A prestigious UK medical academy has agreed to consult for venture capitalists, to inform decisions about investments in late-stage biotechnology companies.
The London-based Academy of Medical Sciences, more than 1,000 members strong, will offer its services to Park Vale Capital, a investment firm also based in London with a dedicated biotechnology fund. The Academy will facilitate initial meetings between interested fellows and Park Vale investment managers. In exchange, the Academy will be paid a retainer to aid in the administrative costs of the agreement, and will receive a share of associated performance fees that Park Vale earns off of the investments.
Academy president John Tooke also stresses that the agreement furthers the Academy’s mission. “It’s entirely consistent with our remit of assisting the advance of medical science.”
Biotechnology companies often rely heavily on venture capital investment to ride out the years of expensive research and development needed to bring a drug to market. But investors are increasingly wary of the industry, with its long timelines and high risk of failure.
Much of the hand-wringing in biotechnology venture capital has focused on the dearth of investors willing to support young companies – a recent report found investment in early-stage companies has fallen to lows not seen since 1996.
But Park Vale’s focus on older firms also addresses an urgent funding gap, says managing partner Katherine Priestly. Many venture capitalists cannot extend their investment in any one company beyond about ten years, she notes. With a drug-development timeline that regularly stretches 12-15 years, that leaves biotechnology firms hanging just as they near the finish line. “It is almost a moral imperative to move these companies forward,” says Tooke. Priestly says her firm hopes to invest in 6-10 companies over the next two years.
While it is not unusual for individual researchers and physicians to enter into consulting relationships with the investment industry, the scope of the Park Vale agreement – encompassing an entire medical academy – is unique. The setup is conceptually reminiscent of an expert network, a type of organisation that assembles a stable of specialists and hires out their services to the financial industry.
Such relationships can be problematic when investors try to glean confidential information from, for example, physicians conducting clinical trials, cautions Eric Campbell, a specialist in conflicts-of-interest and a professor of medicine at the Massachusetts General Hospital in Boston. “This is institutionalizing the investment-consulting dance,” he says, “and I would be concerned about the disclosure of proprietary information.”
Tooke notes that the Academy is establishing a committee to oversee the relationship with Park Vale and to mitigate any risks – including potential conflicts-of-interest –associated with the plan. But the Academy’s role is that of a facilitator, he says, and the onus is on individual fellows to weigh their participation and the information they provide against their other commitments.
Consulting relationships that go beyond the initial Academy-mediated meetings will be handled by individual fellows and their home institutions which, in the United Kingdom, often include offices dedicated to overseeing such agreements.