Cover story; How to make millions from a microbe

Today's young scientists want more than a place in the history books. Mary Braid puts Britain's biotech babes under the microscope
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Indy Lifestyle Online
Chris Evans faces a hard choice before work every morning. What will he drive today from his fleet of luxury cars: the Ferrari, the Aston Martin, or perhaps the Lotus Elan? Or should he slum it in the run-around Jaguar XJS with, naturally, the personalised numberplates?

Mr Evans, 38, is married, with one child and another on the way. He estimates his wealth at around pounds 50m or pounds 60m. Not bad going for a research scientist.

The appliance of science has made a fortune for a man who was raised in a council house in the shadow of the steelworks in Port Talbot, West Glamorgan, where his father worked. Chris Evans fulfilled the promise he showed as a clever working-class child. After university and a doctorate, he became a respected researcher in genetic engineering, the cutting edge of science.

Endless white-coated hours in the laboratory might have followed, in the fine British tradition of pure research. He could have looked forward to the occasional spur of recognition from his peers, perhaps even a Nobel prize. Modest royalties eventually might have trickled in from a multinational pharmaceutical company making millions off the back of one of his breakthroughs.

Instead, the fast-talking, flamboyant Mr Evans blazed his own trail. Eight years ago, marrying scientific knowledge with awesome entrepreneurial skill, he set up his own laboratories and offices and launched himself into the nascent field of biotechnology, which offered the promise of profit for his work.

Biotechnology is the industrial use of organisms or their biochemical components, such as DNA and enzymes, to manufacture food, drugs and other products. It offers the hope, if not the promise, of answers to global health problems such as cancer, heart disease and Aids. Among Evans's projects-in-progress are an anti-asthma pill, a fast-working pain reliever and an environmentally friendly enzyme wash which devours the dead bugs from car windscreens.

Chris Evans runs two biotechnology companies, Chiroscience and Celsis, and flits (by Ferrari or Lotus) between offices in Cambridge and Wales. In less than a decade he has become a biotechnology millionaire, the youngest member of a new breed of scientists-cum-entrepreneurs pioneering not just the science but its commercialisation.

Two weeks ago 15 executives and employees at Oxford-based British Biotech made millions overnight after the company announced promising trial results on a new cancer drug, Marimastat. All 350 employees hold shares in British Biotech; share ownership among biotechnology company employees is the norm. As the share price rocketed from pounds 10.43 to a high of pounds 25, James Noble, finance director, made pounds 1.7m by exercising his share options and Peter Lewis, research and development director, pocketed a cool pounds 1.5m.

The success rippled through to other young biotech firms. Celltech, Chiroscience, Oxford Molecular and ML Laboratories, nicknamed the Brat Pack in the City, saw their share prices rise in the wake of British Biotech's good news.

The biotech babes are among what traders like to call the "sexiest" quoted companies. But their market value and the related wealth of their founders and executives are a matter of controversy, for despite the on-paper wealth (and occasional in-the-pocket killing) of some executives, most companies have yet to make a profit, pay a dividend or even market a single product. "The sector rests entirely on potential and a promise," explains one City analyst. British Biotech actually made a loss of pounds 10.9m in the six months to October. And when Mr Evans launched his fast painkiller, Dexketoprofen, last week, it was not only his first licensed biotech product in the UK, but the first from any of the biotech babes.

Mr Evans, as bullish as the market, shrugs off criticism that his industry might be built more on hope than achievement. "I am creating products that save lives and companies that employ people and have probably created pounds 70m of income for other UK companies," he says. "In the US, people like me are heroes; in Britain, they are cowboys."

But general unease lingers, and it extends beyond the City. As more "anoraks" step out of the labs and into their Lotuses, the phenomenon of the money- making scientist unnerves those who assume that, in Britain at least, the men and women in white coats still toil, not for glory and financial reward, but for the public good.

The buoyant state of the UK biotech industry and the healthy condition of the bank balances of its pioneers owes everything to a decision by the Stock Exchange in 1992 to relax its entry rules. Until then, biotech companies, like everyone else, had to show profit in three consecutive years. High capital investment for research and development periods of up to nine years in effect barred their entry.

Mike Ward, editor of the BioBusiness newsletter, reckons that at least two dozen biotech millionaires, most of them scientists, have since been created in the sector, whose value has doubled in the past year alone. Keith McCullagh, 52, and Brian Richards, respectively chief executive and co-founder of British Biotech, and Peter Fellner, chief executive of Celltech, are among those thought to have made a fortune out of biotechnology.

British Biotech was set up in 1986 by Mr McCullagh and Mr Richards after GD Searle, the US drugs company, closed the British research centre which the men operated. It was the first to be floated after the rule change. Some 15 small biotech companies have followed. A further six are expected to go public next year.

The biotech sector in the UK is small and its founding fathers are in demand. It is therefore rather incestuous. Many career paths lead back to Searle's, and the pioneers pop up as chairmen and chief executives in the mushrooming smaller companies. Most are sensitive to the implied criticism that their own and their companies' fortunes are built on sand.

Last week Mr Lewis felt the need to explain that he needed to cash in his shares to compensate for losses at the Lloyd's insurance market. Perhaps Mr Noble, 37, just fancied a new sports car, a yacht and a bigger house: he did not say what he would spend the money on. But clearly he was enjoying the return on the gamble he took in joining the company in 1990. "Friends thought I was crazy to leave my job and take a pay cut to join a loss- making company," recalled Mr Noble, formerly director of corporate finance with Kleinwort Benson.

Mr Noble has no problems with finance directors making money. Neither, he argues, should there be any objection to scientists getting rich. "It is the best thing that has happened to UK science. If we can make money for scientists, then there will be more enthusiasm for people to stay in science in this country. We may be able to reverse the brain drain to the US. Peter Lewis, our head of research and development, came back from the States to work for us."

Dr Nowell Stebbing, 54, left Chiroscience in September with pounds 8m from shares after two-and-a-half years as chief executive and deputy chairman. This was considered a mite excessive, as Chiroscience had yet to make a profit, had lost pounds 9.2m in the previous year and had yet to market its first drug, and Dr Stebbing was criticised in the press.

Dr Stebbing, another Searle UK graduate who now heads Axis Genetics, is furious with last week's "snide" press comments about the British Biotech bosses. He insists that they are based on jealousy and a misunderstanding of the way business works. What's wrong with scientists making money, he asks. Only purists - such as the Nobel committee that apparently withheld a prize from the American genetic engineering pioneer Herbert Boyer because he set up a biotech company - would consider that commercial success tainted science. "Frankly, I am delighted to see the techies getting a piece of the action and not just the moneylenders," he says.

It is an attitude shared by Chris Evans, who believes that you can benefit mankind and still make money for yourself and your shareholders. He argues that he successfully straddles the divide between science and business. He is a visiting professor at Exeter University, and he has just received a second honorary degree in recognition of his role. He is a regular guest speaker in universities. He considers himself a leader and role model for a new generation of science students.

"I motivate scientists," he says. "Last week I spoke to a hundred students who were sitting where I was 15 years ago. There is tons of great science in the world buried under piles of dust. People like me expose it."

Mr Evans says that the City does not like to see scientists "doing it for themselves". Last week Polymasc, a fledgling biotech company set up by research staff at the Royal Free Hospital medical school, took do- it-yourself to a new level. It is poised to become the first academic venture to float without first seeking outside finance. By cutting out venture capitalists, the company argues that it will retain control of research direction. But the move also maximises their potential income from inventions.

Percy Lomax, corporate healthcare investor and non-executive director of Polymasc, says there has been a revolution in relations between science and business. "In the past, the scientists created the wealth but never had the power in companies. All that has changed."

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