It’s every academic’s dream to see their University spin out company take flight and become a stock market success, but so determined was one Leeds University professor that he jacked in 12 years of academia to take over the running of the firm.
Dr Alastair Smith became CEO of Avacta Group, which makes devices to speed up and reduce the cost of drug development, in 2005 and oversaw its flotation in 2006.
The board have had a hard slog over the past 10 years, but now there are signs all this hard work is about to pay off as the firm stands on the brink of hitting the big time.
The hype rests around Avacta’s latest invention – Affimers, a high-tech alternative to antibodies.
While the Wetherby-based group reported a pre-tax loss of £2m in the year to July 31, up from a loss of £1.9m the previous year after higher administrative expenses and one-off costs, revenue rose 18 per cent to £3.2m.
Dr Smith says there are no longer any technical hurdles to prevent it from scaling up the commercialisation of Affimers.
The group sees “enormous potential” in its Affimer technology and it is now in a position to turn the recent technical and operational progress into commercial success.
Analysts believe Avacta could become a new mini Abcam, one of AIM’s largest and most established healthcare companies.
But Dr Smith has set his sights higher than this.
“No, we won’t be the next Abcam. It’s not what we want to do, but the hype is correct. We are looking for something more exciting and high value,” he says.
“Abcam has become enormously successful. People call it the ‘Amazon of antibodies’. We have the opposite with our own proprietary alternative to antibodies. There’s a gap in the market.”
Rather than providing antibodies that are generic, Avacta is homing in on a specific target market.
Antibodies help fight viruses or bacteria in the body by binding to them and targeting them for destruction.
A recent article in the highly respected journal “Nature” highlighted the weakness of antibodies that are currently available to lab technicians.
In one study, less than half of the 6,000 routinely used commercial antibodies pinpointed their specific targets alone, with most cross-reacting with other targets and thereby making the test results unreliable.
The authors believe that substandard antibodies are largely to blame for a study showing that only six out of 53 landmark preclinical studies could be replicated, despite using the same antibodies from the same suppliers.
The article said that the resulting waste in materials, time and money costs over £230m every year in the US alone.
The authors believe this will create a large opportunity for alternatives in a research market worth around £1bn a year.
Dr Smith says that Avacta has developed just such an engineered alternative reagent in Affimers, which Avacta claims are much better at latching on to the target pathogens, more stable, more robust and quick to develop.
They also have a lower manufacturing cost and no batch to batch variability.
“This article describes clearly the imperfect nature of antibodies, many of which do not deliver consistent results,” says Dr Smith.
“As Affimers become better known, we are increasingly being considered by researchers as a provider of high quality products which have all the benefits of antibodies with none of the limitations.”
While rivals can take 10 to 12 months to develop antibodies, it takes Avacta seven weeks to generate an Affimer.
The group’s focus now is to build a profitable business out of Affimers which it hopes to do over the next two or three years.
“It’s a huge challenge to get a market to take up a new technology, but we’ve told the market we need to demonstrate material revenues, £300,000 to £400,000, and we need commercial partnerships that are going to generate revenue in the near term,” says Dr Smith.
In the meantime, Avacta has been busy freeing itself up from historical parts of the business (that came out of Leeds University) in order to focus on Affimers.
Last month it sold Optim, a machine designed to speed up and reduce the cost of drug development, for up to £3.3m. It will put the proceeds towards the development and commercialisation of its Affimer technology.
“The sale will allow us to focus on the development and commercialisation of Affimers,” says Dr Smith.
“The group has a huge opportunity with the Affimer technology to grow significant value for shareholders.”
The other part of the business that could be sold off is animal health, which Dr Smith believes has a lot more growth potential than Optim.
The division recently launched a canine lymphoma test and it’s now working on a feline lymphoma test.
“Animal health has good growth potential and we’re working on a dozen tests,” says Dr Smith.
If Avacta sticks to its current plan, Dr Smith believes the group will be profitable by 2017.
In the meantime it has a number of deals in the pipeline for Affimers, both big and small, and it hopes to land a substantial commercial partner this calendar year.
Having given up a lifetime in academia to make Avacta a success, Dr Smith now stands on the brink of seeing his dream come true.