March 2019 was a busy month
April 2019
March has been a busy month for university technology transfer in the UK. There are four events to draw attention to in particular, they are all connected one way or another, although just how connected is a matter for continued discussion.
The four events are the sale of Oxford University spin-out Nightstar Therapeutics to Biogen for over US$870m, managed by Syncona plc; the decision by Imperial College to bring its technology transfer activities back in-house decades after creating Imperial Innovations Ltd; the slide of the IP Group plc share price below £1.00 on the London Stock Exchange; and Cambridge Innovation Capital raising an additional £150m.
Nightstar Therapeutics
Nightstar spun-out from the University in Oxford in January 2014. It was unusual, and impressive from the start. The company’s first programme was a gene therapy for an inherited form of progressive blindness, developed by Professor Robert MacLaren and colleagues at Oxford’s Nuffield Laboratory of Ophthalmology. The first round investment was £12m, the first investment made by Syncona Partners, Wellcome Trust’s venture investment arm. Two points stand-out: £12m is a huge amount for a first round, especially back in 2014, and Syncona is a hugely impressive investment group, with outstanding leadership, doing patient capital before may people were talking about.
As it was reported at the time … ‘ Tom Hockaday, Managing Director of Oxford University Innovation, said: ‘The £12 million investment in Nightstar represents one of the largest investments in a new academic spin-out in Europe. Oxford University Innovation is very excited to have worked with Professor MacLaren since 2009 to protect this technology and we look forward to it benefitting patients.”
A year after spinning-out Nightstar raised a further £5m, another year on it did a Series B round of $35m, then a NASDAQ IPO, and in March 2019 reached terms with Biogen for Biogen to acquire the entire business for $877m. Wow! Showing that putting big money in at the start, and bringing in top level senior management can really work, in a few years. I imagine University of Oxford still holds a few per cent, and so will see some cash some back, some which will find its way to ‘the old place’, technology transfer company Oxford University Innovation Ltd (‘which is nice’).
Imperial College
At the beginning of March, Imperial College announced that it was bringing its technology transfer activities back in house, ending its technology transfer arrangements with IP Group plc, a year before the 15 year pipeline arrangements were due to be formally ended or renewed. The story began over thirty years ago when the College set up Imperial Innovations Ltd as a wholly owned subsidiary.
Imperial College set up Imperial Innovations as its wholly owned technology transfer company in 1986. In the 2000’s the College gradually sold off parts of Imperial Innovations, ending up with a minority shareholding in IP Group, which had taken over Touchstone, the new name given to Imperial Innovations as the business had gradually become more investment focussed and no longer solely focussed on Imperial College.
Imperial College has done this in ‘direct response to the growing entrepreneurial and commercial environment’ and now the ‘technology transfer work is to be led directly by the College, replacing the external tech transfer office arrangement that has previously been in place’ so that ‘the wider investor community will now have access to Imperial’s most innovative entrepreneurs, their ideas, and their startups, while academics will have a much wider range of potential investors to work with’.
There remains an interesting, worthwhile debate to be held over whether a university runs its technology transfer activities within its administration or as a wholly owned subsidiary company. There should never have been any doubt that the technology transfer office should remain wholly owned by the university. The gradual sell-off of Imperial Innovations since 2006 is an example that proves this point.
Imperial College now owns a minority shareholding in a publicly listed investment company. It does not hold any shareholding assets in its spin-outs over the last decades, it does not own a substantial patent portfolio, and it is now rebuilding its own technology transfer office capability. By contract, other leading UK universities with wholly owned subsidiary companies do hold all of these things. Oxford’s spin-out share portfolio is valued in excess of £150m, and it owns a substantial patent portfolio, and a long established technology transfer business, as does Cambridge and UCL. And throughout, each university has been able to manage its technology transfer to the benefit of the university, adapting to broader trends in impact, and social enterprise, for example.
IP Group
IP Group has been around a long time. It grew out of IP2IPO, which was founded in 2000 to manage its game-changing £20m investment into Oxford University’s new Chemistry building. IP Group floated on the London Stock Exchange a long time ago, in 2006, and as one would expect has seen some ups and downs over the years, some of its own doing, some imposed upon it from outside. Over the years it has raised quite a lot of additional money from new share offers, and has made a range of investments into spin-outs from the UK’s leading universities; it also now has an Australian subsidiary and a base in Hong Kong.
In early March 2019 the share price dropped below 100p for the first time, and has since slid further, to about 88p at the end of the month. I don’t know what is happening there, but it doesn’t look too good. The details can no doubt be found in the year-end results released a few days ago, and the usual explanations of low volumes etc. Share prices can go up as well as down, and I am sure there’s a long way to go in the story of IP Group.
A couple of year’s ago IP Group acquired investment company Touchstone Innovations plc. Touchstone was the renamed Imperial Innovations, which had managed technology transfer for Imperial College from its formation in the 1980’s, up until the other day, as described above.
I doubt the ending of the Imperial College relationship has affected IP Group’s share price too much; there was only a year left on the original pipeline deal from Imperial Innovations/Touchstone/IPGroup; I doubt much of their value has been connected to the pipeline for a while now.. The transfer of technology transfer operations back to Imperial College, in fact results in cost savings for IP Group, about £3m a year.
One point that is surprising, with the good news from Nightstar a few weeks ago, and the more recent news from CIC , why didn’t IP Group’s share price increase? What happened to ‘a rising tide lifts all boats’? – especially in such a compact and closely collaborating sector.
Cambridge Innovation Capital
Cambridge Innovation Capital (CIC) has completed a funding round of £150 million, bringing the total amount of capital raised to date to £275 million. Congratulations! The University of Cambridge and Cambridge University Endowment Fund contributed the cornerstone investment, and the financing was supported by a diverse range of new institutional and strategic investors.
CIC invests in spin-outs an start-ups from Cambridge University and also the Cambridge innovation community. It has a wider deal flow base, although not yet as much cash to invest as Oxford Sciences Innovation’s £600m. I imagine Cambridge is very content with its approach, an impressive, wholly owned technology transfer company, and local investment community with impressive access to capital and experience.
Summary
Nightstar was an enormous success, for which Oxford and Syncona can take enormous credit. Imperial College will be swallowing their pride over a 14 year experiment which didn’t quite work out. IP Group will be hoping for some good news and someone wanting to buy its shares. Cambridge Innovation Capital will be delighted with their new resources and the Cambridge community delighted with the availability of investment capital.
How connected are these four things? Syncona is leading the way in patient capital, helping others show it is possible. The overlap in shareholder investors between IP Group and CIC (and OSI) means they are inevitably connected. The crucial difference is the leadership and management teams. The withdrawal of Imperial College from this whole arena may be affecting IP Group’s share price, but not much, and will be watched with interest by Oxford, Cambridge and UCL, just as they watched the privatisation experiment.
March 2019 was a busy month in the land of university technology transfer.
The four events are the sale of Oxford University spin-out Nightstar Therapeutics to Biogen for over US$870m, managed by Syncona plc; the decision by Imperial College to bring its technology transfer activities back in-house decades after creating Imperial Innovations Ltd; the slide of the IP Group plc share price below £1.00 on the London Stock Exchange; and Cambridge Innovation Capital raising an additional £150m.
Nightstar Therapeutics
Nightstar spun-out from the University in Oxford in January 2014. It was unusual, and impressive from the start. The company’s first programme was a gene therapy for an inherited form of progressive blindness, developed by Professor Robert MacLaren and colleagues at Oxford’s Nuffield Laboratory of Ophthalmology. The first round investment was £12m, the first investment made by Syncona Partners, Wellcome Trust’s venture investment arm. Two points stand-out: £12m is a huge amount for a first round, especially back in 2014, and Syncona is a hugely impressive investment group, with outstanding leadership, doing patient capital before may people were talking about.
As it was reported at the time … ‘ Tom Hockaday, Managing Director of Oxford University Innovation, said: ‘The £12 million investment in Nightstar represents one of the largest investments in a new academic spin-out in Europe. Oxford University Innovation is very excited to have worked with Professor MacLaren since 2009 to protect this technology and we look forward to it benefitting patients.”
A year after spinning-out Nightstar raised a further £5m, another year on it did a Series B round of $35m, then a NASDAQ IPO, and in March 2019 reached terms with Biogen for Biogen to acquire the entire business for $877m. Wow! Showing that putting big money in at the start, and bringing in top level senior management can really work, in a few years. I imagine University of Oxford still holds a few per cent, and so will see some cash some back, some which will find its way to ‘the old place’, technology transfer company Oxford University Innovation Ltd (‘which is nice’).
Imperial College
At the beginning of March, Imperial College announced that it was bringing its technology transfer activities back in house, ending its technology transfer arrangements with IP Group plc, a year before the 15 year pipeline arrangements were due to be formally ended or renewed. The story began over thirty years ago when the College set up Imperial Innovations Ltd as a wholly owned subsidiary.
Imperial College set up Imperial Innovations as its wholly owned technology transfer company in 1986. In the 2000’s the College gradually sold off parts of Imperial Innovations, ending up with a minority shareholding in IP Group, which had taken over Touchstone, the new name given to Imperial Innovations as the business had gradually become more investment focussed and no longer solely focussed on Imperial College.
Imperial College has done this in ‘direct response to the growing entrepreneurial and commercial environment’ and now the ‘technology transfer work is to be led directly by the College, replacing the external tech transfer office arrangement that has previously been in place’ so that ‘the wider investor community will now have access to Imperial’s most innovative entrepreneurs, their ideas, and their startups, while academics will have a much wider range of potential investors to work with’.
There remains an interesting, worthwhile debate to be held over whether a university runs its technology transfer activities within its administration or as a wholly owned subsidiary company. There should never have been any doubt that the technology transfer office should remain wholly owned by the university. The gradual sell-off of Imperial Innovations since 2006 is an example that proves this point.
Imperial College now owns a minority shareholding in a publicly listed investment company. It does not hold any shareholding assets in its spin-outs over the last decades, it does not own a substantial patent portfolio, and it is now rebuilding its own technology transfer office capability. By contract, other leading UK universities with wholly owned subsidiary companies do hold all of these things. Oxford’s spin-out share portfolio is valued in excess of £150m, and it owns a substantial patent portfolio, and a long established technology transfer business, as does Cambridge and UCL. And throughout, each university has been able to manage its technology transfer to the benefit of the university, adapting to broader trends in impact, and social enterprise, for example.
IP Group
IP Group has been around a long time. It grew out of IP2IPO, which was founded in 2000 to manage its game-changing £20m investment into Oxford University’s new Chemistry building. IP Group floated on the London Stock Exchange a long time ago, in 2006, and as one would expect has seen some ups and downs over the years, some of its own doing, some imposed upon it from outside. Over the years it has raised quite a lot of additional money from new share offers, and has made a range of investments into spin-outs from the UK’s leading universities; it also now has an Australian subsidiary and a base in Hong Kong.
In early March 2019 the share price dropped below 100p for the first time, and has since slid further, to about 88p at the end of the month. I don’t know what is happening there, but it doesn’t look too good. The details can no doubt be found in the year-end results released a few days ago, and the usual explanations of low volumes etc. Share prices can go up as well as down, and I am sure there’s a long way to go in the story of IP Group.
A couple of year’s ago IP Group acquired investment company Touchstone Innovations plc. Touchstone was the renamed Imperial Innovations, which had managed technology transfer for Imperial College from its formation in the 1980’s, up until the other day, as described above.
I doubt the ending of the Imperial College relationship has affected IP Group’s share price too much; there was only a year left on the original pipeline deal from Imperial Innovations/Touchstone/IPGroup; I doubt much of their value has been connected to the pipeline for a while now.. The transfer of technology transfer operations back to Imperial College, in fact results in cost savings for IP Group, about £3m a year.
One point that is surprising, with the good news from Nightstar a few weeks ago, and the more recent news from CIC , why didn’t IP Group’s share price increase? What happened to ‘a rising tide lifts all boats’? – especially in such a compact and closely collaborating sector.
Cambridge Innovation Capital
Cambridge Innovation Capital (CIC) has completed a funding round of £150 million, bringing the total amount of capital raised to date to £275 million. Congratulations! The University of Cambridge and Cambridge University Endowment Fund contributed the cornerstone investment, and the financing was supported by a diverse range of new institutional and strategic investors.
CIC invests in spin-outs an start-ups from Cambridge University and also the Cambridge innovation community. It has a wider deal flow base, although not yet as much cash to invest as Oxford Sciences Innovation’s £600m. I imagine Cambridge is very content with its approach, an impressive, wholly owned technology transfer company, and local investment community with impressive access to capital and experience.
Summary
Nightstar was an enormous success, for which Oxford and Syncona can take enormous credit. Imperial College will be swallowing their pride over a 14 year experiment which didn’t quite work out. IP Group will be hoping for some good news and someone wanting to buy its shares. Cambridge Innovation Capital will be delighted with their new resources and the Cambridge community delighted with the availability of investment capital.
How connected are these four things? Syncona is leading the way in patient capital, helping others show it is possible. The overlap in shareholder investors between IP Group and CIC (and OSI) means they are inevitably connected. The crucial difference is the leadership and management teams. The withdrawal of Imperial College from this whole arena may be affecting IP Group’s share price, but not much, and will be watched with interest by Oxford, Cambridge and UCL, just as they watched the privatisation experiment.
March 2019 was a busy month in the land of university technology transfer.