The landscape for UK SMEs post-COVID

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The landscape for UK R&D SMEs post-COVID

Big pharma might have dominated COVID headlines with its vaccine drive, but behind the scenes an army of SMEs has enabled the UK to respond swiftly to the pandemic. We take a look at how these companies are faring in a difficult environment, and why more recognition from the government, alongside continued investment into new infrastructure, is vital to the sector’s future.

The entire UK life sciences industry has stepped up to help the country come out the other side of COVID-19 – helping with everything from diagnostics and vaccines to providing continuity in non-COVID disease areas, even while lockdowns and stretched healthcare resources make ‘normal’ work near impossible.

Dr Kath Mackay, managing director Bruntwood SciTech, Alderley Park, notes that most of these companies won’t be household names, but that small and medium-sized enterprises (SMEs) have been just as important as big pharma to the country’s pandemic response.

She highlights companies like Zenzium, which has provided AI capabilities for a clinical trial hoping to identify patients at high risk of severe COVID, and Cobra Biologics, which has been part of two consortia helping to rapidly develop vaccines.

In order to support SMEs in the post-COVID world, Bruntwood SciTech is continuing to invest in the infrastructure and development of ecosystems for science and tech businesses across the UK – but the sector’s existing challenges in areas like investment and recruitment mean there’s still a lot of hard work to do.

The state of SME investment

On the surface, funding for smaller life sciences companies seems to be buoyant. The BIA’s recent report, ‘The science of success: UK biotech in 2020’, marks the best year for biotech investments ever recorded by the trade association, with UK companies raising a record £2.8 billion in equity finance in 2020.

But Mackay says that while these figures are encouraging, investment can vary greatly on a company-by-company basis, and there have been struggles in the past year around seed and Series A financing.

“It’s not been an upward trajectory all year. There is support out there for companies that need it, but we also need to recognise that there are both companies that are thriving and companies that are struggling at the moment.”

An unexpected positive of the pandemic is that it has opened up opportunities for some companies to speak to investors they would never have interacted with were it not for remote working, which has broken down geographic barriers between the north and south.

“There’s been increased democratisation of how investment works in the UK now that everyone is used to remote working,” Mackay says.

But at the same time, she adds, many companies have found it harder to have investor conversations without face-to-face meetings.

In addition, while private investment numbers have gone up, public grant funding has wavered.

“That funding can be crucial for stimulating early innovation and making companies more attractive to investors,” says Mackay. “There may be knock-on effects on company growth from that following the pandemic.”

Dr Christopher Bullock, CEO and co-founder of QV Bioelectronics, based at Alderley Park, says that while COVID’s impact on the company’s research operations has been minimal, it has been slightly more challenging from an investment perspective.

“Compared to the impact that the pandemic has had on the economy as a whole, we’ve been very fortunate. We did have one investment deal that fell through, due to issues with the investment company’s cash-flow, but from a day-to-day operational perspective we’ve fared fairly well.”

QV is developing an implantable medical device for the treatment of brain tumours, with the stated target of doubling the life expectancy of patients.

The device uses advanced materials to allow the implant to rapidly conform to the size of the cavity in a patient’s brain tissue after resection surgery.

Applying electrical fields at specific frequencies from the device to the surrounding brain tissue can then interfere with cancer cell mitosis and slow tumour growth.

The device is still in the early stages of development, with the company going through a preclinical testing regime to ensure safety and regulatory compliance, before starting first-in-man clinical trials in 2024/25.

“In a lot of ways, we were lucky that the pandemic hit us when it did, because it would have actually been much more difficult if we’d been further along in clinical development,” Bullock says. “We’ve already had some delays to parts of the testing thanks to resource challenges. Some of the consultant neurosurgeons we’re working with have become involved in treating COVID patients, which would normally be nowhere near their area of expertise.”

Nevertheless, he notes that there are likely to be long-term effects from the pandemic on cancer investment as a whole.

“Investors fall into a lot of different categories. Some simply won’t have enough spare capital to invest in anything right now, others will want to focus more on antiviral companies, which is understandable.

“But the sad truth is that people are still getting cancer every day. Moving funding from one area to another does have an impact, and it remains to be seen whether that’s going to impact fundraising in the long term.

“After COVID we’ll certainly see some sense of normality returning to the field – it’s just a question of whether things will ever completely go back to how they were.”

Meanwhile, the pandemic means that biomedical charities have been forced to close shops and cease fundraising events, and have been unable to fund biomedical research as much as they used to.

“That’s going to have knock-on impacts for the oncology research community as a whole,” Bullock says.

And while Bullock says the UK is the “best country in Europe” to launch a biomedical company, he believes there are still some systemic problems in funding deep science ventures.

“Investor appetite and the total investment pool is certainly smaller than in our American or Asian counterparts – and to a certain extent, the investors’ focus is very different, with more of an emphasis on fintech and digital technologies.

“Meanwhile, a lot of the more traditional strategic investors are focused on drugs and biologics. At QV, we have excellent investors, but companies like ours do sit in a rather small gap, and that would be the case regardless of COVID.”

Mackay hopes that the government will recognise that the sector needs sustained investment to succeed in the future and provide more certainty around funding once the pandemic is over. In the meantime, though, she says that science and technology campuses like those in the Bruntwood SciTech network should aim to give companies as much support as they need in accessing funding.

For Bruntwood SciTech this meant having one on one conversations with every company based at Alderley Park, Manchester Science Park and Citylabs at the outset of the pandemic.

“We have everything from digital health firms to manufacturing companies,” says Mackay. “We wanted to find out what their individual challenges were, where they needed support, and what kinds of funding schemes they could be directed to.”

‘Strategic coherence’ for diagnostics

Mackay says she’d also like to see more support for the development of additional infrastructure for the diagnostics industry in a post-COVID world.

“The pandemic has shown us that the diagnostics sector is fragmented and underinvested compared to other parts of industry; it could use some more strategic coherence.”

Luckily, Dr Joanne Mason, chief scientific officer at diagnostics company Yourgene Health, says that the pandemic has massively boosted awareness of the sector in the UK.

“Now the question is how we make the most of that,” she says. “We’ve built many new partnerships and have found ways to get closer to the customer, and that has the potential to lead to long-term change for healthcare if we can harness it.”

Yourgene Health began life as two companies – Premaitha Health and Elucigene Diagnostics – specialising in non-invasive prenatal screening and diagnostic care for genetic disorders including Cystic Fibrosis, but soon grew into a broader diagnostics company thanks to acquisitions in Asia and North America.

This global presence gave Yourgene an unexpected head start in their response to COVID.

“We were following closely what was happening across Asia and had set up our own COVID alert teams in the UK,” says Joanne Cross, the company’s director of marketing. “We were having high-level COVID meetings weeks before the UK lockdown, and had already planned for people to work from home.

“I must admit, I remember thinking it wasn’t really going to happen – but then I went to a conference in Dubai at the beginning of February. Seeing the conference so quiet, with people wearing masks, really made it hit home.”

The company eventually implemented a hybrid working model. With its headquarters at Bruntwood SciTech’s Citylabs campus in Manchester keeping labs open throughout lockdowns, employees can go in to do lab work if needed, while planning and development work is mostly done from home.

And as the pandemic crisis deepened, Yourgene decided to launch its own COVID diagnostic test mere weeks after the first lockdown began.

“Early on we became involved with manufacturing reagents for other companies’ COVID tests because of our existing manufacturing capability,” says Mason.

“When the UK supply chains started to creak, the government issued a call for diagnostics companies to help scale up testing – specifically with something that didn’t use the existing supply chain.

“We saw a need for workplace and private PCR testing that wasn’t really being supported by the NHS.”

Pivoting like this was obviously a challenge during lockdown, and meant the company had to ramp up hiring significantly – which Cross says was helped by being located in the heart of Manchester’s scientific ecosystem.

“We also had to learn how to prioritise what we do and how we spend our resources so that we’re working on the right things at the right time,” says Mason.

Cross adds: “We still supply molecular diagnostic products to hospitals and labs; services like cancer screening and antenatal care haven’t gone away just because there’s a pandemic.”

The Manchester health innovation ecosystem has also helped the company continue to build partnerships even with lockdowns in place – and is part of the reason why Mason and Cross believe there is a great foundation for the diagnostics industry to build on post-COVID.

“Often we’ve started conversations with people about the pandemic that have gone in other directions and led to collaborations completely unrelated to COVID,” says Mason. “For instance, we now work much more closely with Manchester University NHS Foundation Trust and Health Innovation Manchester, who are also based in Citylabs 1.0, than we’ve ever done before.”

A new way of working

Mackay agrees that the networking aspect of R&D ecosystems is vital to SMEs’ growth both now and in the future – and so maintaining a collaborative and communicative culture has been as important to Bruntwood SciTech as keeping labs and offices open.

“Companies come to campuses like Alderley Park, Citylabs and Manchester Science Park because they want to be part of an ecosystem where they can meet potential collaborators on a daily basis,” she says.

“We put in lots of hard work to find different ways to get our customers talking through digital means.

“We’ve actually found that some of the more relaxed events – such as a weekly virtual coffee where people can hang out without a strict agenda – have been most helpful for helping the peer network continue to gel.”

She also hopes the network can aid in access to talent – likely to be another challenge in the post-COVID landscape.

“Many smaller companies do lots of work with younger scientists via internships, but that has become more difficult this past year,” says Mackay.

“Some organisations have been offering digital work experience schemes, but I’m not sure they’re quite the same in terms of giving lab experience to young scientists and providing a talent platform for businesses.”

The future for the sector is bright, and having the right infrastructure will be crucial to further supporting R&D in the years to come.

Dr Kath Mackay is managing director of Bruntwood SciTech – Alderley Park, home to the UK’s largest single-site life science campus and award-winning tech hub, Glasshouse. Her responsibilities include stimulating new business ventures and managing further development of the Park. Mackay joined Alderley Park in 2019 from Innovate UK. In her most recent role there, Mackay was director for ageing society, health and nutrition, and part of the executive management team.

Dr Chris Bullock is the CEO & co-founder of QV Bioelectronics, leading the commercial and technical development of the company. He is a biomedical engineer with expertise in medical device design, biomaterials and bioelectronics and holds a PhD from The University of Manchester, where his research focused on the development of novel graphene bioelectronic devices and the use of electrical stimuli to control cell behaviour. He is passionate about using new technologies to improve patient outcomes.

Dr Joanne Mason is the chief scientific officer at Yourgene Health, leading the development of the next generation molecular diagnostics particularly in the area of reproductive health. Joanne has previously held positions as VP biodiscovery with Cambridge Epigenetix, and director of sequencing and sample acquisition for Genomics England, where she managed the delivery of samples and whole genome sequencing for the 100,000 Genomes Project.

Joanne Cross is director of marketing at Yourgene Health. Joanne has over 18 years’ experience in the molecular diagnostics sector as a marketing professional with experience of working in the oncology and reproductive health fields. Prior to joining Yourgene in 2013, Joanne was a freelance marketing consultant working for a variety of biotech and diagnostic companies.

Bruntwood SciTech is the UK’s leading developer of innovation districts, creating the environments and ecosystems for science and technology businesses to form, scale and grow.

A 50:50 joint venture between leading property company Bruntwood and Legal & General, Bruntwood SciTech provides high quality office and laboratory space and tailored business support, offering unrivalled access to finance, talent and markets, an extensive clinical, academic and public partner network and a sector-specialist community of over 500 companies.

Bruntwood SciTech has a portfolio of over 1.8m sq ft including Alderley Park in Cheshire, Platform in Leeds, Innovation Birmingham, a cluster in the heart of Manchester’s Oxford Road Corridor innovation district, Manchester Science Park, Citylabs 1.0 & 2.0 part of the Manchester University NHS Foundation Trust (MFT) campus and Circle Square – a joint venture with Vita Group and a development pipeline of 850,000 sq ft which includes Birmingham Health Innovation Campus.

George

George Underwood is the editor for pharmaphorum’s Deep Dive digital magazine. He has been reporting on the pharma industry for seven years and has worked at a number of leading publications in the UK.

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