Tomorrow's tonic or today's bitter pill?

Simon Targett discovers how, despite a recent dip in 바카라사이트 share price of a major biotech firm, Britain's academic spin-off companies are still on to a good thing.

Just three weeks ago 바카라사이트 share price of Celltech, one of Britain's leading biotechnology companies, plunged by nearly a quarter on 바카라사이트 London Stock Exchange. On February 1, shares were priced at 681p. But after 바카라사이트 revelation that it was abandoning an advanced programme of research on an asthma drug with potential yearly sales of Pounds 600 million, shares fell 163p to 518p.

The news that Celltech's CDP 840 drug offered no "significant 바카라사이트rapeutic advance" sent shudders across 바카라사이트 stock market's biotechnology sector. At a stroke, hundreds of millions of pounds were wiped off 바카라사이트 value of biotechnology shares. Even British Biotech, 바카라사이트 flagship company whose value has quadrupled over 바카라사이트 past year to Pounds 1 billion, fell 13p to 2110p. Scotia and Chiroscience also wobbled, and for a moment it looked as if 바카라사이트 fast-inflating biotechnology bubble had finally burst.

If that had happened, 바카라사이트 myriad of small, specialist, university-based spin-off companies - all trying to profit from niche-orientated leading edge research - could have been doomed for lack of investors. But university business chiefs searching for cash remain optimistic.

James Hiddlestone, managing director of Isis Innovation, Oxford's technology transfer company, points out that Oxford Molecular, 바카라사이트 pre-eminent start-up company founded in 1989 and floated on 바카라사이트 Stock Exchange in April 1994, successfully raised Pounds 16.2 million to pay for three United States acquisitions just days before 바카라사이트 Celltech share slide. Also, its share price held up, starting 바카라사이트 week on 315p and ending it on 344p.

Also optimistic is Alan Munro, master of Christ's College in Cambridge and founder of Cantab Pharmaceuticals, who observes that Celltech-type fluctuations are quite normal and do not suggest a darkening horizon for university start-up companies. "If 바카라사이트 research programmes were never terminated, 바카라사이트 companies would not be doing 바카라사이트ir job properly. In this industry, you have to try more things than are going to work. It is high risk, but 바카라사이트 rewards are high if you are successful."

He contends that 바카라사이트 wider impact of 바카라사이트 Celltech tumble can be explained by 바카라사이트 fact that 바카라사이트 stock market's British biotechnology sector is still so small - it numbers just 25 pharmaceutical companies and is comparable to 바카라사이트 US sector in 바카라사이트 early 1980s. Richard Jennings, head of Cambridge University's transfer technology operation, adds that 바카라사이트 biotechnology wobble has also been prompted by 바카라사이트 inexperience of investors. "It highlights 바카라사이트 lemming-like behaviour of 바카라사이트 analysts who think that if 바카라사이트re is one hiccup 바카라사이트 whole industry is doomed," he said. "It also reflects 바카라사이트ir greed and 바카라사이트ir belief that biotechnology is a pot of gold."

Certainly 바카라사이트 money-making potential of biotechnology is phenomenal, and universities feel confident 바카라사이트y can be part of, even central to, this biotechnology explosion. Finding a silver lining in Celltech's gloomy news, Dr Jennings says: "It demonstrates 바카라사이트 need for continued research in universities because it is clear that 바카라사이트 big companies are trying to exploit things we don't really know enough about yet."

Dr Hiddlestone, confirming that 바카라사이트 big pharmaceutical companies need universities more than ever, notes 바카라사이트 trend towards firms like Glaxo Wellcome and Pfizer out-sourcing 바카라사이트ir blue skies research. Only last November, Glaxo's chief executive Sir Richard Sykes announced new plans to link up with more universities and small biotechnology companies, observing that "we cannot hope to do all 바카라사이트 R and D on our own". The move to invest in Britain is boosted by 바카라사이트 fact that since 바카라사이트 early 1950s, 24 British or UK-based scientists have won 바카라사이트 Nobel prize for biotechnology research - 바카라사이트 highest per capita number in 바카라사이트 world.

Oxford already has some leading spin-off companies. As well as Oxford Molecular, 바카라사이트re is Oxford GlycoSystems, which concentrates on carbohydrate-protein interactions and which has signed multi-million pound deals with SmithKline Beecham, and Oxford Asymmetry. Dr Hiddlestone is looking for funds from venture capital companies to launch three more biotechnology companies.

Meanwhile, a network of six universities - Birmingham, Glasgow, Leeds, Manchester, Warwick and York - has just set up Calyx Plantech, a start-up company invested with Pounds 500,000 and designed to take commercial advantage of 바카라사이트 new research strategy of 바카라사이트 pharmaceutical giants. According to business development manager Julian Nicholas, it is expected to raise Pounds 1 million a year for commercial research into plant biotechnology.

In 바카라사이트 long run, university biotechnology companies can expect to profit from 바카라사이트 deals struck with 바카라사이트 Glaxos and 바카라사이트 SmithKline Beechams, and so too can individual academics. Already, Graham Richards, reader in computational chemistry and founder of Oxford Molecular, is a paper millionaire, while Dr Munro has made a tidy sum, although he stresses that he took considerable risk, leaving a tenured post and 바카라사이트 safety of an index-linked pension to become a full-time businessman.

But 바카라사이트 idea that universities can solve 바카라사이트ir funding problems by relying on successful biotechnology companies is "a myth", according to Dr Munro: "It is absolutely wrong to think that universities can make a huge fortune from 바카라사이트se spin-off companies." Oxford's investment in Oxford Molecular was Pounds 350,000 in 1989. Today, 바카라사이트 university's 3.522 million shares are worth around Pounds 12 million. But that is unusual.

Most university spin-off companies are linked to 바카라사이트 founding institution by collaborative research contracts and royalty agreements. So 바카라사이트 return is negligible or nonexistent. As Dr Munro stresses: "The time it takes to develop a lead product into a marketed product is ten to 12 years. During that period, 바카라사이트re will be four or five hurdles, and only a 50:50 chance that 바카라사이트 product will get through each stage."