West Midlands NHS Innovations Conference 2006

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West Midlands NHS Innovations Conference 2006

• sharing innovation for healthcare

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Welcome and Introduction

• Alan Wenban-Smith
• Chairman
• MidTECH

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Conference Aim

• To bring together key stakeholders involved in
  taking NHS innovations from idea to application
• Share experiences best practice
• Identify challenges opportunities
• Celebrate success
• Create contacts

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Some different perspectives

• Chief Executives view Mark Goldman
• Innovation Hub view David Gleaves
• Innovators view Monica Spiteri
• Industry view Matthew Harte
• Investors view Terry Swainbank
• Panel discussion

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Who is MidTECH?

• Top down
• MidTECH is the NHS Innovations hub for the West
  Midlands
• Our job is to help Trusts to identify and manage
  innovations arising from their work
• We provide expertise and resources
• Bottom up
• Innovation is a bottom-up process
• We have a regional membership
• We are there for all NHS Trusts in the region

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What is MidTECH for?

• Improving health care by making good use of new
  ideas
• Realising potential income for NHS, Trusts and
  inventors
• Generating employment in the national and
  regional economies

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MidTECH Strategy

• Membership
• NHS Trusts in the West Midlands
• Members service entitlement menu
• Pay as you go also available
• Resources
• Core funding for sustainable capability
• Exploitation funds for investment in projects
• Operation
• Not for profit commercial income ploughed back
• Grow regional ownership, reduce central dependency

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The MidTECH approach

• Includes
• clinical trials
• access to staff
• know how

• Includes
• prototyping
• design
• manufacture

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• New NHS
• New Business Opportunities
• Dr Mark Goldman
• Chief Executive

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The NHS

• Conceived in 1948 after the 2nd World War
• Healthcare free at the point of delivery
  according to need
• The envy of the world

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The changing face of healthcare

• Diversity of provision
• Care in the community
• Self help
• Choice

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Structure of the NHS
Secretary of State
Monitor
Department of Health
Private Sector
Strategic Health Authority
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Primary Care Trusts
298
Foundation Trusts
Acute Hospitals
31
206
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How can you help?

• Understand us and our problems

• Bring us solutions but respect our culture

• Recognise our achievements

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Whats in it for YOU?

• Growing market
• Recession proof
• Global marketing opportunity
• Under developed product ranges
• Wide product requirements
• New approaches to healthcare

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The opportunity

• 15 billion non pay expenditure
• Massive Health Spend 10 GDP by 2008
• Local Trusts
• University Hospital Birmingham 300m
• Heartlands and Solihull 240m
• Manchester United 230m
• Spend on equipment alone approximately 28

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Markets
New
New market Existing product
New market New product eg innovation
Markets
Existing market Existing product eg business as
usual, Choice
Existing market New product eg new model of
healthcare
Existing
Existing
New
Products
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Potential areas for development

• Low Tech Opportunities
• Cleaning materials
• Disposable plastics/drapes/clothes
• Manual handling equipment
• Protective clothing
• Wheelchairs/trolleys/stretchers
• Tagging and security devices
• Anti bacterial support
• Furnishings, packaging

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Complex products

• Communication
• Instrumentation
• Software solutions
• Implantable devices
• Drug delivery systems
• Lab equipment

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Medipark
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Purpose of the Medipark

• Enhance research
• Attract other organisations
• Attract funding
• Enhance reputation of HEFT
• Recruitment and retention of the best people
• Support regeneration
• Jobs
• businesses

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Infection Control Working Together with
Industry
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MRSA

• Methicillin Resistant Staphylococcus Aureus
• 30 people carry the germ
• SA and MRSA not risk to healthy
• 40 SA cases resistant to meth and antibiotics
• The Chief Medical Officer report Winning Ways
  working together to reduce Healthcare Associated
  Infection in England
• Everyone has a role to play - nurses, doctors,
  cleaners, patients, visitors

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Research

• Hygieia SkinSure barrier cream
• Bioquell
• 2 hour MRSA rapid test
• Surface coatings

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Practical application

• Hand gel dispensers
• Coated bags and aprons
• Disposable bags
• Cleaning systems
• Voice activated alerts
• Patient tagging
• Telemetry

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Learning together the Initial experience

• Initial a cleaning company
• Initial hygiene solutions
• Initial public health education
• Initial a partner in healthcare

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Centre of excellence

• National and international interest

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Conclusion

• Healthcare needs innovation and new products to
  deliver a new agenda
• Healthcare is a global business opportunity

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NHS Innovations in the West MidlandsA
perspective from the NHS innovations hub

• David Gleaves
• Director
• MidTECH

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Ingredients for a successful Innovations Hub

• Accessible to regional NHS
• Capability Capacity
• Networked

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MidTECH Plan

• 2004-5 Establish baseline capability client
  base
• 2005-6 Demonstrate capability grow client base
  networks
• 2006-7 Enhanced capability delivery

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2005-6 Client Base

• Client base of 33 NHS bodies
• Increase of 100 on 2004-5
• 66 of total

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Coverage Birmingham the Black Country
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Coverage Shropshire Staffordshire
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Coverage West Midlands South
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2005-6 Delivery

• Over 90 Innovations registered
• 60 increase on 2004-5
• 10 Patents, designs trademarks
• 3 times the number for 2004-5
• First NHS-University agreement
• 6 more in pipeline
• 20 development projects
• 2 licence deals

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2005-6 Networks

• Working relationships
• Medilink West Midlands
• HealthTech (WMG)
• CHID
• Regional design prototype community
• Stakeholder relationships
• DH, DTI, AWM, regional University sector

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2006-7 DeliveryMeeting clients growing needs

• Working in partnership with Trusts to deliver
  their commercialisation plans
• Joint ventures, spin-out companies, science parks
• Developing regional differentiators
• Capability mapping
• Focus on design prototyping
• Promoting regional NHS innovation
• Conference
• Competition
• Surgeries
• Local events

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2006-7 beyond

• Capability
• Marketing Communications
• NHS Designer (unique to UK NHS)
• Embedded innovation champions
• Plan to recruit senior innovation manager
• Forming as CLG in March 2006
• Secured 3-years further DTI support

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Networks Partnerships

• Working with AWM partners to deliver regional
  economic strategy
• Improve industrial links through co-location with
  Medilink West Midlands
• Develop regional NHS VC network
• Improve links with NHS National Institute for
  Innovation Improvement, HPC, CEP, etc.

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An Innovators Perspective

• Monica Spiteri
• Professor in Respiratory Medicine
• University Hospital of North Staffordshire

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Society has changed dramatically

• The Public expects and demands scientific and
  engineering advances.
• Immediate and rapid new solutions, new gadgets
  and new systems.
• Improvement in quality of life and,
• Aspiration to Dr Who-like immortality

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Public Needs drive NHS Strategy

• To enhance public health and well-being, the NHS
  has
• To improve service delivery and patient access.
• To invest in and deliver technological and
  pharmacological innovations.

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What price to pay for innovation?

• A delicate interplay
• NHS resources not bottomless.
• Which innovations, devices or drugs, are
  essential vs merely nice-to-have.
• Patient benefit vs costs of scientific progress.
• Safe clinically effective vs rapid development,
  commercialisation, implementation.

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Recent NHS Initiatives

• Healthcare Industries Task Force (2003)
• Joint venture, NHS and Industry
• Explored common grounds of working -
• To stimulate/promote NHS innovation.
• To facilitate commercial realisation.
• To speed up implementation of target discovery
  into the clinical arena.

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HITF actions - Crucial and timely

• Medical device evaluation service
• NHS Innovation Centre and hub
• NHS regional procurement
• Building RD capacity UK Clinical Research
  Collaboration
• Training Education

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Best Research for Best Health

• NHS Science and Innovation Investment Framework,
  2006
• A National Institute for Health Research
• A Faculty
• Academic Medical Centres
• Expanded Funding streams and Technology Platforms
• New Innovation funds

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NHS NEW FUNDING SCHEMES

• Responsive funds for applied and practice based
  research in areas important to front-line staff
• Programmes of applied research allocated
  competitively to NHS trusts for areas of high
  priority to the NHS
• Challenge fund for innovation - to encourage
  well-managed risk-taking and innovation in the
  NHS
• RISC (Research for Innovation, Speculation and
  Creativity) awards - to ensure that new and
  radical ideas can be developed and tested.

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EXCITING BLUEPRINT

• a dream come true for NHS researchers
• Or
• just wishful thinking!

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ENSURE DELIVERY, NOT FAILURE

• Who can ensure it happens in the NHS?
• How will the best ideas for patient benefit be
  heard in the NHS?
• What medium is best placed to progress
  innovative ideas across traditional boundaries in
  the NHS, however daring at the time?

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Time to change the balance?

• From a loaded top-down approach (systems
  organised along Institutional agendas)
• To a bottom-up approach (engaging and guiding
  teams of players at the clinical front).

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Opportunities for Innovation in NHS

• Largest skills-mix platform in UK (gt1M staff)
  greater than health-care technologies industry (
  2000 companies 50,000 personnel).
• NHS staff already work in teams under diverse
  clinical situations for patient benefit.
• First-hand knowledge of niche areas in diagnosis
  / therapy requiring urgent innovation and
  development.
• NHS is universally established, visible to the
  Public.

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Thus, the NHS community offers

• Unique opportunity to drive growth of, and to
  implement, technological pharmaceutical and
  service innovations.

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Difficulties of innovating in NHS

• NHS staff struggle to establish research
  portfolios against a backdrop of heavy clinical
  commitments and targets.
• Endless difficulty in getting ideas heard and
  securing support funds, losing out to
  university-based counterparts.
• Academic agendas driven by institutional politics
  and research assessment exercises, not by patient
  / NHS needs clinical researchers left
  frustrated.
• Intricate, but necessary, regulatory / legal
  requirements and systems process too complex!
• Slow translation journey from idea to trials to
  clinical endorsement to bedside, delays patient
  benefit.

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Future challenges

• Urgent need for radical change in attitude to
  research across the NHS.
• Encourage and stimulate an entrepreneurial
  culture amongst NHS employees.
• Harvest, groom, and support... Allow thinking
  outside the box!.
• Foster a pipeline of innovations from NHS
  grassroots.
• Ensure NHS innovator owns and drives the venture,
  in partnership with industry feel good
  factor.

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FUTURE CHALLENGES

• Empower staff to venture into unfamiliar
  technological territories cross transfer
  knowledge and expertise.
• Facilitate NHS Trust-Industry partnerships to
  enable cost effective, quick, safe, reliable
  products for our patients.

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Reducing the Burden of Lung Cancer investment
in superior screening tools

• A multi-disciplinary Team Project
• University Hospital of North Staffordshire
• working together with
• Patient Groups (Macmillan BLF Breathe Easy)

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CLINICAL NEED

• Lung cancer leading cause of deaths in UK 1 in
  13 men and 1 in 23 women develop lung tumours.
• Survival rates remain poor.
• Only 13 can be cured, having surgery as first
  treatment option surgical rates in England lag
  behind US and Europe.
• 85 of lung cancers originate within the
  bronchial wall lining and development is a
  multistage process over a long time period.

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OCT PROJECT FOCUS

• To develop safe, reliable, imaging device based
  on infrared technology, OCT.
• To provide real time, ultrasound-like, optical
  histology of lung micro- structures.
• To identify in situ pathological changes.
• Ultimate OCT prototype to be cost-effective,
  portable and adaptable to the immediate clinical
  setting.

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OCT Project Progress Time-line

• 1999 March 2005 Idea, project design and
  initial studies funded by Trust charitable funds
  turned down by other sources.
• April 2005 Nominated for MidTECH Innovations
  award.
• May 2005 Start of collaboration with MidTECH.
• June 2005 Preparations for IP protection.
• July 2005 UHNS patent application for OCT
  development in the lung.
• August 2005 First meeting with industrial
  partner.
• September December 2005 Joint venture
  initiatives.
• December 2005 5 year clinical technical plan
  established.
• February 2006 First OCT system update
  delivered.

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OCT Project adoption by MidTECH

• Excellent example of energised progress of
  NHS-based innovation.
• Our requirements were listened to, leading to an
  appropriate industrial partner.
• MidTECH-mediated JV ensures that NHS staff
  continue to drive the innovation.
• Whilst attracting third-stream funding from
  private sector, enabling seamless translation of
  device to clinical benefit.

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An Innovators Vision
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An Industry Perspective

• Matthew Harte
• Managing Director
• BioCote Ltd

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Why use Industry?

• Potentially very attractive customer
• Many strengths of industry
• Flexible
• Speed
• Low Cost
• Platform for innovation and ideas
• Eager to provide solutions
• However we need guidance
• What does the NHS want?

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BioCote Experience

• Antimicrobial Powder coatings
• Original Invention 1994
• Lacked ability to commercialise
• Financial backing 2001
• Enabled commercialisation of technology
• Continued technical development
• Partner with existing manufacturers

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BioCote Experience

• Create solutions for existing products
• Plastics, coatings and textiles
• Silver based technology
• Technology and support
• Marketing
• Microbiological
• Wide range of applications
• 40 Partners
• Ability to create environments

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Our Experience

• NHS long and complicated
• Who do we need to speak to?

• PASA
• Rapid Review Panel
• Architects
• Designers
• Building Contractors

• NHS Trusts
• RD
• Procurement
• Infection Control
• Chief Executive
• Director of Infection Prevention and Control
• Estates Facilities

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Rapid Review Panel

• Convened by the HPA at the request of The
  Department of Health
• Winning Ways and Towards cleaner hospitals and
  lower rates of infection.
• The panel provides a prompt assessment of new and
  novel equipment, materials, and other products or
  protocols that may be of value to the NHS in
  improving hospital infection control and reducing
  hospital acquired infections.

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Rapid Review Panel

• Received a rating of 3
• More Clinical data required
• How do we get clinical data?
• Finance
• Timescales
• Will it make a commercial difference?

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Help and Experience

• Medilink WM
• Guidance
• Key contacts and events
• Heart of England NHS Foundation Trust
• Very receptive to new innovations
• Provided opportunity to create Biocote
  environment within Hospital
• Clinical evidence
• Partner Companies

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What can the NHS learn?

• Innovation
• Traditionally from smaller companies
• Financial pressures
• Time constraints
• Innovator vs Commercial
• NHS has a part to play
• Backup clinical data
• encouragement/direction (key proactive
  individuals)

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What an Investor Seeks

• Terry Swainbank
• Investment Director,Rainbow Seed Fund
• Midven

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Content

• Early stage investments
• Risk / investment profiles
• Tackle obliquely experience with PSREs
  Rainbow Seed Fund
• - what it looks for
• - some examples

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Background

• Midven Birmingham-based VC Fund Manager
• Specialises in early stage investment and manages
  3 Funds
• Advantage Growth Fund
• Rainbow Seed Fund
• HSBC Fund for the Midlands

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Rainbow Seed Fund

• A venture capital fund specialising in seedcorn
  investment to commercialise research and
  innovation
• Risk finance not an alternative to grant funding
• Investment opportunities drawn from dstl, 4
  research councils (CCLRC, NERC, BBSRC, ) and
  UKAEA Fusion
• Another 6 PSREs will join shortly
• 6m fund
• DTI funded, through PSRE competitions

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Risk Funding for Technology Businesses
Capital required
20m
Trade Buyer or IPO
Mainstream VC
10m
Early Stage Venture Capital Funds
1m
Business Angels / RVCs
250k
10k
Stage of Development
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The Rainbow Model
Initial filtering by TTO and RSF Investment
Manager
Quick and simple approval process for RSF
investments up to 25,000 on PoC, IP, market
assessment, etc
RSF helps to build management team
RSF follow on investment leveraged by other risk
capital, with help from RSF investor network

Trade sale, IPO or licensing deal
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So Far..

• 25 first and 9 further investments
• 10 Spin-out companies
• Over 2.5m committed
• Over 11m of external finance raised by our
  portfolio
• Portfolio value more than 0.5m above cost
• Next Target realisations into cash (exits)

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RSF Portfolio

• Benefit from wide spread of research
• Portfolio diagnostics / medical physics /
  biotechnology / space / security
• Includes deliberately a spectrum
• Modest service businesses which need to generate
  revenues early
• More profound businesses but have to demonstrate
  progression to attract further investment

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What will Rainbow invest in?

• Required
• Good science providing a platform for a
  differentiated product or service
• IP properly protected and ownership untainted
• Researchers (and their employer) keen to see
  their ideas commercialised
• Experienced business managers willing to get
  involved
• Proposed markets are preferably large and growing
  might though be an interesting niche
• A clear business model dealing with the possible
  need for additional finance
• Not Required
• Scientists left to their own devices to
  commercialise

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Appraisal

• Will this investment make money?
• Can RSF negotiate satisfactory terms?
• Is there an exit for the investment?
• Will more money be needed, and if so where will
  it come from?

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Risk v Return

• Market Risk
• Maturity / Size / Barriers to Entry
• Technology Risk
• Timescales
• Reliance on further cash milestones that need
  to be achieved
• Lower risk 20 to 25 IRR target
• Higher risk 50 to 60 IRR target

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Appraisal Issues

• Assessing technical merits
• Use of research peers, specialist consultants
• Technical advisory panel
• Cautionary note best science might be elegant
  but not necessarily best in a commercial context
• Assessing commercial potential
• Market information often limited researchers
  have often not considered commercial potential
  (and indeed work of rival research teams)
• Rainbow cash for independent market / technical
  studies

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Intellectual Property Issues for both the
Investor and the Sponsoring Organisation

• Assign or licence?
• Knowhow / patents
• Who meets patenting costs? If attacked what is
  the defence strategy?
• Freedom to use
• Dependence on IP held elsewhere
• Pipeline agreements
• Access to staff who created the IP to properly
  exploit the IP

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Licence or Spin-out

• Depends on scale -
• single product aimed at a mature, concentrated
  market
• platform technology in a fragmented or new market
• Need for additional finance downstream
• Management
• Patent costs

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Spin-outs

• Management generally need to recruit from
  outside. Position of researchers /
  institutional goals?
• Funding almost always needs 3rd party funding
  (grants / SFLGS / business angels)
• 2nd Round Funding VC coolness to early stage
  investments

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Example of RSF Investment L3 Technology Ltd

• Initially 13k to fund proof of concept an
  accurate cholesterol diagnostic - in 2003
• Followed by a 230k commitment to a spin-out
  which licensed the technology from CCLRC. RSF
  invested alongside others (total 1m)
• RSF has an equity stake in the company as does
  CCLRC and two inventors.
• Seeking early licence may need more cash

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Example of RSF Investment Cellcentric Ltd

• 250k to fund a dedicated research programme at
  Babraham in the field of epigenetics.
• Cellcentric is developing an IP platform and has
  agreements over Cambridge and UCL IP. Likely
  revenues from cancer therapies,
• RSF has a shareholding in the company. Babraham
  has share options which will crystallise when
  patent filings are made.
• Will need to raise further (substantial) cash.

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Example of RSF Investment Remo Technologies Ltd

• Telemetry devices to monitor patients developed
  by Dstl and a third party
• Modest markets mainly in research
• RSF invested 75k
• Company has to achieve profitability on this cash
  unlikely to attract significant additional
  funding
• Might use this company as a route to market for
  related products

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Further Information / Discussion

• www.rainbowseedfund.com
• www.midven.com
• Terry Swainbank 07710 491589

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West Midlands NHS Innovations Conference 2006

• sharing innovation for healthcare