This month, BioFIT speaker in 2015 Kevin McBride, Vice-President-Research at AmorChem in Canada, shared his thoughts on European entrepreneurship in Life Sciences:
We have seen many new initiatives in early stage innovation financing over the past few years. How do you think these trends will evolve in the next ten years?
We will continue to see big pharma reaching back into stellar academic institutions and establishing collaborations both institutionally as well as with top tier researchers. Successes in such endeavours will continue to encourage pharma to seek out discovery-stage targets and assets externally, allowing them to essentially outsource their R&D and in-license only when a valuation point has been reached for candidates that fit into their pipelines. The reason why this activity represents the direction of early stage financing is that it is market-driven. Previously, early stage work was somewhat buried in universities with tech transfer offices utilising a “push” strategy, with only limited success. The closing-in on university-based research assets by both big pharma as well as by translational VC funds such as AmorChem represents more the need for greater innovation in the market. A “pull” strategy by that market is one of the best ways of encouraging and driving innovation forward.
Although the trend of pharma collaborating with academic institutions has been thriving over the last few years, at least here in Canada, the AmorChem Fund is quite unique in that we finance early stage projects in universities and were doing so ahead of the current trend. One interesting aspect of the currently evolving situation is that we occasionally find ourselves competing with substantially larger organisations for the same assets. But again, this is the market driving an increased need for innovation, and for those involved in discovery R&D in universities, such attention and competition can only be a good thing.
Johnson&Johnson are making quite a splash with their JLABS concept, whereby chosen projects are offered incubator space in chic new facilities amidst a key collective of intellectual and developmental expertise. I see that type of endeavour becoming more and more popular in the coming years.
As a North American VC, how do you see the future of the European seed capital market?
We invest more or less exclusively here in Canada, hence my limited knowledge of the European situation. I see it as similar from the Canadian situation, in that the geography/potential is very large, but we lag behind the United States in terms of financial infrastructure. There, they are willing to absorb the risk and transaction costs of financing early innovation, and with access to sufficiently diversified funding sources one can take an entity from SME level and scale it into a domestic if not globally competitive company. Europe has struggled in that fashion similarly to Canada, but there have been recent EU and European Commission initiatives, such as the Innovation Union/Single Market Act/Expert Group/CIP/COSME, as well as 2013’s “Regulation on European Venture Capital Funds”. I think that Europe is poised to become extremely competitive and productive in terms of entrepreneurs having access to venture capital across borders and achieving the growth that is essential for the sector.
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