antoxis (Page 23) is developing a chemicalplatform, based on the flavonoids found in fruit andvegetables, to develop a new range of powerful drugs to treatestablished diseases such as cancer, and provide novel smallmolecules for use in the regenerative medicine industry.

This issue of Science Scotland demonstrates the hugepotential in Scotland for combining academic excellencewith commercial opportunity. Biomedicine already plays animportant role in the Scottish economy and offers theprospect for huge growth potential in future.

Professor Angus Lamond FRS FRSE.Professor of Biochemistry, University of Dundee

PROFESSOR ANGUS LAMOND FRS FRSE

ContentsInspired by nature 4NovaBiotics

Better outcomes for all 8Aridhia

The formulation for success 11XstalBio

Formore details ... 14MDBiosciences

Semi-virtual drug development 17MGB Biopharma

The business of science 20CXR Biosciences

Doing things naturally 23Antoxis

Viewpoint 26Professor AndrewMorris FRSE, Scotland’s Chief Scientist

Viewpoint 27Professor Roland Wolf OBE FRSE

Editorial Board:Chair: Professor John Coggins, OBE, FRSE, FSBEmeritus Professor of Molecular Enzymology, School of Biology,University of Glasgow

Professor Peter Grant, OBE, FRSE, FIET, FIEE, FREngEmeritus Regius Professor of Engineering, School of Engineering, University of Edinburgh

Professor Angus Lamond, FRS, FRSEProfessor of Biochemistry, University of Dundee

Professor DavidMilne, OBE, FRSE, FIET, SMIEEE, FREngNon-Executive Director, Wolfson Microelectronics plc

Editorial Team:Writer: Peter BarrDesigner: Emma QuinnProduction Editor: Jenny Liddell, The Royal Society of EdinburghPrinter: Mackay & Inglis Ltd

www.royalsoced.org.ukwww.sciencescotland.org

ISSN 1743 – 6222 (Science Scotland Print)ISSN 1743 – 6230 (online)

If you would like more information, please contact: [email protected]

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ANY VIEWS EXPRESSED IN THIS PUBLICATION DO NOT NECESSARILY REPRESENT THOSEOF THE ROYAL SOCIETY OF EDINBURGH, NOR ALL OF ITS FELLOWS.

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sciencescotland ISSUE 13 WINTER 2012 page 3

Inspired by nature

page 4 sciencescotland ISSUE 13 WINTER 2012

Core business: Drug developmentLocation: AberdeenFounded: 2004Number of employees: 15

Aberdeen-based NovaBiotics is on the brink of asignificant breakthrough in drug development – andhopefully amuch-deserved return for its investorsin the not-too-distant future...

According to the Chief Executive of NovaBiotics, DeborahO'Neil, the company she founded eight years ago has noproducts, customers or revenues – yet. But it has alreadyattracted investments of £10 million and has completedclinical trials for a drug which could generate £1.5 billionin sales in a market worth an estimated £3 billion a year.

Novexatin® is designed to cure an ugly and painfulcondition that affects about 12 per cent of the world’spopulation: onychomycosis, or “nail fungus.”

According to O’Neil, the company is considering raisinga further £10 million in funds to further progress thisrevolutionary new drug towards commercialisation, alongwith two other potential best-sellers – drugs to fightcystic fibrosis (Lynovex® now has 'orphan' approval inEurope) and candidaemia, a potentially fatal bloodstreaminfection. In parallel, the company is also in discussionswith potential strategic pharmaceutical partners with aview to out-licensing Novexatin® and thereafter jointlydeveloping it for the clinic.

As well as having various patents for Novexatin® and atleast 80 other applications pending, O'Neil believescommunication is essential to win the support ofinvestors. “We have to keep them updated with all andany tangible technical progress within the company,”she says, explaining that this is important if investorsare to “keep the faith” in the longer-term value of thecompany's platform and pipeline products – recognisingthat development life-cycles tend to be much longer forbiotechnology than for most other sectors.

ProfileNovaBiotics

DEBORAH O’NEIL

The industrymodel hasmoved on,but themajority of the investmentcommunity hasn’t caught up yet –an exception being our investors,who have stepped into the breachto support us and get us furtherdown the development trackthan originally planned.

The scienceNovaBiotics focuses on thedesign and development ofnovel anti-infective therapies fordifficult-to-treat infectious fungaland bacterial conditions,(including life-threateninginfections such as candidaemiaand cystic fibrosis), using its“unique patented peptide anti-infective technology” – drugsbased on the antimicrobialpeptides produced in our bodies“as the first line of defenceagainst any infectious challenge.”

Peptides are simple chainsof amino acids. And insulin isanother example of a peptidedrug.

NovaBiotics’ technology is notonly “more effective and saferthan conventional antimicrobials”,but also kills rather thanmerelyinhibits the pathogens that ittargets and, in so doing,minimises or even rules out therisk of antibiotics drug resistancedeveloping.

To develop drug candidates readyfor clinical trials, NovaBioticsuses an approach called“rational drug design”whichfast-tracks the process byworking back from knowledge ofthemolecules that nature uses tofight infections and turning theminto therapies, rather thanscreening hundreds of thousandsof chemical compounds to findone that works. This can cut thetime it takes to get a drug tomarket by up to 75 per cent –down to only five years in thecase of Novexatin®.

Says O’Neil: “It can take 12 yearsand at least $2-$7bn to get adrug tomarket – unless you do itthe NovaBiotics way, which givesyoumore years of sales whilstthe drug is still on patent.”

“Raising funds in this sector often feelslike being on a treadmill,” says O’Neil.“Rather thanmoving on from Round A toRound B and so on in the traditionalsense, we’ve beenmore focused andleaner in our financingmodel, but this hasmeant going from A to Z and round again.

“This is true for most early to mid-stagebiotechnology companies and their needfor cash,” she adds. “The industry modelhasmoved on, but themajority of theinvestment community hasn’t caught upyet – an exception being our investors, whohave stepped into the breach to support usand get us further down the developmenttrack than originally planned.”

O’Neil identifies three “key pieces of data”which investors rely on:

1 effectiveness of drug candidates overthe competition and key differentiators

2 safety of the drug over competition –marketed and in development

3 goodmarket research to supportclaims of commercial potential of eachproduct candidate

With Novexatin®, it’s also important that itpenetrates the nail, so the drug reachesthe target fungi.

Themarket leader in nail fungustreatments (Lamisil tablets) only offers asuccess rate of 38 per cent in patientswithmild tomoderate disease, relapseis common, and this and other systemicantifungal treatments are associated withwell-described side effects and safetyissues. The currently available topical(brush-on) treatments have even worseefficacy profiles than Lamisil. Butaccording to O”Neil, Novexatin® (which isalso a topical treatment) acts ten timesfaster than the “best of the bunch” of

these products and has a ten timesbetter success rate, according to studiesconducted so far. In addition, it only needsto be applied once a day for amonth.

The other key products in the company’spipeline are Novamycin® and Lynovex®(see sidebar). The latter recently gained“orphan drug status,” so it can befast-tracked to clinical trials on the basisthat it treats a relatively rare condition –cystic fibrosis – which only affects about70,000 people worldwide. Other productsin the portfolio are designed to treatconditions such as MRSA, acne anddandruff.

Lynovex®, says O’Neil, is a classicexample of serendipity in science. Whileinvestigating compounds whichmightassist in getting drugs to penetrate nails,as part of the development of Novexatin®,the research team discovered a compoundwhich could disrupt bacterial biofilmsthat are themajor issue with the lunginfections associated with cystic fibrosis.

NovaBiotics designs and developsnovel drugs, but manufacturing andmarketing will be handled by itscommercial partners –majorpharmaceutical/biopharmaceuticalcompanies – who will pay licensingand development milestone fees toNovaBiotics, as well as royalties for everyproduct sold once the drugs reachmarket. This will leave NovaBiotics tofocus on what it does best. “We design thedrugs and license the recipe to pharma,”says O’Neil.

According to O’Neil, revenue fromthese alliances will be “returned to theshareholders and re-invested into pipelinedevelopment, to facilitate expansion andmaximise even greater investor returns.”


sciencescotland ISSUE 13 WINTER 2012

“The big pharmaceutical companies no longer focuson R&D,” she continues, “and don't tend to licence oracquire technology until the later stages of clinicaldevelopment.” In recent years, there’s been a globalcull of research in pharma, she adds. The blockbusterdrugs developed in the 1980s will soon drop off thepatent cliff and there is not much in the pipeline toreplace them. As a result, pharma is turning moreandmore to biotech to come up with the new drugclasses and real innovation – but it tends not to adoptthese new candidates until they are sufficiently‘de-risked’ in their development cycle.

The development cycle for Novexatin® has been longerthan anticipated when the business was first spun out,says O’Neil, mainly because pharma wanted later-stageassets, and as a result of the failure of three potentialrival products in the course of their development,which created a greater degree of scepticism in theindustry. “This is understandable,” says O’Neil.

“Nail fungus is a very tough clinical problem to solve,but our completely differentiated approach is certainlysucceeding so far.”

In the early days of NovaBiotics, Scottish Enterprisesaw the potential of the technology, but believed it was“too close to market” for proof-of-concept funding.NovaBiotics co-founder John Pool, as BusinessBiotechnology Advisor for Scottish Enterprise, saw thehugemarket potential of focusing the platform on onevery large commercial opportunity and put his finger onthe button when he asked O’Neil if her new technologycould tackle nail fungus.

O’Neil admits that if Pool hadn’t shaped the strategyat this point, things could have been very different:“I may have beenmore interested in other applicationsfor the technology, particularly life-threateningconditions like MRSA.”

ProfileNovaBiotics

The productsNovaBiotics has three key productsin the pipeline:

Novexatin® is a brush-ontreatment for fungal nail infections(onychomycosis). It not onlyaddresses the underlying causeof the problem by killing the fungibut also improves cosmeticappearance of the nail. Marketpotential: $3 billion per year.

Lynovex® tackles both of themajor clinical problems in cysticfibrosis (CF) by breaking downexcessivemucus in the lungs,killing the bacteria responsiblefor the chronic recurrent airwayinfections associated with CF andalso preventing formation of theslimy biofilms which these bacteriaform to protect them againstantibiotic effects and immunesystem clearance. Themarket isexpected to be worth $2 billion by2014 and individual treatmentscurrently cost about $20,000 perpatient per year. Lynovex® receivedorphan drug designation for thetreatment of CF in Europe inOctober 2011.

Novamycin® is an antifungalpeptide for the treatment of thebloodstream and deep-tissueinfections caused by Candidaand other yeasts andmoulds.Novamycin® is also beingdeveloped as a treatment fororal pharyngeal Candida infectionsand vulvo-vaginal infections.The cost of current treatmentsfor bloodstream Candida infectionscan run to tens of thousands ofpounds per patient, with survivalrates as low as 20 per cent anddrug resistance also a problem.The global market is forecastto be worth $5.7 billion by 2014.Novamycin®was developed fromthe same technology platformas Novexatin® and thereforehas already been significantlyde-risked.

Pool has stayed with NovaBioticsright from the start, including aspell as the company Chairman,and has helped to bring in a string ofearly-stage investors. “He wasmymentor andmy anchor in thespin-out stage,” says O’Neil.

O’Neil today is just as fascinatedwith the fight against infections(andmucosal immunology) as shewas as a PhD student in London.She is full of praise for her academicmentors and supervisors and thepeople she worked with in London,California and Belgium, as well as inScotland. In San Diego, she began torealise how drugs based on the

antimicrobial peptides wemake inour bodies could play a key role infighting infections, and this waswhat inspired her current pipeline.In Belgium, she learned aboutcommercialisation and at the RowettResearch Institute in Aberdeen, shedeveloped her ideas to the pointwhere she was ready to establishthe company and “dip her toes”into business, turning peptides intodruggablemolecules.

Nail fungusmay not be thesexiest problem in science, but forNovaBiotics and the people behind it,this is just scratching the surface...


Betteroutcomesfor all


Core business: Health informaticsDate incorporated: 2007Location: EdinburghAnnual revenues: About £3millionNumber of employees: 60Major customers: UK, Kuwait, Australasia

In health care, better outcomes are the target that everyoneaims for. And Aridhia not only promises better outcomesfor patients and healthcare providers, but also for its ownstakeholders and the economy...

In 2007, David Sibbald was sitting in his Edinburgh office,analysing vast amounts of data, trying to puzzle out bettersolutions for his clients. How can we improve the telecomsnetwork? How can we deliver better results for the bank?

Meanwhile, in Dundee, Professor AndrewMorris was tryingto understand why diabetes was spreading so quickly inScotland and how to improve patient care, analysing vastamounts of data sometimes going back to the early 1950s.

Then the twomen had dinner (Sibbald claims he paid thebill) and founded one of Scotland's most successfulbiomedical companies, specialising in health informatics.

Today, Aridhia employs 60 people, including softwaredevelopers, life scientists and clinicians, and has revenuesof £3 million a year. Its client base is also growing fastaround the world, including major contracts in the MiddleEast and beyond.

In 2007, Morris already had extensive experience indiabetes, using data to develop solutions for patientsand healthcare providers, and realised the obviousnext step was to apply this highly specialised knowledgeto other common chronic diseases, and ultimately also inother countries. Sibbald was used to looking at data“whizzing around the infrastructure,” and saw a lot ofparallels between commercial clients and the medicalsphere – everyone wants high-performance solutions,integration, analysis, scalability, robustness, reliabilityand good presentation of data. Everyone wants to ask“what-if” questions. In medicine, there are lots of“domain-specific” data (including thousands of parametersfor diabetes, covering everything from lifestyle to genetics)but also lots of general data, too. In fact, the worlds ofinformatics andmedical research are not as different asthey may first appear. Customer service and patient careare also very similar, and lower costs are always nearthe top of the wish list in any enterprise – including ahealthcare provider.

Profile Aridhia

... the company’smissionis simple: To support themanagement of chronicdiseases through the useof health informatics.

Computersvs CancerOne of themost challengingprojects undertaken by theAridhia team is a study of thesevenmain types of cancer,developing new software toimprove our understandingof the disease and how todeliver better patient care.There are 15,000 new casesof cancer in Scotland per year,and by combining differentmethods, including analysisof observational data as wellas biopsies, a clearer pictureshould emerge not only of thegeneral trends but also of highlyindividual factors. Likemanyother common chronic diseases,cancer is a “cocktail” of problemsand pre-existing conditions, andthe optimum treatment is usuallydifferent for different patients.

The project, which involvesNHS Lothian, NHS Tayside andcancer centres in the Universitiesof Edinburgh and Dundee and isfunded to the tune of £1millionby the Technology Strategy Board(a summatched by Aridhia), isscheduled for completion by theend of 2013. “It is the first andmost significant study of its typein the world,” says David Sibbald,“and the results coulddramatically change ourapproach to the treatment ofcancer.” Sibbald also believesthat it will not just provide asolution for Scotland, but alsohave an international impact.

This international outlook iswhat drives the two founders on.“Wewant to grow a successfulcompany in Scotland that exportssolutions, bringing benefitsback to Scotland”, says Morris.“And for that we need to alignour clinical research andknowhowwith informaticsand the knowledge of how tocommercialise what we are doing.”

In healthcare, some diseases aremorecommon – andmore costly – than others.Common chronic diseases such ascancer, diabetes and respiratory andcardiovascular problems are a huge andgrowing problem all around the world.They are not just the leading causes ofmortality, but are also forecast to doublein prevalence by 2030. In a global“market” where the healthcare bill isexpected to rise to $30 trillion by the year2030, the business potential is alsoenormous – because of the growingdemand for more cost-effectiveapproaches. “And when you applyinformatics tomedical problems,” saysMorris, “better can also be cheaper.”

Rising to the challengeAridhia's solutions are designed toaddress threemain aspects of healthcare: patient outcomes, costs andindividual engagement. And thecompany’s mission is simple: To supportthemanagement of chronic diseasesthrough the use of health informatics.

Health informatics is the integration ofcomputer andmedical science to analysedata – including observational and geneticdata – so that healthcare providers can

improve their understanding of trends inthe wider population, as well as providebetter, more personalised care forindividual patients by studying risk factorsand the impact of treatment and publichealth programmes. Morris says it’s alsoimportant to “stratify risk” – groupingpatients according to their individualrisk profiles.

Aridhia also stresses the need to usehealth informatics to engage individualsin their own care – for example,self-monitoring. “There is an enormousasymmetry,” Sibbald explains, “betweenthe data held by the healthcare providerand the information available to individuals.Most industries use informatics to transferresponsibility back to individuals, so whyshould healthcare not do the same?”

Morris also talks about the “journey ofcare,” pointing out that patients withcommon chronic diseases tend to seemultiple professionals (podiatrists,cardiologists and dieticians, etc.).“We are not good at joining up thedifferent parts of the story,” he says.“Health informatics is a very simple idea,but it makes a big difference. We alsowant it to encouragemore self-care– pushing information to the patient.The focus is always on the patient.”


DAVID SIBBALD OBE FRSE PROFESSOR ANDREW MORRIS FRSE


The company journeyWhen Aridhia was formed, what Sibbaldbrought to the table was his knowledgeof commercialisation and productisation,as well as industrial-strengthinformatics. He was able to combine thiswith Morris’s medical expertise andknowledge of informatics, gained in hisown research projects over the years.

For example, in 1996, Morris and histeam in Dundee received £100,000 fromthe Chief Scientist Office at the ScottishGovernment Health Department to buildamulti-disciplinary team to analyse datato improve patient care for diabetes,focusing on the area around Dundee.In those days, there were about 7,500people with diabetes in Tayside. Today,says Morris, there are 21,000, and it isestimated that people with diabetes areresponsible for more than 10% ofhealthcare expenditure, or approximately£1.5 billion in Scotland alone. The totalnumber of people with diabetes inScotland is currently running at just over250,000.) “The technology has evolved alot over the years,” Morris says, “and thescale of the problem has also increased.”

Morris, who was recently appointed ChiefScientist at the Scottish GovernmentHealth Department, is a Director ofAridhia. He is also Governor of the HealthFoundation, and Convenor of HealthScience Scotland, but despite all this hestill sees patients every week, to keep intouch with healthcare in the real world.

The company also draws great strengthfrom its othermajor shareholders, NHSTayside and the University of Dundee,who provide raw data and expertise, andplay amajor role in the “collaborativepartnership” between the differentorganisations.

Sibbald’s company, Sumerian, andScottish Equity Partners are the largestprivate investors.

Before Aridhia was formed, Sibbald ran acompany specialising in high-performancecomputing, and as soon as he andMorrisstarted working together, he saw the“huge opportunity to bring diversedomains together.”

The “good chemistry” between the twofounders has been the driving forcebehind the company’s growth. “The keyto health informatics is cross-domainskills,” Sibbald explains. “People tend tostick with their communities, but wewanted to bring them together.”

The futureThe logical next step for Aridhia’stechnology is the extension to genomicand genetic data. There aremultipleparameters in every disease – e.g. canceris not one disease, but a combination offactors and pre-existing conditions – andthe application of genomics will providemore precise diagnosis and treatmentof individual conditions.

The ultimate goal of Aridhia and everyhealthcare provider is better patient careand lower costs. But the “journey” is onlybeginning. “Many healthcare systemsdon't capture data in real time,” saysMorris, “partly because there aresomany factors involved. There is adisconnect between activities and costs.”

Morris is also concerned about a wasteof resources, duplication and harm:“Knowledge through data is key,” headds. “We have to drive knowledge tothe front line, in real time, to personalisepatient care.”

Health informatics, in its current form,is a relatively new approach to healthcare. It is hard tomeasure the benefitsof any advance, including healthinformatics, because healthcare is anever-changing, ongoing process and thepopulations and the individuals changeover time. But there is little doubt thathealth informatics will soon become acornerstone of healthcare, because thepressures on the system are so greatand the benefits of more intelligent dataanalysis promise to relieve at least someof the pressure.

“Current models of healthcare provisionare not sustainable,” Morris concludes.“If the bill for healthcare starts toincreasingly erode GDP, as currentprojections suggest, then we’re in trouble– not just in terms of health but also theeconomy.”

Profile Aridhia

Case study:KuwaitOne of Aridhia's mostnotable projects to dateis the Kuwait ScotlandeHealth InnovationNetwork (KSeHIN), acollaboration betweenKuwait’s Ministry ofHealth (MOH), theDasman DiabetesInstitute in Kuwait anda Scottish consortiumconsisting of theUniversity of Dundee,NHS Tayside and Aridhia.

The collaborationwith Kuwait (population3.1million) involves usinga package of solutionsto do in-depth researchinto diabetes, includinga”smart learningenvironment” for 105MSc students, plusclinical networkdevelopment, exportedby the NHS researchinteractions andinformatics platformsdeveloped by Aridhiafor data analysis.


The formulationfor success

Core business: Drug delivery of biologicalmolecules

Date incorporated: August 2001

Location: Glasgow

Annual revenues: About £600,000

Number of employees: 12

Major customers: Top 20 pharmaceuticalcompanies, includingvaccine and biotechcompanies

Itmay seemodd that XstalBio does not name its clients onitswebsite, but its CEO and founder,Marie Claire Parker,explains: “We help provide formulation solutions formany oftheworld's leading pharmaceutical companies. Our clientsand the projects that wework on are confidential and this isprimarily because if our technology provides an 'edge', solvesa technical problemor is potentially game-changing, then it’slogical to limit what other companies know. Althoughwe can’tsaywhoweworkwith, whichwould be good for our business,the flip-side is that we have developed a number of long-termrelationshipswith some clients and as their challenges havechanged, we’ve been responsive to this and this has helpedus to innovate.”

Founded in 2001, XstalBio focuses on “advanceddrug delivery,” developing solutions that enable

bio-pharmaceuticals to get inside the body as efficientlyas possible – an area that can be overlooked in the initialstages by many companies developing new therapeuticproteins, vaccines and peptides. According to Parker, somedrugs can lose more than half of their potency during theirjourney from laboratory to body, and this not only addsto costs but makes them less reliable. The reason, sheexplains, is that biomolecules are large, complexthree-dimensional structures which can be very sensitiveto their environment. “Our job,” she says, “is to get theminto the body in the right dose in an easily-delivered stableform, effectively and safely. The challenge set by clientsmay be different every time, but nine times out of ten,our technology solves it.”

The technologyThe technology that led to XstalBio being founded was jointlydeveloped by researchers at the University of Glasgow and theUniversity of Strathclyde in the late 1990s and was patented byParker and her colleagues, Johann Partridge, Barry Mooreand Peter Halling.

The protein-coatedmicrocrystal system (PCMC) was abreakthrough that enabled protein-based drugs to bedelivered by inhaler instead of by injection, and serendipitywas almost as important as the science involved. As Parkerdescribes it, quoting science fiction writer Isaac Asimov,“Themost exciting phrase to hear in science and the one thatheraldsmost discoveries is not Eureka! but that’s funny.”

Profile XstalBio


The “funny” thing that happened was that Parker and hercolleagues were expecting to prepare an amorphousmixof particles (formulating enzymes for biocatalysis withdifferent common salts) when they discovered that theparticles were in fact not amorphous but crystalline andhad unique properties – a water-soluble, crystalline core(amino acid, sugar or salt) which provided an efficient formof transport for bioactive molecules, enabling them to beprepared in a dry powder format for delivery via inhaler inthe appropriate particle-size range. Solving these technicalchallenges not only kept the drug stable but also made iteasy to control the dose and the release rate, combiningseveral different protein nanoclusters on the same surface.

Different versions of PCMC are developed for specificpharmaceuticals – for example, proteins such as insulin.XstalBio’s PCMC system is also very effective for treatingdiseases such as cystic fibrosis, because it can bedelivered as a dry powder straight to the lungs.

The companyXstalBio was one of the first companies in Scotland to spinout from two universities (Strathclyde and Glasgow), butParker and her colleagues neededmore than good scienceto get it established, setting up their operation in the Centrefor Integrated Diagnostic Systems (CDIS), a bio-incubatorfacility in the University of Glasgow. After the initial excitementof discovery, they had to validate the new technology and fundtheir research by working with amajor pharmaceuticalcompany. At first, they also looked for venture capital (VC)investment, but this proved to be a distraction. “Manypotential investors were very positive about the newtechnology,” says Parker, “but they thought we were tooearly-stage and told us to come back when we’d signed ourfirst licence agreement.” Several people also advised Parkerto try and limit involvement from VC investors because“they seek returns over a timescale that often isn’t alignedwith that of the life-science industry.”

Profile XstalBio

MARIE CLAIRE PARKER (PICTURED)WAS AWARDED A ROYAL SOCIETY OFEDINBURGH/SCOTTISH ENTERPRISEENTERPRISE FELLOWSHIP IN LIFESCIENCES IN 2001, AND IN 2006 SHEALSO WON THE RSE’S GANNOCHYTRUST INNOVATION AWARD.

Wehave developed a numberof long-term relationshipswith some clients and as theirchallenges have changed,we’vebeen responsive to this and thishas helped us to innovate.


In the pharmaceutical industry, productand technology timescales tend to belonger than inmost other sectors. Evenif the science is already proven, saysParker, negotiations with potential clients(over budgets and priorities, etc.) can inthemost extreme cases go on for up totwo years from the first point of contact“before you even lift a pipette.”

Because they believed in the science,Parker and her colleagues decided togo ahead anyway, and took three years,from 1999 to 2002, to prove the technologyworked, working with the company’s firstpharmaceutical partner, BoehringerIngelheim in Germany. “It is rare in scienceto find new technology working so quickly,”says Parker, “but wemet all our targetsand we were all very keen to exploit it.”In 2004, she then secured the licence forPCMC, after reaching agreement withStrathclyde and Glasgow, and the client liststeadily grew. “intellectual property (IP) isworthless if it sits on the shelf,” Parker says.

The CEO and founder has always refusedto let barriers get in her way, combiningscientific discipline with a talent forbusiness and a passion for getting thingsdone. “For some academics, the safeoption is to do nothing, but I was fired upfrom the start,” she explains. Otherscientists spin out too early, she cautions,but XstalBio managed to fund its researchfrom the start on its earnings, primarilyfrom Boehringer Ingelheim, supplementedby grants and awards, including severalSMART: SCOTLAND awards, plus fundsfrom private shareholders. “We aimed togrow organically,” says Parker.

From 2005 onwards, XstalBio started tobuild up amuch broader client portfolioamong the Top 20 pharmaceutical giants,along the way developing new PCMCsolutions and building up its scientific

data. In addition, in collaboration withBoehringer Ingelheim, PCMC can bemanufactured for clinical batches ofmaterial under licence.

“You have to be proactive,” says Parker,“but you also have to realise that individualclients can be very different and have to becarefullymanaged. One size does not fit all.”

There are lots of companies whospecialise in formulation, says Parker, butmost of them are focusing on incrementalproblems rather than on the new“game-changing” solutions which XstalBiois developing in Glasgow today. Thedelivery of drugs by inhalation is only oneaspect of the company’s work now andParker’s team is looking to the future byfocusing onmethods to deliver very highconcentrations of drugs – in a single shot– in doctors’ surgeries and even in thehome, so patients do not need to go tohospital for treatments that can oftentake several hours. Although theunderlying technology is still basedon PCMC, the company is currentlydeveloping amuch broader platform tomeet more diverse therapeutic needs,at the same time as working with a widerange of clients.

So, what is the next step for XstalBio?In Parker’s view, the target is a trade salewithin the next two or three years – a planthat has been in the back of hermindsince the company started. This will meanbecoming part of a large drug deliverycompany, or the drug delivery division of alarge pharmaceutical firm.

“We’re determined tomake it all happen,”says Parker. “Our success is based onconstant innovation and listening tocustomers. We can’t be sure that what wedevelop today will be tomorrow’s newtechnology, but we have to embrace riskand never let anything get in our way.”

How canweencourageentrepreneurs?“Instead of focusing on studentswho are doing well, we shouldencourage students who arefailing – because they will be theentrepreneurs of the future,”says XstalBio CEO and founder,Marie Claire Parker. “Studentsshould be helped to find outwhat they're good at, and rolemodels can also help to inspire,but real entrepreneurs oftentend to be born out of hardship.Successful people seem to havea spark in them, while otherscomplain and get nowhere, thedifference being that they act ontheir ideas rather than bemoancircumstances around them thatconspire for failure.”

In Parker’s view, it’s importantto develop resilience – learnhow to bounce back fromfailure. “Schools anduniversities should focusmoreon problem solving, rather thanlearning by rote, with open-bookexams inmany cases pavingthe way for a different, morerewarding form of learningfor both pupil and teacher,”she explains.

According to Parker, manyscientists are held back inbusiness by the impossiblequest for perfection. “Newsolutions don’t need to beperfect,” she says, “just goodenough. Does it tickmost of theboxes? Are some boxes lessimportant than others? Is itinnovative enough?Will it beuseful and straightforward toimplement?Will it integratewith clients’ existing solutionsand bemarketable, and is itbetter than what’s out there?”

Parker also thinks it’s importantto get the right people aroundyou to build up the business andconsiders she’s been very luckyso far, with a coremanagementteam of five people who workvery well together, havecomplementary skills andbenefit from a range ofpersonal styles.

Formore details...


Core business: Preclinical research

Date incorporated: 2004

Location: Glasgow (parent companyheadquartered in Zurichwith offices inMinnesotaand Tel Aviv)

Employees: 6

Major customers: Leading pharmaceuticalcompanies

“We had no intellectual property (IP),” saysMDBiosciencesco-founder Professor Paul Garside. “Butwho says that youneed IP to spin out a successful biomedical company?”

While most other spin-outs are based on scientific ortechnological breakthroughs, MD Biosciences (MDB)Inflammation Discovery Services was based on therealisation that a small group of scientists working at theUniversity of Glasgow had the expertise and the resourcesto provide a valuable service to the pharmaceutical industry– screening new drug candidates to identify which onesare likely to work best.

At first, some people doubted that a spin-out was the rightway to go, says Garside, but it soon became clear thatsetting up a new company, specialising in preclinicalresearch for drugs designed to treat inflammatory diseases,

was the best approach to running the new operation– and generating revenues for everyone involved.

“At that time,” says Garside, “there was nomechanism fordoing that kind of commercial research within the universityenvironment, but we were convinced it would work as aspin-out.” In those days, it was also very hard to winresearch grants for more than a fewmonths at a time,which made it hard to market research as a business.More predictable cash flow and longer-term funding wereneeded – plus regular contracts.

With financial and operational backing from Eddie Moradian,the CEO and founder of Morwell Diagnostics, the newjoint-venture company was founded in 2004 and quickly grewto 18 people. And despite the economic recession, whichhas seen the pharmaceutical industry cut back its spendingsignificantly in recent years, it has proven amajor success.MDB IDS has also been supported by the University ofGlasgow’s Innovation Network Programme and its First StepAwards, which offer up to £5,000 per project to help createlong-term collaborations between SMEs and universityresearchers. Scottish Enterprise has also backedMDB.

Before the company was formed, Garside and co-founderProfessor Ian McInnes had been approached by a numberof big pharmaceutical companies over the years to providespecialised preclinical research, but it was not until theywent to a biomedical conference in the US in 2004 that thebusiness began to take shape.

ProfileMDBiosciences

WhatmakesMDB different,according to Garside, is that itprovides amuchmore detailedpicture of a candidate drug’smodeof action in terms of the immuneresponse, going beyond standardtests not only to see how the drugworks, but alsowhat it may becapable of doing.

“I think we were invited to the conference as agents provocateurs,” Garsiderecalls. “We were asked to comment on the methods used for screening newdrug candidates, and were able to suggest ideas which seemed to be of interestto the industry.”

Moradian, who was also attending the conference, was impressed by the twoacademics and asked them if they’d ever thought of working commercially.This initial conversation quickly gathered momentum and Moradian promisedto fly over to Glasgow the following week to explore the possibility of spinningout a contract research organisation (CRO) from the University of Glasgow.While Moradian provided the majority of finance and also had a ready-madecustomer base to put on the table, Garside and his team provided the expertiseand the technology, enabling the new company “to investigate the immuneresponse in a more detailed manner.”

What makes MDB different, according to Garside, is that it provides a muchmore detailed picture of a candidate drug’s mode of action in terms of theimmune response, going beyond standard tests not only to see how the drugworks, but also what it may be capable of doing. From the start, Garside stronglybelieved that the ability to design bespoke studies for drugs would also be keyto its long-term success. Some of the more advanced research models usedwould not seem out of place in a university environment, because academicresearchers are often exploring new frontiers of drug design where the industrymay not desire to go, but Garside saw the potential of using these techniqueson an industrial scale, rather than just in speculative research.


PROFESSOR PAUL GARSIDE FRSE

MD BiosciencesMDBiosciencesInflammations DiscoveryServices (MDB IDS)specialises in preclinicalresearch – facilitatingdrug discovery by usingcutting-edgemodels topredict the potential ofnew compounds in theprogress and treatmentof inflammatory diseasessuch as rheumatoidarthritis andmultiplesclerosis.

Its services includeefficacy studies, modeof action platforms,bioanalysis, geneexpression analysis,histopathology andimaging, with anemphasis on customisedstudies and thedevelopment of novelmodels for screening.


“Persuading the big pharmaceutical companies to use anewmodel can be a challenge,” says Garside. “They knowthey need to do all the conventional studies, in order tocompare results with similar competitive products, but theability to look at the immune response inmuchmore detailalso gives them amajor advantage.”

The scienceGarside explains that when the body is attacked by aninfection, two kinds of cells interact: T lymphocytes(or T cells) and B lymphocytes (or B cells). By “talking toeach other,” these cells produce antibodies to counterinfection. They are also adaptive – they learn from theirexperience (including their encounter with a vaccine) inorder to respond to a future attack.

Instead of just showing that a drug is effective, Garsideand his colleagues can demonstrate why it’s effectiveby showing how the T Cells and B cells respond to thedrug by producing the right antibodies. Some cells maybe encouraged by the drug to producemore antibodiesand thus fight the infection, or the drugmay help tomultiply the number of cells that produce the antibodies.T cells also have specific receptors for specific infections,and it's hard to identify these different T cells because theyall appear to be so similar. The proteins they’re designedto fight are also highly complex. Once researchersunderstand what happens in detail, however, thepharmaceutical companies can then fine-tune the drugtomake it more effective. And according to Garside,the trick is to detect the receptors and help the cells torecognise the nature of the challenge they face fromspecific infections – the “what, where, when, why and how”of diseases. For example, MDB IDSmay study a newanti-inflammatory drug, and its job is to find out howit works and ask if it may also be used to treat otherdiseases.

MDB IDS researches the effects of drugs in vivo –i.e. looking at samples from living organisms – butis also exploring new “dynamic imaging”methodsto extend its capabilities. This enables researchersto detect biomarkers inside the body and is thereforenon-invasive and greatly speeds up the research.Generally, the immune response provoked bymost

infections can bemeasured from the very earlystages to predict how it is likely to progress, sothis means researchers can reach their conclusionsmore quickly, thus speeding up development of moreeffective drugs.

The focus of Garside’s research has been “to investigatethe fundamentals of immune regulation in vivo and applyany findings to infectious and auto-immune diseasescenarios.” And, ultimately, this means understandingthe basic interactions of the immune response – whathappens in the body when we’re threatened by differentdiseases, and what turns the immune response on and off.Amajor aspect of his work is using advanced imagingtechniques (amulti-photon laser scanningmicroscope)to see how cells move in living tissue in real time; whatGarside describes as the difference between lookingat still photographs and looking at a film.

Garside developed his interest in immunology while still anundergraduate at Salford University, where he “happenedto do” a project in parasitic infections. This led to a PhD inintestinal parasites, which in turn fuelled Garside's interestin the immune response, and brought him to Glasgow in1989 to work as a post-doctoral researcher for five yearsunder Professor Allan Mowat. He later won aWellcomeTrust Career Development Fellowship to study at theUniversity of Minneapolis and then returned to Glasgow torun his own research lab and teach, becoming Professor ofImmunobiology in 2002. This was followed by four years asDirector of the Centre of Biophotonics at the University ofStrathclyde, before returning to Glasgow again to continuehis research.

During the last decade, Garside andMcInnes spent a lot oftime working tomakeMDB IDS a success, meeting clientsand advising researchers. Both are still shareholders, butare no longer involved on a day-to-day basis.

Garside is proud of his role in establishing one ofScotland’s most successful spin-outs. He is also happyto be back in the research lab. But would he do it allover again?

“If the opportunity did come along and it was an innovativeproject, then definitely yes,” he replies.

ProfileMDBiosciences

...the trick is to detect the receptors and help thecells to recognise the nature of the challengethey face from specific infections – the “what,where, when, why and how” of diseases.


Semi-virtual drugdevelopment

Core business: Anti-bacterial drugsDate incorporated: 2010Location: GlasgowNumber of employees: 4Funding: £2.2million

It may bewalking in the footsteps of Alexander Fleming,who discovered penicillin in 1928, but Glasgow-basedMGBBiopharma is not only developing a new class ofanti-bacterial drugs but also a newway of doingpre-clinical research – and a newway of building adrug development business.

The new class of anti-bacterial drugs, which will soon beready for clinical testing, was discovered by ProfessorColin Suckling of the University of Strathclyde, and MGBBiopharma (MGB) was the company formed to take thenew technology onto the next stage, aiming to develop andcommercialise a drug which is expected to prove moreeffective against hospital-acquired diseases than currentlyavailable therapies.

DNAminor groove binders (MGB) are the small moleculesthat inspired the new company name and they werediscovered by a team of medicinal chemists, molecularmodellers andmicrobiologists at the University ofStrathclyde, led by Suckling. The initial development wasfunded by the University of Strathclyde and ScottishEnterprise’s Proof of Concept Programme, with help fromroyalties from Leucovorin®, an anti-cancer drug whichemerged from research at Strathclyde in the 1980s, alsoled by Suckling.

The new drug, now known as MGB-BP-3, hasdemonstrated “very significant in vitro and in vivo activityagainst Gram positive bacteria, including MRSA, VRE andClostridium difficile.” And MGB Biopharma CEO MiroslavRavic says the market for such drugs could be worth atleast $6 billion a year.

Ravic, who was born and educated in the formerYugoslavia, and worked as a Consultant in BelgradeUniversity Hospital before coming to the UK 25 years ago tocomplete his PhD at St Bartholomew’s Hospital in London,has a very clear vision for the new class of drugs – and howto advance it through pre-clinical and clinical research.

ProfileMGBBiopharma


His experience on “both sides of the fence” as a practisingphysician and in clinical research (he has been involved inmore than 100 clinical studies) has shaped Ravic's attitude todrug development and enabled him to take a very differentapproach to the business. He also spent almost ten yearsas the European Director of Clinical Research at Eisai – anexperience which ultimately convinced him that theremustbe a “better, quicker and cheaper” way to develop newdrugs. “Old habits die hard,” Ravic says. “But I wanted todevelop drugsmy way.”

After leaving Eisai, Ravic then spent three years atAntisoma, where he learned what life was like at a smalldrug development company. Whilst there, he helped torestructure the company’s clinical drug development groupand also played a key role in the development of a new anti-cancer drug which was later licensed to Novartis in a dealworth $900million.

This industry experience has taught Ravic several lessonsand inspired his current approach to research. The bigpharmaceutical companies dominate late-stage researchand tend to use standardised methods – the same protocolsagain and again – rather than take any shortcuts. Whenthey’re aiming to show that the new drug is “active,” havingalready proved it is safe, researchers may engage in severalstudies one after another, each costing millions of dollars.That is why it can take 8–15 years to develop new products,and meanwhile many people may be dying for lack of themore active drugs.

“Time is money,” says Ravic, who says that the conventionaldrug development cycle contains too much “dead space” –not just waiting for final approval but also in the earlierstages. And the answer, he says, is what is called “adaptivedesign,” combining various aspects of the drug developmentprocess, treating it as one continuum and designingbespoke studies tailored to candidate drugs. “Current drugdevelopment is very fragmented and, as a result, instead ofintegrating the development process from beginning to end,

there is often little communication amongst those involvedin pre-clinical research and even less between them andthe clinical development teams,” says Ravic.

As well as having firm views about how to develop newdrugs, Ravic had a clear idea of what kind of drugs he wouldlike to develop, when he set up his own drug developmentbusiness.

Whilst working as an industry consultant, he startedsearching for a new class of molecules which “ticked allthe boxes” in terms of design and targeted acute diseasesrather than chronic diseases, thus promising faster financialreturns. He was also keen to focus on a drug that works onwell-defined targets. “Another key factor,” says Ravic“is that the new drug is designed to target severe diseasesthat are difficult to treat – an area of high unmet need.”And the quest soon led Ravic to Glasgow, where ProfessorSuckling and his team had already tested new anti-bacterialcompounds in vitro and were looking for a partner to helpthemmove on to pre-clinical testing and turn the candidatemolecule into a commercial product. Ravic felt convincedthat some of these compounds had the potential to meetall of his criteria.

By this time, Ravic had also teamed up with his colleagueGavin Clark who, with 25 years’ experience in commercialroles at Johnson & Johnson, Bayer, NoVartis and GSK, hadcoincidentally been one of Suckling’s chemistry studentsin the late ’70s, and the two of them negotiated with theUniversity of Strathclyde to license the technology. Afterdue diligence, Ravic brought in Raymond Spencer, a highlyexperienced Chief Financial Officer from Antisoma and,together with Clark, foundedMGB Biopharma andapproached the new business with the same kind of radicaloutlook that Ravic applied to research. Rather than hiring ateam of researchers and setting up a dedicated new facility,Ravic has created what he calls a “semi-virtual” company.

ProfileMGBBiopharma

The solution devised byMGBwas to builda “virtual” teamof top researchers andexperienced advisorswho already kneweach other fromprevious projects.


“The reason themajority of new drug developmentcompanies fail is simply because they run out of money,”says Ravic. “Research projects tend to take longer thananyone ever expects and new firms also find it hard toattract top researchers, who demand higher salariesand can regard start-ups as too small and risky to join.In addition, one project isn't enough to support a largeresearch team or require our full attention all the time.”

The solution devised by MGBwas to build a “virtual”team of top researchers and experienced advisorswho already knew each other from previous projects,including Suckling plus Professor Iain Hunter andProfessor Curtis Gemmell of Strathclyde, and formerGSK senior scientist, Professor David Scales. Today,the company employs three executive managers on apart-time basis, and one full-time project manager,Dr Dawn Firmin. Although they are active as externalconsultants in non-competitive projects, Ravic says that“part-time is full-time” for all of the team. Thanks to thissemi-virtual structure, the company has essentially beenable to channel an unprecendented 70 per cent of itsfunds into direct research – way beyond the industrynorm – and alsomanaged to finish pre-clinical testingmuch faster, completing the process in only two years.

In the early days of MGB, Ravic, Clark and Spencer weresuccessful in attracting potential investors and raised£2.2 million in start-up funding from an angel syndicateled by Archangel Informal Investments, in associationwith TRI Cap, Barwell and the Scottish Co-investmentFund.

Manufacturing is a key factor for the success of thenew drug and this is handled by two separate partnercompanies: Almac Group in Northern Ireland andScottish firm Encap Drug Delivery in Livingston.

The basic development process involves proving safety(i.e. the drug is not toxic) and then demonstrating activity(the new drug has an effect on its target) and efficacy(how well it performs), followed by clinical testing toconfirm these results and demonstrate compliance withall the required regulations. Last year, MGB-BP-3 wasformally selected as a candidate for clinical testing afterdemonstrating “potent and rapid activity” against a rangeof Gram positive bacteria including MRSA, VRE,Streptococcus and C. difficile. This was what triggered theinvestors to inject the second tranche of fresh funds tomove on to the next stage of development.

MGB presented its findings last year at the InterscienceConference on Antimicrobial Agents and Chemotherapy(ICAAC) in Chicago, USA, and in April this year itannounced that it had published the results of activity ofMGB-BP-3 against Gram positive bacteria, includingMRSA and vancomycin-resistant enterococci, presentingthose data at the 22nd European Congress of ClinicalMicrobiology and Infectious Diseases (ECCMID) in London.

For MGB and its backers, this creates excitingpossibilities. Clinical testing can be highly expensive, soeither they fund this themselves, license the technologyor sell it to a partner, providing a relatively early exit forthe existing investors. Future sales could be significant,with similar new products being purchased forconsiderable sums of cash over the remainder of thedevelopment and the commercialisation, but the newdrug will requiremuchmore additional investmentbefore it is ready for hospital use.

“I deeply appreciate all those individuals who have put allthemoney together,” says Ravic. “If they exit now, thatwill be well deserved, and if we go on to the next stage,the returns could be even greater.“ In addition, Ravicbelieves that the compound will make it “with or withoutour investment,” simply because it has somuch potentialin such a “needy”market.

“The results so far are promising,” adds Ravic. “While theproblem of MRSA is not increasing as fast as previously,the cost of treating Clostridium difficile continues to rise,andMGB-BP-3 promises not only to treat the disease butalso to prevent its recurrence – thus saving evenmorelives andmoney.”

The company’s businessmodel may change in future,says Ravic, but being semi-virtual has delivered very realresults so far for him and the rest of his team – and couldlead to amade-in-Scotland anti-bacterial drug that willnot only savemany lives but ultimately generate billionsof dollars in sales.

MIROSLAV RAVIC

The businessof science


Core business: Drug development solutionsand investigative toxicologyservices

Date incorporated: 2002Location: DundeeNumber of employees: 30–40Major customers: 60+ pharmaceutical,

biotechnology, agrochemicaland chemical companiesincludingGlaxoSmithKline,AstraZeneca, Pfizer,Procter&Gamble andDowAgrochemical

RolandWolf describes how a team of scientists in theUniversity of Dundee joined forces with investors to createone of the city’smost successful biomedical spin-outs– and shares his thoughts onwhat is needed to encouragethe growth of the sector in Scotland...

Reflecting on the last 11 years since he helped to start upCXR Biosciences, Roland Wolf has much to be proud of –including the fact that the company has an anti-cancer agentthat has recently completed a Phase 1 clinical trial, and hasdeveloped a number of unique models for drug development,toxicology assessment and chemical risk assessment.

The company has also created employment for 30–40people over the years, boosting the local economy in theprocess and gaining an international reputation forworld-class research.

But Wolf is not content to rest on his achievements so farand also has strong opinions on the biotechnology sector inScotland, believing that the formula for business success isnot always in tune with the needs andmotivations ofacademic researchers.

“We need to develop a new business model which translatescommercial success back into research,” says Wolf.“Academics have to understand the motivations of investors,and investors need to understand the scientists as well asthe science involved. It’s nice to makemoney, but mostacademics have very different objectives and also tend tohave more altruistic reasons for doing what they do.”Every board needs the right mix of people, he adds, includingmanagers who balance and reflect the two different culturesof business and science.

Wolf also thinks that Scotland has tremendous intellectualresources, but could do much better when it comes totranslating that wealth into profits. “Howmany spin-outshave been truly successful in terms of global impact, profitsand employment?” asks Wolf. “Howmany start-ups havemoved on to the next level? And how can we help themto do so?”

Profile CXRBiosciences

Academics have to understandthemotivations of investors, andinvestors need to understand thescientists aswell as the scienceinvolved.

The scienceCXR offers a range ofpreclinical services,focusing on:

DrugDevelopmentSolutions:Combining proprietarytechnologies withimproved applicationof traditional in vitroand in vivo preclinicalstudies.

Investigative andMechanistic Toxicology:By understanding thepathways that definethe sensitivity of cellsto chemicals, thecompany evaluatesthe actual hazardto humans.

One answer is that the companiesshould takemuchmore advantageof the academic environment in whichthey are often embedded –maintain adialogue and focusmore on knowledgetransfer. Another ingredient of businesssuccess, according to Wolf, is that all thepartners and investors share the samebusiness vision and “direction of travel.”CXR was born out of the recognition thatthe commercial sector needed the kindof expertise and the technologiesavailable at that time in Dundee –including its experience inmolecularbiology, genetics, novel screeningtechnology, pre-clinical drug developmentand risk assessment. The university wasalready engaged in commercial activitiesandWolf and his colleagues believed theycould bemore successful by operatingas a business.

Wolf and his co-founder, Dr Cliff Elcombe,also had a number of innovative solutionsthat could greatly accelerate thedevelopment of new drugs – for example,by discovering as early as possible whetheror not the new candidate drug would besafe used on people.

In the years since then, the idea has turnedinto a reality, as the large pharmaceuticalcompanies increasingly use the services ofcontract research organisations to handletheir most difficult projects.

The services provided by CXR “improvethe clinical predictability of drugdiscovery ADMET (absorption, distribution,metabolism, excretion and toxicity)screens, reduce late-stage productattrition, rescue chemicals and drugsthat may otherwise be abandoned andtransform human risk assessment ofdrugs and chemicals.” It has developeda range of novel pre-clinical models,including genetically “humanised”mice which help to predict how thedrug will affect human beings, plus arange of mechanistic assays and bespokeassays and screens tailored to clientrequirements. It also offersmicroarrayservices “to provide a detailedunderstanding of the cellular responsesto compounds”, which is useful in avariety of ADMET applications, especiallyinvestigative toxicology.

Before setting up CXR, Wolf led researchthat resulted in another spin-outcalled Cypex, which also emergedfrom the University of Dundee, as partof a project in partnership with 15pharmaceutical companies, specialisingin the development andmanufactureof in vitro drugmetabolism systems.The company released its first recombinantprotein in 2000 and now has a portfolioof over 100 products to help in drugdevelopment, including humandrug-metabolising enzymes, finechemicals and antibodies.


ROLAND WOLF OBE FRSE


Wolf came to Dundee in 1992 after 11 years at theUniversity of Edinburgh, where he headed thelaboratories at the Imperial Cancer Research Fund’sMedical Oncology Unit and subsequently headed the ICRFMolecular Pharmacology Unit in the BiochemistryDepartment in George Square. In 1998, he made amajordiscovery concerning the role played by a single gene inprotection against cancer, and today he is the Director ofthe University of Dundee Medical Research Institute andHonorary Director of the Cancer Research UKMolecularPharmacology Unit.

Before CXR was set up at the Dundee Technopole building,it operated for three years as the Centre for XenobioticResearch, based at Ninewells Hospital & Medical School.In its first round of funding, it attracted £4 million fromprivate and public investors, including the Edinburgh-basedArchangel group and Scottish Enterprise Tayside, and itsother shareholders were the founding scientists and theUniversity of Dundee. The company also received fundingfrom the European Regional Development Fund, a RegionalSelective Assistance award and private sector bank finance.

“The work at CXR was very challenging,” says Wolf,“and we achieved a lot with relatively little investment.Our research programme, in collaboration with ScottishEnterprise through the ITI Life Sciences initiative (based inDundee), has also been fantastically successful, and helpedto sustain the business over the years.”

CXR was set up with twomain objectives, focusing oncontract research and drug discovery. First, it aimed to useits cutting-edge technologies to help in drug development,providing solutions to advance pre-clinical research,including innovative and bespokemodels. And secondly, itwas also on a quest to develop new drugs – concentratingon amolecule which Wolf says has considerable potentialright across the spectrum of cancer.

“In Scotland, we have invested hundreds of millions ofpounds in academic research and we want that activity totranslate into better drugs and treatment of disease,”says Wolf. “For this to occur there needs to be a clearunderstanding of the motivation of the investors and theacademics.”

In terms of corporate ethos, Wolf also has clear views,stressing the importance of creating an esprit de corps thatmakes every member of staff feel involved and “excited”about what the company does.

Wolf also feels very strongly that academics should notget embedded in the day-to-day issues of corporate lifeand says that scientists rarely give up their commitmentto research. It should be possible, he adds, to designresearch studies and engage in themwithout spending allof their time in the everyday details. “We should try to avoidsqueezing scientists into a mould,” he continues. Andjudging by the way he describes his vocation, Wolf willnever be squeezed into anyone’s mould.

RolandWolf left CXR in October 2012 to focus on hisacademic activities.

Profile CXRBiosciences

Newbusinesses have to be based on a clearunderstanding of the relative roles of theacademic founders and themanagers.


Doing thingsnaturally

Core business: Drug development –diseases of oxidativestress andmitochondrialdysfunction

Location: AberdeenCompany founded: 2006Number of full-timeemployees: 2

The next time you bite into an apple, eat raspberries orblueberries, or knock back a glass of redwine, youwillbe treating yourself to some of nature'smost effectivetherapies – the antioxidants or flavonoids that help toprotect against the development ofmajor illnesses such ascardiovascular disease, neurodegenerative conditions andcertain cancers. And a small company in Aberdeen is usingthese natural “remedies” as a chemical platform todevelop a new range ofmore powerful drugs to treatestablished disease and provide novel small molecules foruse in the regenerativemedicine industry...

For Donald McPhail, the founder and chief scientific officerof Antoxis, the ultimate achievement would be to see thecompany's products being used in clinics all around theworld in the fight against serious medical conditions withsubstantial unmet need – the end result of work whichstarted a number of years ago at the Rowett ResearchInstitute, now part of the University of Aberdeen, whenscientists set out to understand the role that plantpolyphenols, such as flavonoids, play in human healthand the prevention of disease.

A major focus of this work was to establish the mechanismsby which certain members of the flavonoid family could actas antioxidants, thereby protecting cells from free radicalattack. Free radicals are atoms or molecules that containan unpaired electron, making them highly reactive anddamaging towards cell membranes and a host of importantbiomolecules necessary for maintaining health. They arecontinually produced in the body as a by-product of theconversion of oxygen to energy. This ‘oxidative stress’ iscontrolled by the body’s elaborate antioxidant defencemechanisms. However, these are not fool-proof and a levelof damage inevitably occurs, which can result in disease andthe degenerative changes seen in ageing. The paradox isthat we need oxygen to live, but ultimately it can also leadto our demise.

There is now a substantial body of epidemiological evidencethat diets high in polyphenol antioxidants – for example,apples, red berries and certain vegetables, as well as tea,coffee and wine (in moderation) – are associated with areduction in a range of chronic illnesses. These includecardiovascular disease, inflammatory disorders, Type 2diabetes, neurodegenerative conditions such as Parkinson’sdisease, and certain forms of cancer.

However, once the disease is established, much higherlevels of oxidative stress can be generated that overwhelmthe body's natural defences and result in cell death.So the challenge for scientists is how to amplify thetherapeutic properties of flavonoids and get them into thecells to have beneficial effects – increase the bioactivityand target specific, susceptible locations inside the cell.

Profile Antoxis


Antoxis describes this as “the rationaldesign and synthesis of entirely newflavonoid-like molecules whichdemonstrate a step change in activitycompared with the natural compounds.”

A chemist by background, McPhail hasdeveloped a range of techniques (usingelectron spin resonance spectroscopy),to determine the antioxidant potency offoodstuffs such as wine, tea, berry juicesand even whiskies. “Although there hasbeen a great deal of interest in identifyingdietary sources high in antioxidants,it was understanding the complexrelationships betweenmolecularstructure, antioxidant activity andbio-potency which really intriguedme,”McPhail says. “By understanding theseeffects, the logical next step was todesign new synthetic molecules thatcombine antioxidant potency along withthe additional molecular features neededto produce drug-like characteristics.Developing a successful therapeutic isnot just about a molecule’s ability todestroy free radicals; it is dependenton many factors, including stability,accessing the disease site and the abilityto be absorbed by the cell and target keylocations, such as the mitochondria,where oxidative stress occurs.”

It is this valuable know-how that lies atthe heart of Antoxis and the company wasrecently granted its second patent in theUS and beyond, covering over 100 millionmolecular variants of the flavonoid family.

Using this rational design approach,compound libraries have now beendeveloped that combine antioxidantpotency with rapid cell uptake andtargeting of key areas involved inoxidative stress and free radical damage.

McPhail explains: “Our goal is to designin drug-like characteristics to these novelproduct scaffolds that will make themsuitable for use in clinical conditionswhich the natural compounds are notoptimised for – for example, by increasingthe amount of compound that can crossfrom the bloodstream into the brain andslowing its rate of metabolism.”

Of particular interest are antioxidantswithin the company’s pipeline that target

the energy ‘power house’ of the cell – themitochondria. “This would allow us tointervene in the cycle of oxidative stress,free radical damage andmitochondrialdysfunction that is a major componentof many diseases such as Parkinson’s,Huntington’s and sepsis,” adds McPhail.

The company is also looking at widerapplications for its compounds and isundertaking studies in the field ofregenerative medicine. “Results indicatethat several of our proprietary moleculescan effectively preserve stem cell viabilityin situations where they are exposed tohigh levels of oxidative stress, and oncethe compounds are incorporated into thecell, there is a good time window ofprotection, which is of huge benefitclinically.

After transplantation, therapeutic celltherapies are exposed to reperfusionand immune response effects that canresult in significant generation ofoxygen-derived, free radical species(which in layman’s termsmeans thatover 80% of the transplanted cells candie within 24 h). As recent evidencehas shown that treatment with dietaryantioxidants can help reverse this loss ofviability and functionality, the companybelieves its antioxidants have far bettercharacteristics to improve treatmentoutcomes, as they are almost 1000 timesmore potent than their natural cousins.Early evidence in a number ofregenerative medicine applicationswould tend to support this view.

The use of Antoxis’ compounds inregenerative medicine is seen as aquicker route to market because it'slikely that the compounds would not begiven as a drug but be categorised asa medical device (cells loaded withprotective agents outside the body andpre-implantation), thereby reducing thelong and costly regulatory developmentpathway associated with mainstreamtherapeutics. This would provide thecompany with a much earlier incomestream, potentially within two years,that would then be re-invested intohigher-value, but longer-term drugdevelopment programmes.

Profile AntoxisIntellectualPropertyOne of the chief aims ofAntoxis has been to “carveout a swathe of IP protectingmillions of synthetic variantsof the flavonoid family” andto increase the value of itsintellectual property assetsby “generating compoundefficacy data in a rangeof disease statemodelscovering cancer,neurodegenerative andcardiovascular conditionsas well as regenerativemedicine applications.”After completing thesestudies, the company willchoose themost compellingindications and promisingcompounds tomove forwardinto clinical Phase I studies.

MedicalBenefitsThe flavonoid-likemoleculesdeveloped by Antoxis addresseight key characteristics:

Rapid cell uptake

Increasedmetabolic stability

Membrane lipid solubility

Optimal antioxidant potential

Mitochondrial targeting

Improved access to the brain

Pro-drug options

Substantially enhancedbio-potency

Although there has been a great deal ofinterest in identifying dietary sources highin antioxidants, it was understanding thecomplex relationships betweenmolecularstructure, antioxidant activity andbio-potencywhich really intriguedme.


The business planThe key to commercial success for Antoxis, according toMcPhail, will be the “patent space” the company controls– and this is what will ramp up the company's value overthe next few years. Antoxis now has patents protectingover 100million synthetic variants of the natural flavonoidscaffold. These patents are not just about a singleproduct – they encompass a platform technology fromwhich different molecular variants can be optimised forspecific clinical and stem cell applications.

The ‘on-the-bench’ data is very encouraging, so far.According to McPhail, the lead compounds provide an“exceptional ability” to keep a wide range of cell typesalive, including neuronal cells, when they are exposed tootherwise lethal levels of oxidative stress. The companyis now undertaking in vivo diseasemodels to identifywhich particular clinical indications and compoundcombinations aremost suitable tomove into clinicaltrials. McPhail says he is also confident that Antoxis’products out-perform the natural products, and alsoother antioxidant molecules in clinical trials or onthemarket.

AlliancesFor McPhail, swapping the white coat for the businessworld has been an interesting experience, and one he isenjoying. “Setting up the company has been very exciting– especially the prospect of taking the science tomarketand, hopefully, of providing some kind of health benefit.I was fortunate in securing a Royal Society of Edinburgh/Scottish Enterprise Enterprise Fellowship, prior tocompany formation, which was of immense benefit.”

Likemany other biomedical start-ups, Antoxis operatesas a semi-virtual company. When the company needs toproduce any chemical compounds or undertake pre-clinical research and development, it simply sub-contracts

the project to a specialist firm, thus avoiding costlyoverheads. This makes for greater flexibility and enablesthe company to respond rapidly to new challenges, ratherthan being locked into an infrastructure that may not beappropriate a few years down the line. “Unlike largepharma, biotechs need to be highly-adaptable, with amore dynamic businessmodel,” says McPhail.

Antoxis does not operate alone, however, and haspartnerships and collaborative agreements with severalother organisations, including large pharma andmid-sized bio-pharma. In particular, the company hasfostered excellent links with Scotland’s universities,including Aberdeen, Edinburgh and Glasgow and, insome respects, is replicating the ‘open innovation’model that is becomingmore common in big pharma.

Aberdeen University is a shareholder in the company,while Glasgow University provided themedicinalchemistry expertise needed to generate thefirst-generation, flavonoid-likemolecules, supported byfunding through the Scottish Enterprise Proof of Conceptscheme. Antoxis has also been supported through SULSA(the Scottish Universities Life Sciences Alliance) withpost-doctoral posts in oncology and regenerativemedicine at the University of Edinburgh.

“The key in Scotland,” says McPhail, “is to createan environment where academics can bemorecommercially focused as well as do blue-sky research.”Thanks to Scottish Enterprise, funding initiatives thatencourage high-tech SMEs and the universities to worktogether, along with an excellent investor network (inAntoxis's case, Genomia Fund, Grampian BioPartners,TriCap and Kapital Assets), the blue-sky thinking whichled to the birth of Antoxis, and continues to power itscommercial development programme, will not just leadto better medical treatments, but also to a healthyreturn on investment.

Convergence ofhealthcarewith research:an opportunity for Scotland


Healthcare systems internationally are under great strain.Despite increased spending on healthcare (8% of GDP inthe UK and 17.4% in the US), the pressure continues tomount every year –with increasing life expectancy, newtechnologies, enhanced patient and public expectations anda “rise and rise” of chronic or non-communicable disease,major challenges in all countries.

The facts about chronic disease are particularly stark: up tothree quarters of people over 75 years of age currently sufferfrom a chronic disease, and the incidence of chronic diseasein the over 65s will double by 2030. Last year, a UN summitdeclared chronic diseases to be a global threat to the futuresustainability and affordability of healthcare, and the WorldEconomic Forum estimates that chronic diseases will costthe world economy $47 trillion over the next 20 years.

The quest for better quality at reduced cost remains elusive,but in many countries such as Singapore and Australia, forexample, they are focusing on closer integration of sciencewith healthcare provision and public health, facilitating theconvergence of research with healthcare, not only toaccelerate clinical innovation, but also as a vehicle ofeconomic growth.

Scotland is a relatively small market in terms of globalhealthcare delivery. Annual expenditure on healthcareprovision is about £12 billion for five million people. In lifesciences research, however, Scotland has a disproportionateimpact. It hosts the UK’s second-largest Life Sciencescluster and one of the most sizeable in Europe, with anannual turnover worth £3.1 billion. Scotland also competeswell in health science research, attracting 11.5% (£189M)of the total £1,618M of the health-relevant researchexpenditure in the UK in the recently published UK ClinicalResearch Collaboration report.

As a location for research and clinical trials, Scotland has anumber of advantages over many other countries, includinginternationally-competitive universities where academicsundertake clinical service as well as research. We also havea stable and improving healthcare system, an emergingnationwide clinical research infrastructure ((NHS ResearchScotland), and an informatics capability that exploitselectronic patient records, linkable through a unique NHSpatient identifier, enabling clinical trials, stratified medicineand genetic studies.

But more needs to be done to ensure Scotland remains apowerful player as part of a UK biomedical science cluster.We need to think global and act locally. Speed, efficiency andcosts are three key metrics. We have ground-breaking

initiatives such as SULSA,Generation Scotland andthe Scottish Patient SafetyProgramme, and the recent announcement of ScottishFunding Council Innovation Centres is also highly promising,but it is time to create new alliances before we findourselves spectators on the global stage.

Four key developments would potentially add value:

1 Structured NHS/academic collaborations focusing oneducation, research and quality clinical care delivery.

2 A focus on health and biomedical informatics, usingelectronic patient records to support better treatment,safety and research.

3 A commitment to harmonisation of NHS CaldecottGuardian activities and university governance, costingand contracting, so institutions can become a single pointof contact.

4 Greater collaboration between the biotechnology,pharmaceutical, computer science andmedical devicesindustries, embracing principles of open innovation.

This would not only help position Scotland as a singleresearch site, but also enhance our global competivenessand help us face the challenges of chronic disease.

There is a fundamental shift taking place in the geography ofscience. Collaborative research networks are expanding allover the world, particularly in the emerging economies, andthe influence of more established research centres such asthe UKmay be waning. Researchers here will need to stepout of their comfort zones to keep up with the dynamism ofthe new players, but there are some optimistic signs thatindividuals and institutions are willing to take risks, concedea little sovereignty and work across boundaries.

On a recent trip to Sydney, I walked along Macquarie Street,named after Lachlan Macquarie, a Scot who played a leadingrole in shaping the development of Australia in the early 19thCentury. Two hundred years later, there is an opportunity forScotland to shape the health science agenda – and have amajor international impact on chronic disease managementand health system design.

AndrewMorris is Professor and Dean of Medicine at theUniversity of Dundee, Chief Scientist (Health) at the ScottishGovernment and co-founder of Aridhia Informatics.

Viewpoint AndrewMorris

Exploiting the scientificexcellence of Scottishuniversities in thecommercial sector


Viewpoint RolandWolf

Research collaborations between universities, thepharmaceutical industry and biotechnology companiesare an integral and highly successful component of allScottish universities. There are numerous examplesof how such scientific/commercial interactions haveresulted in improved health care and have contributedto the Scottish economy. In the distant past, suchcollaborationsmay have been frowned on by academics,but they are now a key component of their researchportfolio. However, translating academic excellence anduniversity research into the creation of successful spin-outcompanies has slowed down over the last few years.We need to understand the reasons behind this slowdownand to develop new approaches to regainmomentumin an areawhere Scotland hasworld-class expertiseand that has the potential tomake amajor contributionto the Scottish economy.

Academics are judged by the international competitivenessand impact of their research. Their goal is to performresearch of the highest standard to benefit mankind. This isreinforced by government through the Research ExcellenceFramework (REF), which assesses academic researchoutput and provides financial support to universities basedon their performance. Although the REF takes commercialactivity into account, university researchers are extremelyconcerned about any new commitments that risk damagingtheir basic research careers. Given the large amount oftime needed and the uncertain rewards, setting up a newcompany is often perceived as a very risky commitmentfor academics.

New ways are needed to support academics as foundersof companies in achieving the correct balance betweenacademic and commercial work. Universities, and theirfunding systems, need to give appropriate recognitionand reward to academics who invest precious time incommercialisation, and investors need to understand thatacademic founders are generally motivated by translatingscience into either public or patient benefit, rather thanby short-term financial return or making money per se.The latter is, of course, essential to any successful business,but the balance between vision, innovation and commercialreturn must be dynamic to navigate the complex landscapeto significant growth and success.

Understanding motivations is also fundamental in therelationship between founders, the CEO, the board and theinvestors. Generally speaking, founders should do what theydo best and be concerned with the intellectual and scientificdevelopment of the company and not with its day-to-daymanagement. A biotechnology company cannot operatelike a major pharmaceutical company, and a balancebetween running a commercial business and innovation,entrepreneurship andmotivation is needed. The company’sCEO and board must have an in-depth knowledge of allaspects of the business it is running, including the scienceand the market-place, otherwise competitiveness will belost and the company will not realise its potential.

Finally, the relationship between the founder, the CEO andthe chairman of the board is pivotal to the success of aspin-out company. This must be based onmutual respect,transparency and trust. There must be a high level ofcommitment from all parties; simply turning up for boardmeetings is not enough. Everyonemust subscribe to acommon vision and goal.

Scotland’s universities spend hundreds of millions of poundson outstanding innovative research every year, yet are stillnot exploiting efficiently the best of the significant economicbenefits that this should create. There are many possiblereasons for this and we are still searching for a model thatboth encourages and reduces the pressures on founders.More effective new initiatives are urgently needed to try andbridge this gap, as current approaches have been largelyineffectual. It is critical that we re-evaluate our approachand that government, higher education funding councilsand investors all listen to what the academics are saying.Academics in Scotland are up for this!

RolandWolf is Director of the Biomedical Research Centre,University of Dundee; Honorary Director of CRUKMolecularPharmacology Unit, Ninewells Hospital andMedical School;and amember of the Scottish Science Advisory Council.

Science Scotland – bringing you the best of Science andTechnology from Scotland – is published by The RoyalSociety of Edinburgh, with support from:

The Scottish Government is responsible for most of theissues of day-to-day concern to the people of Scotland,including health, education, justice, rural affairsand transport.

The Royal Society of Edinburgh, Scotland’s nationalacademy, was founded in 1783 and the Fellowship todayincludes some of the best intellectual talent in academia,the professions and business. The RSE facilitates publicdebate, research programmes, educational projects andstrategy formulations. Its strength is its diversity andimpartiality. The Society’s unique multi-disciplinaryapproach enables it to draw from and link with a broadspectrum of expertise to enhance the understanding ofglobally-important issues. In fulfilling its Royal Charter forthe ‘advancement of learning and useful knowledge’, theRSE seeks to contribute to the social, cultural andeconomic wellbeing of Scotland.

To view Science Scotland online, please go to:www.sciencescotland.orgFor more information, please contact:[email protected]

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