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When Pfizer won a fierce bidding war for obesity biotech Metsera last year, it agreed to pay $10bn for a UK university spinout sold for a fraction of that price just two years earlier.
In 2023, Metsera paid $114mn for Zihipp, a UK biotech developing drugs including MET-097i, an experimental once-a-month obesity treatment invented by Imperial College professor Sir Steve Bloom.
Both deals involved US buyers, repeating a pattern of UK scientific research being acquired by American companies with superior financial firepower.
Merck paid $10bn last year for Verona, a London-headquartered lung-disease biotech. Earlier this month, Amgen bought cancer biotech Dark Blue Therapeutics in a deal that could be worth as much as $840mn.
Some in the industry say that US capital pursuing UK innovation is proof of the quality of research from the country’s universities and can be a good motivator.
“The fact that the UK continues to dominate big European start-up biotech acquisitions is incredibly positive for the country,” said Dima Kuzmin, managing partner of 4Bio Capital, a London biotech venture capital firm.
“What we need in the country is . . . more professors showing up at their work at university in an Aston Martin or in a Ferrari. Because nothing motivates better than an example that is tangible, that you can see.”
But he added that the wave of acquisitions by US pharma groups points to an ongoing challenge: a lack of capital in the UK and Europe to scale up promising biotech ventures.
Kuzmin cited the absence of a pan-European stock market and the relatively modest size of UK-focused life sciences venture capital firms as key factors driving UK biotechs to sell to US buyers.
“We definitely need growth capital in the country,” Kuzmin said. He added that one difficulty was that institutional investors were often “not prepared . . . to support venture funds”.
The shortage of capital for start-ups looking to grow is a familiar story across various sectors in the UK.
According to Nature, the country ranks fourth globally for primary science research papers, behind China, the US and Germany. But a London-based early-stage life sciences investor said their portfolio companies almost never consider London when planning an initial public offering, favouring US markets that have much deeper pools of capital.
Jonathan Benger, chief executive of the National Institute for Health and Care Excellence, the UK health service advisory body, told the FT in a recent interview that the country had a “fantastic research base” but that “translating that research into commercial technologies that are then marketed effectively in this country” is a major challenge.
“If you look at the history of many university start-ups, they’re spun out and then floated in America. One of the challenges we have in this country is retaining that intellectual property and research for the benefit of our population.”
Chris Hollowood, chief executive of London-listed life sciences investor Syncona, said that although there had been an increase in early-stage funding for start-ups the “next battle” for UK biotechs was securing significant late-stage capital.
He added that there was a shortage of mid-sized companies, below the ranks of big pharmaceutical groups such as GSK and AstraZeneca, which meant fewer training grounds for scientists and executives.
“The UK isn’t there yet, especially when companies need huge capital to execute on a broad thesis really quickly in a competitive space,” he said. When you combine the level of capital and experience required to expand a company to the next level, Hollowood said it was inevitable that the US would be attractive to ambitious UK biotechs.
“What’s incumbent on us is to make sure that doesn’t happen all the time,” he said. “We have to make sure we get some of them and capture some of the value here.”
Hollowood was keen to stress that the current situation was not “existential” for the UK and that start-ups here have made significant progress attracting capital over the past decade.
The way to improve the environment for UK biotechs is to foster and encourage better start-ups and investors willing to finance the growth of ambitious companies, he added.
“If you want to land a rocket on the moon, you have to point it at the moon,” Hollowood said. “Previously UK biotechs were not pointed at the moon . . . but we’ve made progress.”
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