Pioneer spurned by Britain

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The Independent Online
THE BRITISH scientists who next year plan to offer genetically engineered pigs' hearts for human transplant patients are backed by US venture capitalists - because British ones turned them down.

The pioneering research by Imutran, based in Cambridge, could ultimately resolve the world shortage of hearts and kidneys for transplant. After 10 years' research, it has discovered a technique for breeding pigs whose cells do not trigger the deadly rejection that usually follows the transplantation of any tissue from one animal species to another - known as "xenotransplantation". That means, in theory, that a heart from pig could replace a faulty human one.

So far, the tests have only been conducted to transplant organs from pigs to monkeys. Next year clinical trials on humans are scheduled to begin. If they are successful, and lead to wider use, Imutran's method could turn into an enormous money-spinner - possibly one of the richest in the world.

Yet, says Imutran's chief executive, Christopher Samler: "Frankly, when we originally took the idea to British venture capital companies back in 1988, they didn't believe us. Especially when we told them that there would be no payback for at least 10 years - if ever."

Increasingly, the advice given to the Imutran board, which then consisted of a team of scientists and doctors from Cambridge University and Papworth Hospital, was to look outside the UK. They secured funding from EM Warburg Pincus, based in New York (it is not related to the London-based investment banking giant SBC Warburg).

Warburg Pincus specialises in funding long-term high-risk projects, alongside more straightforward schemes such as corporate restructuring at household names such as the toymaker Mattel and the television company LWT Holdings.

"These things take between six and 10 years to mature. We're prepared to stay the course," says Peter Stalker, a partner at the company's New York office. "This was a typical investment for us. We knew some of the company's original founders, and as a firm we have been involved in biotechnology for probably 20 years."

In fact, Warburg Pincus was an early investor in one of the most famous - or infamous - biotechnology companies. Synergen was a US start-up that developed a product called Antril to counter septic shock, a blood disorder that is a common cause of death in patients after operations. The laboratory trials went well. But the clinical trials were disastrous, indicating that Antril was ineffective.

By the time of the trials, Synergen was owned by a much larger biotechnology company called Amgen, a publicly quoted company for which Antil was seen as crucial. When the trial results were announced, Amgen's value fell from billions of dollars to hundreds of millions in one day.

"We were well out by then," recalls Mr Stalker. The $3m Warburg Pincus had put into Synergen as seed capital had turned into hundreds of millions when it was sold. The overall portfolio value must show a 25 per cent compound annual growth. "That means we need companies doing 10 to 15 times better than that, to make up for the ones that aren't," says Mr Stalker.

Which of those Imutran turns out to be is still uncertain. Warburg Pincus is coy about numbers, saying it invested "between pounds 1m and pounds 20m" in it, for 60 per cent of the equity; the rest is owned by the management. At present, it has no stockbroker.

It is still early days: the company has never made a profit, and its ongoing costs are about pounds 5m annually - and those will probably treble next year when the trials begin.

But it has impressed Mr Stalker by bringing in outside partners to help bear costs. "They have Sandoz [the drugs company] as a major supporter of the xenotransplantation program," says Mr Stalker. "Right now they're pretty self-sufficient."

Imutran's Mr Samler says: "We're really a virtual corporation. We don't own any physical assets. We lease, borrow, rent, cajole, exchange. We hire out our intellects. Venture capital is actually the smallest part of the funding: we haven't needed any extra for six years."

But Sandoz and Warburg Pincus will be essential once the trials get properly underway. "In 1997, the costs will probably treble again," says Mr Samler.

"The fact is that you need big partners in this business. Typically, if the research takes up a million pounds, then the trials take 10 million - and the sales and marketing will take 100 million. That's why we need big partners."

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