Commercialisation hurdles stifle innovation

WESTERN Australia is failing to capitalise on opportunities in the medical technology sector due to a lack of government support for the commercialisation of scientific research, according to several industry players spoken to by Business News.

This is despite ‘medical products’ being listed among six key areas in the federal government’s $1.5 billion Modern Manufacturing Strategy (MMS) for 2020.

That strategy describes manufacturing as critical to a modern Australian economy, with medical products potentially “[T]he centrepiece of a dynamic economy based on translating smart ideas into globally competitive manufactured products”.

MTPConnect is a government-backed growth centre for medical technologies with a key aim of promoting commercialisation and collaboration across the sector, to improve patient outcomes and create jobs and economic growth.

Managing director Dan Grant said getting the best out of medical research in Australia required a breaking down of the barriers among industry, teaching and academic clinical research.

“Australia and WA are well known for the high quality of research that we undertake in universities and medical research hubs and other places but are less good at translating that to commercial outcomes and patient outcomes,” Dr Grant told Business News.

“There’s a host of things lacking; funding gaps in specific parts of the sector, especially that ‘valley of death stage’, the early stage of a project where funding is very difficult to get, so programs are terminated, or licences sold offshore to other entities.

“There’s also a skills gap. We’ve just published a broad skills gap analysis across sectors, and there are significant gaps as it relates to commercialisation and translation. We don’t have the depth of people who have developed things like drugs as other countries have.”

MTPConnect’s WA Life Sciences Innovation Hub and Perth’s Centre for Entrepreneurial Research and Innovation (CERI) are among a handful of WA accelerators and incubators working to boost growth and jobs in the sector.

At CERI, that focus is on making scientists more business savvy, with entrepreneur boot camps (among other courses), low-cost office space, mentoring and most recently the expertise of a CEO-in-residence, whose role is to help startups become better at doing business.

CERI chief executive Carolyn Williams refers to that onsite leader as a ‘sidecar CEO’ whose focus is supporting startups. However, she said the sector lacked a centralised WA commercialisation hub responsible for driving research out of the hospital and university laboratories and into the hands of the population.

“Wouldn’t it be nice if we could all come together to focus on the state and bring all the pots of money to one central commercialisation centre and … do a decent job of it and connect people,” Dr Williams said.

“Otherwise, it stays stuck in the labs, stuck in the universities, stuck in the hospitals and you and I never get to see it.

“What happens is, it gets written up in a thesis or a journal paper and when that’s finished off the researcher goes and gets a job, and the research is left to collect dust.

“You may have two or three people on the ground in a university commercialisation hub, if it has one at all, who don’t even know that research exits.”

CERI’s founder is philanthropist Charlie Bass, who made his fortune in WA’s resources sector.

Mr Bass’s vision is to help develop WA’s medtech sector in order to reduce the state’s dependence on resources, and the erratic boom-bust cycle that drains investment from other sectors.

It’s the curse of resources-rich countries, termed a ‘paradox of plenty’.

It also pushes many brilliant young minds – those not interested in mining-related jobs such as engineering – to leave the state to pursue careers elsewhere.

“Commercialisation of medical research and technology for CERI is about creating jobs, diversifying the economy, keeping young bright minds in WA, and also getting the technology out to people for whom it can make a difference,” Dr Williams said.

“Our focus is the high-value research like stem cell technology; high knowledge research that’s in the universities and hospitals, at the frontier of science that should be commercialised to change people’s lives.

“It’s cutting-edge science, and when you think of successful entrepreneurial companies, they are just that: disruptive, at the cutting edge of technology.

“The challenge is to adapt and commercialise it quickly.”

In February, Education Minister Alan Tudge said universities spent $12.2 billion on research and produced 100,000 pub lications. A key performance indicator for university academics is to have research published as proof of the impact of the university’s research.

However, Mr Tudge said the institutions needed to play a bigger role in the commercialisation of that research.

“To not just produce brilliant research but to work more with businesses and governments to translate this research into breakthrough products, new businesses and ideas, and grow our economy  and strengthen our society,” he said.

IP disincentive

Mr Tudge also called for entrepreneur ial academics to be properly rewarded for engagement with business and flagged that the federal government was prepared to change intellectual property (IP) laws if necessary.

Universities often own the IP created by an employee. At the University of Western Australia, for example, net proceeds from commercialisation are split 85 per cent to the originator and 15 to the university for projects where net proceeds of commercialisation are less than $100,000. That increases for those more  than $100,000 to a 50-50 split.

This is regarded as a disincentive for researchers to pursue commercialisation.

Funding flow

Dr Grant said a constant flow of funding through the sector was one of the important ways MTPConnect helped researchers commercialise. He said the not-for-profit’s $32 million REDI program targeted the skills gaps with industry experience and training.

In addition, WA researchers can tap into its $45 million BioMedTech Horizons  program and the $22.3 million Biomedical Translation Bridge program, of which OncoRes Medical, Dimerix and Bard1Life Sciences have been recipients.

Many of the government grants schemes require funding to be matched, with researchers required to raise substantial capital in order to receive a grant for the same amount. And therein lies a difficulty.

Often, scientists have left a paid job in academia or a research facility to develop their product and may have no income.

The onus falls to ‘friends, family and fools’ to invest, particularly for researchers in the early stages of development.

Dr Williams said the system was a limiting factor for research outcomes nationally 

“For example, the National Science Foundation in the US has two pots of money. One is for the main funding bodies; you get a grant, do your research and development, and if it’s any good you can apply for the commercialisation funding, which is next stage,” she said.

“So, they can take you to the next  level. We have nothing like that.”

Other researchers talk about the limitations of bureaucracy, its aversion to risk, lack of government investment and the legal hurdles that make it extremely difficult to take research out of laborato- ries to the world, regardless of how good it is.

Potential

One such case is Marian Sturm’s company Isopogen. Dr Sturm is a world leader in the manufacture and delivery of cellular treatments.

She retired in May after 43 years in the sector, most recently as facility director of cell and tissue thera- pies at Royal Perth Hospital.

In 2005, Dr Sturm started development of Mesenchymal Stem Cells (MSC), traditionally harvested from bone marrow and able to divide and morph into other types of cells.

She said her product had proved effective in clinical trials in the treatment of Crohn’s disease and other applications.

Clinical trials are under way nationally into the treatment of lung transplant recipients.

Dr Sturm said the science had been the easy part, with commercialisation a far more challenging ask. Currently, the product is only accessible through clinical trials and on compassionate grounds to those who have run out of treatment  options.

Isopogen was formed in 2015 and operates from CERI’s Nedland’s incuba- tor, which offers low-cost office space, mentoring and business skills programs.

Dr Sturm worked alone on the science and the complex business aspects of Isopogen until CERI’s incubator linked her to Paul Fry, a former Pricewaterhouse Coopers partner and now her chief financial controller and business adviser.

Dr Sturm and her team are clearly frustrated that the commercialisation of a medtech product has taken so long, and at the lack of state government support for cell and gene therapy.

Of the $2.4 million invested in Isopo gen to date, just $30,000 has been grant funding.

“This is low-hanging fruit,” Mr Fry told Business News.

“This treatment is well progressed. It has treated 170 patients, had 1,200 infusions, 11 clinical trials; the work has been published in journals and shown to  be very effective.

“The investment community thinks  it’s great, but they want to know when we’re commercialising, first revenues, where we’re manufacturing, and so on.”

Mr Fry said Isopogen would like to work more closely with government to develop infrastructure and harness inno vation in WA.

However, lack of government support and investment in stem cell and gene therapy in WA means that headquar- ters and manufacturing may be forced elsewhere.

A FIT physiotherapist until a cancer diagnosis in 2019, Steve Sterling, 50, sud denly found himself dealing with a whole new reality.

Major cancer surgery left him with 40 staples in his stomach and a stoma to remove waste from his body.

His healing wounds made it uncomfortable to empty and change the stoma while hunched over a toilet, and he wanted to improve how he dealt with the process.

Within six months of that lifechanging surgery, Mr Sterling had developed a device that would make emptying and changing a stoma more comfortable, effective, and more dignified.

It’s the U-Can, a device to remove waste from a pouch without having to squeeze and irritate the skin that is currently part of a pilot trail with the WA Ostomy Association.

The U-Can allows the pouch to be emptied without having to worry about using a public toilet. It also reduces the injury to skin where the stoma is glued to his body.

“The problem is that skin is not designed to have something glued to it and pulling on it constantly, and when you damage the skin, the pouch stops sticking to it,” Mr Sterling said.

“I thought if I can transfer the forces from the hand pulling on the skin to a transfer plate, the energy goes elsewhere and stops damaging the skin. 

“Someone with a stoma has to change the pouch every two or three days. It’s quite a stressful thing and what makes it more so is the stoma can acti vate and waste can start coming out and if there is no pouch there it runs down the side of your body. 

“So, it was a massive coup for me to design a lip on the back to have on a wall and I could put [the] stoma over the lip of the device and if it did activate then the security was there that it wasn’t going to run down me.”

Mr Sterling has patents pending and  is in talks with companies that provide ostomates with their kits, to manufacture the U-Can. 

“It’s very, very promising in respect  to the capacity they have to scale this up, because I want as many devices as possible out there and being used,” Mr Sterling said. 

He estimates the project has cost him up to $50,000, with $25,000 of this from an innovation grant (matched 20 per cent by him) and the remainder self-funded with help from family and friends. 

“I trawled through government web sites and had numerous discussions with government innovation support people and senior policy officers to discuss what finances there might be out there, and there’s nothing that isn’t matched,” Mr Sterling said. 

“Funding is geared to companies that are already up and running and making money and can afford to continue with their innovations; it’s a top-up for them. 

“That negatively impacts those that have less – startups like me – and I feel  that’s an injustice. 

“I also feel that this impedes inno vation across our population. There are people who want to get relevant, useful inventions out of their garages and into the marketplace knowing it’s going to make a difference to the world, and they can’t.”