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Global Business Update Proposed by the U.K. Chancellor in March 2009, the Patent THE CHANGING FINANCIAL CLIMATE: FINDING FURTHER FUNDING Box cuts corporate tax on income from patents originating in the Like all economies around the world, the U.K. for both U.K. and non-U.K. companies. It comes into effect U.K.'s has been hit by the financial downturn. in April of 2013. Companies carrying out research in the U.K. The dearth of traditional VC funding for earlyalso qualify for R&D; tax credits at a rate of 130% of qualifying stage companies has led to a need for alternative expenses for large companies and 200% of qualifying expenses forms of funding, in addition to that provided by for small companies. This "superdeduction" effectively reduces the U.K. Government. companies' taxable profits. "The U.K. biotech sector has moved on since the boom of the early From April 2013, large companies will have the option to claim 1990s. We now have a better understanding of risks and opportu"above-the-line" R&D; tax credits instead, which are applied to nities. The nature of funding and collaborations has also changed, the company's profit–and-loss account rather than its taxable with less traditional funders becoming more important," says Bates. income. Alternative sources of venture capital include Big Pharma comSupport from the U.K. government also includes funding panies, universities, and charitable trusts. For example, SR One, streams. The Medical Research Council and the Technology GlaxoSmithKline's indepenStrategy Board (the U.K.'s dent corporate healthcare innovations agency) run the venture capital fund, has £180 million Biomedical invested over $680 million Catalyst, which provides in biotech since 1985. Rock funding for life sciences' Spring Ventures EU's backers small and medium enterinclude Glasgow, Edinburgh, prises (SMEs) in the U.K., and Aberdeen universities, and supporting opportunities it focuses on supporting earwith both scientific and ly-stage life science and techcommercial potential. This nology companies. Syncona support has the potential to Partners, which launched in bridge the funding gap for January 2013 and is wholly early-stage research, as well owned by the Wellcome Trust, as encourage academia and has been created to help both industry to work together. early- and late-stage companies. The National Health Service's Its first deal was for seed fund(NHS) National Institute for Steve Bates, CEO, BioIndustry Association ing for Cambridge EpiGenetix, Health Research provides an early-stage epigenetics spinresearch awards for collaboout from Cambridge University. rations between U.K. healthcare academics, clinicians, and indusEarly-stage companies are also increasingly being supported by try that focus on developing patient-focused innovative medical private investor syndicates and corporate investors, rather than by technologies. venture capital companies with life sciences experience. This has In the U.K. there are government-backed regional funds. broadened the scope for available funding, but means that it is Scottish Enterprise provides grants for projects up to early-stage increasingly important to demonstrate the value of the sector in clinical trials; Invest Northern Ireland backs bench-to-bedside terms of both business potential and impact on society. research; and the Life Sciences Investment Fund supports the The BIA is calling for the introduction of Citizen's Innovation Welsh life sciences sector. Funds, a form of crowdfunding (see "Crowdfunding In Life The headquarters of Powell's company, Virttu, are in Glasgow, Sciences: A New Route To Finance," Life Science Leader December Scotland, and it has historically received support from regional 2012) that allows private individuals to invest small amounts funding. As Powell explains, "There is a significant level of in biotech research and innovation. This mode of funding has regional support for Scottish companies, helping with growth, been very successful in France, where the Fonds Communs de development, and infrastructure." Placements dans l'Innovation (FCPI) has raised more than €6.5 "The Biomedical Catalyst, changes to R&D; tax credits, and the billion since 1997, supporting over 1,000 companies. Patent Box have been well received and are leveraging additional Financing remains a challenge for many in the U.K. biotech secprivate financing, helping biotech companies grow faster," says tor, according to Powell, who says that it's not always clear why Bates. "Because funding became tighter earlier in the U.K. than in the United States, we have had to think smarter. As a result, we are leaner and less reliant on traditional funding than some of the other biotech regions." 64 LifeScienceLeader.com April 2013