Business Weekly

 A solid relationship between the European healthcare giant and CAT started with AstraZeneca’s £75 million collaboration with the firm and then flourished through its subsequent £702m acquisition in June 2006.

Following the acquisition, AstraZeneca pledged to invest tens of millions of pounds into CAT, bolstering staff and laboratory space in an effort to boost the flow of its product pipeline. Further investment in biologics soon followed as AstraZeneca somewhat surprised the industry with the $15.2 billion acquisition of US-based MedImmune.

Conscious of the acute importance of a strong and innovative pipeline, AstraZeneca had gathered the elements to put together a potentially world-class, fully integrated biologics and vaccines business within the Group. This it seems to have done through the diligent integration of CAT and MedImmune.

Using the latter’s brand, it has built a company with a common corporate structure based on three outstanding research and development centres which have retained their independence and individual strengths.

These centres are indispensable if MedImmune is to achieve its ambitious goal of accounting for 25 per cent of AstraZeneca’s entire development portfolio by 2010, having started at zero.

Heading the Cambridge integration is John Stageman, of AstraZeneca and currently interim site general manager at the Granta Park facility where up to £17 million is being invested in the fit-out and refurbishment of the GP15, the old Millennium Pharmaceuticals building.

Unlike the building’s previous inhabitants, AstraZeneca is of the opinion that to successfully build MedImmune to its fullest potential, research and development centres like Cambridge are crucial, not just because of their products and technology, but also because they can attract the best talent; with a 20 per cent employee growth rate targeted for 2008 from a highly competitive global work pool, this asset is crucial.

An indication of the company’s application is Stageman’s approach. While he is delighted with MedImmune’s progress in Cambridge, he doesn’t gloss over the fact that it has taken plenty of hard work to get there.

“It has been quite a challenge in 2007 to get it right because, like with all acquisitions, you have to work to create a greater degree of understanding, to build relationships and trust. The MedImmune operation has been set up in a way that strategically separates the company from AstraZeneca and fully integrates the R & D capability into MedImmune. This way entrepreneurial spirit has been preserved.

“Cambridge is now one of three major R & D centres for MedImmune: Gaithersburg headquarters, vaccines in California and now the Cambridge centre for monoclonal antibody discovery. Each centre has slightly different specialisation and working culture, but are united by a common portfolio, operational processes and a single set of targets globally.

“There was concern and fear from some areas that the acquisition would take some of the innovation and freedom away, a culture that has characterised Cambridge in the past. However, this is not the case and we really are going to invest and grow and be successful.

“To do this and to get the right talent means we have to be a global player, we have to act globally, so do we sit in fear that MedImmune will close down in Cambridge? Definitely not.”

While the acquisition of MedImmune didn’t halt the promised investment in Cambridge, it did slow down the rate of expansion as CAT was integrated into the firm; however this is set to pick up fast in 2008, helped along by completion of new specialist research laboratories at GP15. This development has continued uninterrupted and stage one should be completed in March and work will continue through 2008, finishing around September at a cost of about £17m. These state-of-the-art facilities will be key if MedImmune is to reach its 25 per cent target.

Stageman said: “Staff content grew at least 10 per cent in 2007. We want a 20 per cent increase this year – the plan is to catch up with the growth planned last year – up to 380 or 400 from our current position of 320.”

Stageman says the combined MedImmune pipeline has the potential to exceed the numbers needed to reach the 25 per cent AstraZeneca goal, but it will only progress successfully with the right recruitment.

He said: “We are about to embark upon an aggressive recruiting programme to provide an enhanced research capacity and particularly more staff with clinical development experience.”

While it is building numbers fast, MedImmune is determined to find the best talent. One option is to look abroad, but not necessarily at foreign workers.

“If we advertise or use headhunters, we’ll also be looking for people wanting to return to the UK. There is a large number of people who have gone abroad, to the US or somewhere for five years or so and wish to come back; it’s actually quite fertile ground.”

Closer to home is next door, but one ­– at UCB. The Belgian pharmaceutical, which acquired Chiroscience and Celltech, is leaving. “We are aware of the situation at UCB and are in contact with them,” said Stageman.

Some of the UCB staff should have the appropriate areas of expertise for MedImmune in Cambridge, which at the moment is building a pipeline in neuroscience and metabolism in addition to its established projects in inflammatory disease and cancer.

CAT 354, a potential treatment for acute asthma, is in Phase II and is Cambridge’s most advanced project, but an increasingly tough regulatory process means it is at least  four years away. However, behind it is a strong pipeline and Stageman expects a sequence of products to follow quickly thereafter.

“The published evidence suggests that risks are increasing more for small molecule candidate drugs than for biologicals and there are more Phase III failures than there have been in the past. Companies are having to invest significantly more in their development programmes than they have been and there are deep concerns about holding so much risk.

“The need exists to engage in bigger clinical programmes or to be more careful in Phase II, which makes it tougher and more expensive, but they are still enormous therapeutic opportunities and we expect biologicals to continue to be the fastest growing segment.”

The chances of successful early stage developments in Cambridge and across Europe should improve with the new broadened focus of MedImmune’s venture capital fund, MedImmune Ventures, (MIV) taking it beyond the areas of infectious disease, oncology and inflammatory disease.

Stageman said: “MedImmune has been really adventurous in setting up MIV as an internal investment arm and using it in an exciting way to take an early interest in breaking technologies and new projects.

“MedImmune also has business development staff in Cambridge; it’s a fundamental part of the toolset to interact with the biotech community. We can talk to the business development team about a possible partner or at the other end, to a small company about how there may be an opportunity with MIV.

“We do put opportunities forward on the table and have a very good view of biotechs in Northern Europe, France, Germany, Scandanavia as well as the UK. It has given Cambridge an extra opportunity to build strategic relationships and to invest.”

MedImmune hopes the work at Cambridge will also play an important role in building up its UK profile.

As Stageman points out, the company is not well known here as its products are not on the market in the UK. However, with Cambridge and its vaccine manufacturing centre at Speke on Merseyside, it has 500 UK staff, which, according to Stageman, makes MedImmune UK one of the largest specialist biotech companies in the country.

As it expands further in Cambridge and completes the integration of CAT and its expansion into new premises, MedImmune will need to evolve its global management structure; whether Stageman will be part of it remains to be seen, though no one can question his commitment.

“I’m seconded from AstraZeneca to help the merger and help MedImmune maximise the value of its considerable R & D assets globally.  I am loving the role and it is going very well. Through 2008 we’ll work to answer what is the right leadership structure for R & D in Europe and worldwide to follow and once a decision has been made, I may well stay or go back to AstraZeneca. For now I need to focus on hitting our targets.”
 

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