Drug Development and Discovery

The tech transfer value chain

Around the same time as Moderna started working on its messenger-RNA Covid vaccine, Italian company Takis Biotech started developing the first DNA-based Covid vaccine in Europe. But, while the American biotech was already preparing GMP batches just 42 days after the Chinese published the sequence of the virus, Takis lacked the infrastructure to move that fast. Today, Takis’ Covid-eVax is moving to Phase 2 clinical trials. Meanwhile, the only other Italian company developing a vaccine against the SARS-CoV-2, ReiThera reported encouraging results in Phase 1 and Phase 2 clinical trials, but it is unclear how it will fund later-stage trials requiring thousands of volunteers. A court of audit overseeing public spending ruled against a 50 million euros government investment into the company. In the race to develop a Covid vaccine, the full value chain of innovation, including investors, regulators and governments, has been put to the test together with the scientists, and it is no surprise to see that the few vaccines available today were created in the world’s most powerful countries for innovation. The story of Italian biotech is one of scientific excellence insufficiently valorized due to a lack of industrial and financial catalysts. On the one side, Italy has a great academic inheritance in biotech and medical science, is the sixth in the world for the number of clinical papers published, and a pioneer in the use of stem cells and genetic therapy, according to Anna Formosa, country manager of CRO Pharm-Olam. On the other side, the established pharmaceutical industry is more focused on manufacturing and commercial activities. This leaves both scientists and start-ups without an industry receptor.


Ideas and innovation, however, abound. There are 344 healthcare biotech Italian enterprises in Italy, but these only represent a total revenue of 9 billion euros in value, according to Assobiotec, the Industry Trade Association for the Development of Biotech in Italy. Moreover, 90% of these are SMEs. “The sector is particularly dynamic and truly motivated to innovate and grow, but we pay the price for huge juridical, fiscal and regulatory obstacles. The result is the very small average size of the Italian biotech enterprises, with many valuable ideas and projects struggling to reach the stabilization phase,” said Ricardo Palmisano, the president of Assobiotec. Franco Lori, the CEO of Italian drug discovery company Virostatics, calls this disconnect between the different actors “the Achilles” hill of Italian drug development: “The Italian pharma industry counts a few great names, but we are missing the culture of bringing a drug from pre-clinical to leading the market. This is why we need to seek out partners in the UK, Switzerland or the US, rather than Italy.” Fabio Bianco, the CSO of early-stage life sciences incubator Bio4Dreams, boils it down to a lack of tech transfer culture. The “tech transfer office” is typically realized at the university level in countries like the US or the UK, but without this filter, ideas reach investors or industrial partners too early. There are two issues related to this. First, a poorly structured project will not earn the trust of investors. Second, investors may not understand the complexities of new drugs, together with clinical, regulatory, or pharmaco-economic aspects. To Bianco, the cultural change that needs to take place is to convince the industry and start-ups alike to start by engaging on a scientific level first, rather than going straight into commercial matters, which is what currently happens. Bio4Dreams works with start-ups in advanced therapeutics, diagnostics, medical devices, AI, as well as blue and green tech, in a bid to shape and de-risk a project before it is ready for the next step of development – be it financing or a partnership.

Background image courtesy of Pexels, Chokniti Khongchum

“Italy has a large pool of talented, passionate and hardworking people. However, over the last 30 years, the country has lost all its MNCs, not only in the pharmaceutical industry but in most of the industrial sectors. To fuel a model of global culture, Italy has a long way to go.”

Riccardo Carbucicchio, CEO, NTC



The next big issue is funding. According to the latest figures from Assobiotec, 25 financing transactions worth 152 million euros were carried out in 2019, which makes Italy the recipient of 5% of European funds and 1% of global investments. For the average biotech investment, Italy receives 6 million euros, compared to a European average of 20 million euros. While it may be easier for big pharma companies to attract investment, Italy’s biotech sector is very early stage – out of the 375 new therapeutic projects under development in Italy, only 73 are in clinical phase. This is the stage when funding is both most critical and most difficult to pin down. Without many options, biotech encapsulation start-up Nanomnia managed to raise 400,000 euros through crowdfunding. Its founder, Marta Bonaconsa, considers raising capital in Italy is very challenging: “It is especially difficult for biotech companies who don’t have the same scalability potential as digital start-ups relying on replicating an already existing business model. Venture capitals are almost non-existent, while crowdfunding and crowdsourcing platforms are gaining popularity but are not very strong yet.”

The Italian VC scene is small, about 10 times smaller than France’s, according to some sources, but a few Italian firms have become more prominent in recent years. Fabrizio Chines works as an advisor for Panakès Partners, one of the first Italian funds fully dedicated to life sciences. This year, Panakès raised 150 million euros and it hopes to reach 180 million euros by the end of 2021. Having recently expanded its focus from med-tech to biotech, the VC already received 500 requests from potential targets. “Funding for early-stage development remains generally limited, while pricing and market access challenges hinder the valuations needed for early-stage programs,” said Chines. Some international VCs have also made their way to Italy. French venture capital firm Sofinnova Partners, which specializes in healthcare and sustainability, invested in Enthera Pharmaceuticals, an Italian start-up dedicated to the development of first-in-class biologics for the treatment of Type 1 Diabetes (T1D) and Inflammatory Bowel Disease (IBD). Enthera is also backed up by some corporate investors, including Roche Venture Fund and AbbVie Ventures, which helped the company to raise 35 million euros in a Series A financing – a record for the Italian biotech industry. The money will fund two clinical trials, but Enthera will need at least 80 million euros to bring the novel therapeutics into the market. The lead clinical candidate is already in GMP production, and the first clinical trial with healthy subjects is scheduled for the beginning of 2022. Enthera’s success is an encouraging sign for biotech, including higher-risk, higher-value biotech therapies without equivalent on the market. “Existing therapeutic options for the degenerative diseases we target can only slow down or stop progression, but there is currently no real-disease modifying treatment that can revert the destruction of the organ,” said Giovanni Amabile, the CEO of Enthera.

“The current appetite for high-risk ventures comes from the fact that there is high liquidity in the market, so investors do not mind taking risky bets. However, this environment will soon change and investors will search for safe havens and companies that can generate long-term revenues with lower risks.”

Alessandro Della Chà, the CEO of Cosmo Pharmaceuticals

The great attention paid to biotech since the beginning of the pandemic has certainly ignited investor appetite in the sector, both healthcare and non-healthcare investors picking up on life sciences. Data from McKinsey indicated that the average share price of European and US biotechs increased at more than twice the rate of the S&P500 between January 2020 and January 2021, biotech over performing its related industry, pharmaceuticals. Meanwhile, VC activity grew by 45% in a year, based on the same source. BCIG reported that VCs invested 60% more by January 2021 than they had in the previous year. This offers a good opportunity for both established start-ups waiting on their big break, but also for new start-ups, born as a result of the new needs that the pandemic created. For instance, Biomedical Pharma is a fresh start-up spinning off from Power Metal in 2020. In collaboration with the University of Siena, it came up with a non-toxic, photocatalytic sanitizer containing a colloidal resistant material on different types of surfaces. The patent is known as PhotoACTIVE Technology and is already the mark of five products. Its founder and CEO, Omar Alessandrini, believes the increased focus on hygiene is here to last: “The pandemic has brought a change in people’s mentalities and habits, and the need for products that eliminate viruses and bacteria from surfaces and fabrics will surely persist; in fact, it is estimated that €28 million will be dedicated to research on antiviral and antibacterial products in the textile industry over the next few years.” However, some Italian industry leaders are cautious about an expected investment boom in biotech or innovation more broadly. Franco Lori, the CEO of Virostatics, expects a short-lived hype, a mere reaction to the emergency that will eventually fade: “One would be tempted to argue that the pandemic created more willingness to invest in addressing health challenges; there is also a large cash opportunity in Italy, and we have a prime minister well familiarized with the EU mechanisms. But besides these pluses, we have a cultural minus: we are not used to thinking about long-term investments. Cultural change is the slowest to occur, which is why I don’t expect a dramatic change driven by the pandemic,” he said. Observing long-term market tendencies, Alessandro Della Chà, the CEO of Cosmo Pharmaceuticals (SWX: COPN), also noted a trend whereby the value of a company goes up with the release of clinical results before it drops down again once final results are confirmed. This indicates volatile sentiment in some investor groups. “During the pandemic, numerous companies took an opportunistic approach, coming up with Covid-19 programs. Given the advancement of vaccinations, investing in Covid-19 related treatments should be taken with caution,” Della Chà said.