1:49 PM
 | 
May 24, 2019
 |  BioCentury  |  Finance

How Europe’s hotspots of innovation could fuel its rise as a global player in new modalities

Europe’s best bet for closing the gap with the U.S. is to nurture its hotspots of innovation for new modalities

Editor's Note: This article was updated on Jun 05, 2019 at 5:16 AM PDT

It is clear that Europe has hotspots of innovation that are discovering and developing the next wave of new therapeutic modalities. Nearly every category of new modality has a European champion, with clusters forming around some modalities and attracting dedicated capital. But despite improvements, the fundamental gaps for translating its science mean Europe will struggle to match the pace of development in the U.S. and China.

To play on par, Europe will need to secure its hotspots more long-term capital, increased manufacturing capacity and infrastructure, and better access to entrepreneurial management teams.

Two distinct pictures are crystallizing for Europe’s contribution to the development of new modalities.

First, the pace of scientific discovery and company formation has increased markedly in the past five to ten years.

A McKinsey & Company report, Biotech in Europe: Scaling Innovation, presented at BioCentury’s BioEquity Europe conference in May, shows immunotherapy and gene and cell therapies were the fastest growing segments in Europe since 2012 in terms of investment and company formation.

The data converge with the sentiment among eight European VCs interviewed by BioCentury, who ascribe the progress in part to intiatives aimed at building the infrastructure necessary to develop and manufacture these new modalities.

They pointed to the Cell and Gene Therapy Catapult in the U.K. as a prime example. The government-led initiative provides support across clinical development, process optimization, logistics and manufacturing, and is a contributing factor to the U.K.’s dominance in the region for the discovery and development of advanced therapies.

More than one third of European biotechs launched since 2012 were created in the U.K., which also has the largest concentration of cell and gene therapy companies. Other growing hotspots for cell and gene therapies are appearing in Switzerland, the Netherlands and Denmark (see “Europe: Some Spots Hotter Than Others”).

“When you compare with the numbers a few years ago, it is just a completely new level of funding.”

Joachim Rothe, LSP

Pan-European VCs are also raising larger funds, some of which are dedicated to investing in new modalities.

For instance, U.K.’s Syncona Ltd. is deploying large amounts of capital focused on cell and gene therapies. These modalities will also be the focus of a new Italian fund being raised by Sofinnova Partners.

The increased capital means VCs are also better equipped to attract top talent, even from premier hubs like Boston.

But the second picture sees Europe being eclipsed by China, and needing to find a new gear for keeping pace with the U.S.

Europe remains dependent on U.S. funds for growth capital. While two thirds of European IPOs between 2012 and 2018 were filed on European exchanges, 98% of the follow-on capital was raised on U.S. exchanges.

And the pace at which Europe is translating its science lags that in the U.S. and China. The numbers show a disconnect between Europe’s strength in biology, its focus on translation and its entrepreneurial appetite.

The McKinsey report notes that from 2005-18, Europe provided the largest share of publications on cell and gene therapies at 39%, compared with 38% for the U.S. and 23% for China, meaning Europe holds its own in basic science.

However, in BioCentury’s Distillery, which selects the top papers with translational relevance, Europe accounted for 30% of the findings with commercial potential between 2008-18, while the U.S. accounted for 70% and China 5%. In 2018, a clear shift from western countries to China was evident, as the U.S. was responsible for 56% of all top papers vs. 25% for Europe and 12% for China. Papers with multiple authors from different regions were double counted (see Figure: “Hot Topic Distillery Items: 2014-18”).

And whereas the number of biomedical patents filed in the U.S. rose about eight-fold since 2005, the number in Europe barely doubled. In the same time, China produced a twenty-fold increase in patent filings, with the majority of that rise taking place after 2013.

While the numbers don’t indicate the number of high quality patents, they do reflect an entrepreneurial culture embedded in the U.S. and skyrocketing in China that Europe has yet to imbue broadly in its academic centers.


Figure: Hot topic distillery items: 2014-18

The overall number of items published in BioCentury Innovation’s Distillery section describing technologies identified as hot topics by BioCentury has fluctuated year to year. And while the percentage of abstracts from the U.S., Asia and Europe have all grown in recent years, Europe was still falling behind in 2018. The Distillery contains synopses of papers describing technologies or discoveries with commercial potential selected from the top 40 biomedical journals. The top chart shows Distillery items containing technologies BioCentury identified as hot topics, including gene therapies, cell therapies, gene editing, nucleic acid technologies, microbiome, oncolytic viruses, neuroinflammation and antimicrobial resistance, as a percentage of total Distillery items for each region. The bottom chart shows the percentage of European items describing hot topics originating in each country in each year, with only countries producing 10 or more abstracts cumulative in the five-year period shown. Source: BioCentury Archives

Modality momentum

Europe’s best chance to compete globally most likely lies in its ability to capitalize on the momentum and expertise it is building in new modalities.

Europe has a rich history as pioneers in the discovery and early research of new therapeutic...

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