Earning from Incubating

Photo: Courtesy of MMI INCUBATING SCIENCE: The Albe Centre in Livingston, Scottish scion of MMI. At the Bioscience Innovation Centre in Cambridge, researchers not only experiment with groundbreaking drug-discovery technologies, they also participate in a business experiment that investors hope will change the way scientists commercialize their products. For the most part, government or nonprofit groups subsidize biotech incubators in the hope that the incubator will jump-start companies to provide long-term employment and local tax revenues. Scientists get the benefit of capital to seed an idea. But Medical Marketing International (MMI) Group, also in Cambridge, runs the Innovation Centre for a profit. MMI Group, a publicly traded company, is now evaluating a plan to develop Europe's largest bioscience incubator at a former pharmaceutical research campus outside London and is reaching out to potential partners in the United States. MMI was cofounded in 1988 by David Best, a former Roche executive, and Margaret Mitchell, a former government information technology expert. It began as a technology development firm, but it now operates a new venture fund and offers business incubation to scientists. "We operate on a commercial basis day to day," says Best, MMI's chief executive officer. "The companies we incubate must have sufficient funding to pay their way. There is no subsidy on rent or services." Best says his managers' practical industry experience gives them a better understanding of commercial markets, compared with university or government incubator teams. "We develop biotechnology products, and incubation is part of that process," Best says. "We have the management skills and the facilities, and we have our own fund now. When all that is in the right measure, and if you have people who have spent all their lives in the industry, you're likely to be more successful." PERILS OF PROFIT But Phillip Singerman, executive director of the Maryland Technology Development Corp., says he has been in the incubator business for 25 years and has yet to see a for-profit incubator work. "Incubators are not moneymaking operations," he says. "They are effective economic development tools if you want to develop a technology industry, but people need to be prepared to require some sort of public subsidy." Lately, MMI's investors have been subsidizing its work. MMI had sales of £631,928 and lost £848,000 in the year ending March 2001, which included £410,000 in costs associated with the Cambridge center. MMI's most recent financial results will not be released until July. The company trades on the Alternative Investment Market of the London Stock Exchange, where its shares are now selling near its 52-week low of 33 pence per share. MMI's Bioscience Innovation Centre opened in 2000 with 12 labs occupying 25,000 square feet. Best says it is now fully leased and profitable. In March 2002, MMI opened an incubator at the Alba Centre in Livingston, Scotland, in partnership with the Scottish government. The Scottish incubator will focus on convergence technologies melding bioscience and miniature electronics. Now MMI is studying a plan to develop the Roche research campus in Welwyn Garden City, near London. With 100,000 square feet of sophisticated lab space, it would be Europe's largest incubator, says Best. MMI has an option to acquire the site, as Roche has shifted its research to other countries. MMI also runs a Venture Capital Trust, which was floated on the public markets in April. He says the new fund is structured to avoid conflicts of interests with the rest of MMI and has an independent board of directors that will make the final funding decisions. CASE IN POINT The inherent conflict between for-profit and university research came to a head during MMI's only foray into the United States, at Oregon Health & Science University (OHSU) in Portland. Best says that before MMI ventured into Oregon, the company commissioned a study that found just four of 900 business incubators were commercially successful. "They were not really businesses," he contends. "Often a university will put up a sign on a building that says 'incubator' and hire a janitor and provide heating and lighting. It's an extension of the university. Our definition of an incubator is that it must be purpose-built. It must be sector-specific and it must be fully mentored. ... It must have a full team of people." Photo: Courtesy of Bioscience Innovation Centre David Best Best says the Oregon venture fizzled due to conflicts with the university over the program's direction. "The commercial realities are that the commercial people must set the agenda," he says. "Sometimes the researchers are just keen to play. Individual technology transfer offices have to work out what their roles are," Best adds. "Are they facilitators or are they developers? Unless they have a lifetime of experience in the industry, they shouldn't really try to turn into developers." Todd Sherer, director of technology and research collaboration at OHSU, says MMI's all-business ap-proach conflicted with the academic and public mission of the university, which receives 80% of its funding from public sources. "We wanted to build value in the technologies, not the company that runs the joint venture," says Sherer, who added that MMI seemed unfamiliar with some aspects of American drug discovery and development. Nonetheless, Best says MMI has formed a US subsidiary and is talking to potential clients on both coasts of the United States. "Incubation generally is of great interest, not only in America," he says. "But the discussion must distinguish between a truly commercial incubator and a lot of well-meaning amateurs in the university." Susan Warner (swarner@comcast.net) is a freelance writer in Philadelphia.

Earning from Incubating

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Photo: Courtesy of MMI
INCUBATING SCIENCE: The Albe Centre in Livingston, Scottish scion of MMI.