Wellcome Trust is the second largest charitable foundation in the world, behind the Bill & Melinda Gates Foundation. Based in London, the Trust has a £20.9 billion investment portfolio (as of 30 September 2016) to assist in the translation of basic academic research to commercial products.
Richard Seabrook, who participated in a panel discussion on alternative investment options at BIO-Europe Spring 2017 in Barcelona, explains to Biocat that anyone can apply for this funding, including non-UK based companies. The most important thing is for them to see tangible patient benefits emerging from Trust-funded research.
Traditionally this gap is called the valley of death and is quite a well-established funding gap in Europe. It also exists in the United States, but the US government has actually put a lot of funding into this space. In Europe, the gap is more pronounced and organizations like the Wellcome Trust have decided that if we want to achieve our mission, which is to improve human and animal health, we need to provide funding beyond basic research, into the product-development stage, to help ideas cross this valley of death and become attractive to other, more substantial funders.
The funding we provide is project-based. We don’t fund the indirect costs or the infrastructure because it has to be funded separately. We fund therapeutics, vaccines, diagnostics and medical technologies to a point which they can be attractive to other investors. So we take on the risk.
That’s correct, we are non-disease focused. We are sensitive to where we think there is a market failure. There is a market failure in antibiotics and drugs for CNS diseases. The reason for the market failure is that it’s very risky but there is a lot of good research going on in both of those areas that could potentially lead to treatments. No one is prepared to fund it, so that’s why we have prioritized these areas.
There is a shortage of capital in Europe and crowdfunding is one source of new investment, and it is expected to grow. But it is early days for crowdfunding and I can’t really see what relationship there will be between the individual investors and the company that has been funded, other than providing funds.
Crowdfunding investors are not experts, in funding or in healthcare companies, so they can’t provide guidance to entrepreneurs. However, a charitable foundation like the Wellcome Trust has a closer relationship with entrepreneurs because we are able to provide expertise in clinical practice, drug discovery, engineering and chemistry. We can contribute technical expertise that crowdfunding investors can’t.
You have to satisfy the needs of the different investors. Our need is based on developing the project, while other investors are probably more focused on how long it takes to achieve an exit. We are prepared to be patient because we know it takes a long time to achieve an exit but new investors, like crowdfunding investors, may want their exit earlier.
Basic science can no longer live off public grants alone (Government or EU). Venture capital, angel investors, crowdfunding, high-net-worth individuals and philanthropic organizations are their future. The majority of philanthropic organizations are disease focused, such as Alzheimer or cancer. So, they look for opportunities outside their own country and are a good opportunity as a funding alternative.