Bio-tech firms seeing real benefits from Biomedical Catalyst funding programme, says expert

On Monday the Government announced that 51 businesses would receive a share of £47.2 million in the "second wave" of funding announced as part of the Biomedical Catalyst programme.

The Biomedical Catalyst was established by the Government late in 2011 as an initiative to help medical scientists win finance to develop their research. The programme was developed in order to bridge a funding gap known as the "valley of death". The term refers to the difficulties some early stage biotech and medtech companies have in obtaining enough finance to develop their research and development programmes to a stage where they can attract meaningful amounts of venture capital interest and/or license those programmes to a third party.

Steve Bates, chief executive of the UK BioIndustry Association (BIA) described the Biomedical Catalyst as "this government’s most effective UK biotech initiative". Bates was commenting as the BIA published a report into the impact of the Biomedical Catalyst (28-page / 5.41MB PDF) so far.

Competition in the first round of the Biomedical Catalyst opened on 30 April last year. The BIA said that over £50 million of funding had been awarded during the first round and that companies awarded the grants had raised more than £20m in additional private finance on top of that figure. The BIA said that this showed that the funding programme had the ability to "leverage additional capital, encourage private investors and de-risk medical research projects".

The BIA said that the process for bidding for funding under the scheme was "fast, accessible and understandable" and said there had been positive feedback from both successful and unsuccessful applicants.

Universities and Science Minister David Willetts said that the Government would look to replicate the Biomedical Catalyst model "across other technology areas" in order to help firms in those sector gain access to sources of finance.

Corporate law expert Charles Waddell of Pinsent Masons, the law firm behind Out-Law.com, said that non-dilutive funding from the Biomedical Catalyst programme had provided a meaningful amount of support to a large number of companies in the life sciences sector.

"Equity funding remains challenging for life sciences companies, especially those involved in early stage research and development," Waddell said. "Alternative sources of finance, such as the Biomedical Catalyst, have provided, and we hope will continue to provide, a useful source of finance for biotech and medtech companies."

"The larger life sciences venture capital investors are generally only interested in backing projects at a later stage of the drug development process and in order to get onto the radar screen of investors, biotech and medtech companies need a lot of finance. Equity finance, to the extent available, can be expensive" he added. "The Biomedical Catalyst programme, being non-dilutive, helps companies to develop their programmes further than they would otherwise be able to. Many of our clients are used to working with constrained resources. Biomedical Catalyst funding can help early stage companies run with a number of different development projects as opposed to just one."

Of the £47.2m of funding being awarded in the second wave of the Biomedical Catalyst scheme, more than £30m will go to 18 different projects involved in the 'early stage' of development. The 'early stage' of research is where researches "evaluate the technical feasibility of an idea and establish proof of concept in a model system", the Government said.

The Government said that £3.3m will be split between 25 projects to enable "feasibility studies" to be conducted, whilst £13.6m has been handed out as 'late stage' awards to eight projects. The 'late stage' of research is where researchers "take a well developed concept and demonstrate its effectiveness in a relevant environment", allowing them to "evaluate the clinical utility of their new product, process or service".

With private finance included, more than £62m will be invested in the projects in total, the Government said.