Scotland centre stage in European life sciences

Published on Thursday 13 May 2004 01:00

IN THIS ultra health-conscious age, the demand for life-saving, or at least life-enhancing, drugs and other medicines remains undiminished and big business.

One of the legacies of Roslin’s Dolly the Sheep is that the global life sciences spotlight has stayed on Scotland, reflected in the 5th BioEquity Europe coming to Edinburgh this weekend.

It is the first time this major two-day summit, kicking off on Monday, has been staged in Britain, with previous Euro get-togethers held in Munich, Frankfurt, Zurich and Paris.

Viewed as something of a bellwether event, it will show that it’s still tough going out there for start-up enterprises, as venture capitalists play safe and continue to favour later stage biotech companies as their best option.

The end product is that early-stage outfits remain desperate for cash. Now, such biotech hopefuls have the chance to rub shoulders with top venture capitalists and financiers when BioEquity Europe 2004 hits town.

No less than 600 leading VCs, bankers and analysts from more than 20 countries are set to converge on the capital for the summit, organised by BioCentury, a major global provider of bio-industry investment intelligence.

It represents one of the world’s major life sciences investment gatherings and is the single most important funding event in Europe this year.

This is highlighted by the staging of presentations by up to 65 companies. They will include a trio of Scots stars - Ardana, Cyclacel and Laxdale - with eventual flotation very much on their minds, plus Intercell, which took over Excell Biotech in March and still has a major manufacturing operation in Livingston.

The event will be held at Edinburgh’s Grand Sheraton Hotel and comes with all the customary glitz, gala dinner and networking lunches associated with such a global event.

But no-one who is in the know underestimates how all the big deals will be done behind closed doors, in tandem with numerous workshops and panel sessions.

Biotech hopefuls will be backed up by major players from Scotland’s financial and biotech communities, joining forces with Scottish Enterprise and other members of the event’s host committee, such as Connect and the BioIndustry Association.

Scottish Enterprise is regional host of the event and Ken Snowden, life sciences director, said: "We’re delighted that Edinburgh is the focus of the European funding community for the life sciences industry. All the members of the host committee will be doing their best to create an environment to facilitate networking and dealmaking."

However, in a still high-risk environment, enthusiasm should be tempered with realism, according to a Young Company Finance bulletin ahead of BioEquity Europe.

As far as YCF is concerned, investors have yet to form a queue to start putting money into young life sciences companies, as they continue to prefer the safety net of backing outfits that are closer to launching products on to the market.

So, perhaps, the Edinburgh summit assumes an even-greater significance and an opportunity for budding biotech starlets to show off their wares. This is the view of Brian Kerr, director of the healthcare and life sciences investment group at Scottish Equity Partners, one of the event’s sponsors. Kerr said: "BioEquity is the most significant investment conference for the European life sciences industry and I think its timing is particularly interesting.

"The biotech and life sciences sectors have gone through a very tough few years," he added. "In fact, it’s probably been the worst time in living memory for early- to mid-stage biotech companies."

So, for Kerr and his colleagues at SEP they will be seeking evidence of VC mood changes reflected in investment activity on show during the summit.

Bruce Gellatly, life science partner with Ernst & Young, confirmed that there is more money coming back into the market, but it is still being concentrated on later stage companies. "Young companies are still very much in a pressure cooker situation," he said. "Money is scarce, valuations low and the majority of available venture capital is concentrated on supporting portfolio investments, or joining later stage investment rounds.

"On the whole, the European industry has not enjoyed the buoyancy seen in the US. It has been forced to respond to challenging funding conditions and lack of investor confidence," Gellatly added.

Barbara Blaney, Scottish director of the BioIndustry Association (BIA) summed up by pointing to the choice of Scotland as venue for the summit. "This reflects a vibrant life sciences sector in Scotland.

"To get such a key international platform to showcase our industry provides an excellent opportunity to gain both access to and awareness from substantial European venture capital funds."

Blaney and other members of the BioEquity Europe host committee have organised a pre-summit satellite event at the Edinburgh Whisky Tasting Centre on Sunday afternoon. Then, a further six Scots biotech firms will show off their talents to newly-arrived Euro venture capitalists.

The organisers of BioEquity Europe 2004 were influenced to choose Edinburgh and the Lothians as its location following a recent study by the European Investment Bank identifying the area as one of only three biotech clusters in the UK.

The region houses almost a third of Scotland’s life sciences and biotechnology activity, employing just under 40 per cent of all sector staff within Scotland.

Landmark cutting edge projects are a $1 billion (650 million) public/private investment to establish the Central for Biomedical Research at Little France, as a focus for commercial research, backed up by a 1m Centre for Stem Cell Research, and the Biocampus, located on the outskirts of Edinburgh.