A synthesis of science and industry
Vaxxilon is a start-up company founded by the Max Planck Society and the Swiss biotech firm Actelion, which aims to bring synthetic, polysaccharide-based vaccines to market. The company’s research division will be based in Berlin-Adlershof, just 45 minutes away from the Max Planck Institute of Colloids and Interfaces in Potsdam-Golm. This was where Peter Seeberger and his team - in cooperation with Gennaro de Libero from the University Hospital of Basel - developed the new approach to the identification and production of vaccines. Jörn Erselius, Managing Director of Max Planck Innovation (MI), explains how the start-up came into being.
Dr. Erselius, the foundation of Vaxxilon has now been completed - reason to celebrate for you and your colleagues at Max Planck Innovation?
Jörn Erselius: Absolutely, a spin-off endowed with €30 million of start-up capital for the first four years is not an everyday occurrence. What’s more, we have found a partner and investor in Actelion that is not only contributing a substantial amount of capital to Vaxxilon but also an experienced management team. I believe the success Actelion itself has enjoyed in the biotech sector - with its market capitalization now standing at around €15 billion after 18 years - has also enabled us to appoint a top-quality Board of Directors, which is the equivalent of the Supervisory Board. The former chair of GlaxoSmithKline Biologicals and the former President Pharmaceutical Operations at GlaxoSmithKline now sit on the Board for example. Actelion also possesses extensive expertise in the authorization of new drugs.
Vaccines already provide highly effective protection against infections. What makes Peter Seeberger’s research and the ongoing development at Vaxxilon so important?
While vaccines are indeed very effective, they nonetheless also have their limitations. In some cases, we hope their effectiveness can be further improved and their administration made easier. We are also aiming to achieve shorter development times, lower costs, less complex production and simpler sales and distribution. However, it is extremely important that pathogens for which no vaccines currently exist can also be tackled through Peter Seeberger’s work. Having more vaccines and fewer infections may also provide us with a further means of dealing with the increasingly acute problem of antibiotic resistances.
What is so special about the vaccines that Vaxxilon will bring onto the market?
The carbohydrate-based vaccines can be manufactured completely synthetically and do not contain any proteins. This simplifies production and makes the result more reproducible than conventional, carbohydrate-based vaccines which are generally isolated from a pathogen culture. We also hope that the use of adjuvants, which usually boost the impact of vaccines, can be refrained from. If vaccines do not contain any proteins, they may no longer have to be completely cooled. This is extremely important for applications in hotter regions and many developing countries where the substances have often already been spoiled by the time they reach patients.
So is Vaxxilon certain to succeed?
We believe there is tremendous potential in the company and have every confidence that it can achieve great things. The start-up has obviously tied up significant resources. Four people from Max Planck Innovation have been heavily committed to it time-wise over the past two years.
How did the start-up come about?
The biotech community is usually aware of the publications of Max Planck scientists that are of interest for applications. That was also true in the case of Peter Seeberger and his glyco-vaccines. We initially made contact with various pharmaceutical companies and investors. Venture capital is nevertheless very hard to come by in Germany at present. If at all, start-ups in Germany generally only initially obtain modest financing in the low single-figure millions, for example, through business angels or high-tech start-up funds. The second and third rounds of financing with institutional venture capital investors is not usually successful or not to the required extent. There was not one single IPO of a biotech company on a German stock exchange last year, while there were around 70 in the US.
Why is it so difficult to find investors in Germany?
Investors are finding it difficult themselves to raise capital for their funds and have become much more cautious after the days of the “Neuer Markt” where many start-ups failed, especially high-risk pharmaceutical ventures. Investors in Germany favour substances already at the clinical development stage. The Max Planck Society, which conducts basic research, can obviously not afford to do that. It is nevertheless endeavouring to bridge the gap between basic research and application through the Lead Discovery Center in Dortmund. Several projects have already been successfully licensed.
Would founding Vaxxilon with a US investor have been an alternative?
Venture capital investors in the US like to set up companies in their direct vicinity to allow them to establish close links with the start-up and to sometimes steer it with an interim management. However, we did not wish to set up in the US, where there may have been potential investors, as Germany should also ultimately benefit should Vaxxilon prove successful.
How did you bring Mr. Seeberger and Actelion together?
Peter Gruss, former President of the Max Planck Society, arranged the initial contact. After Mr. Seeberger presented his work to Actelion, they showed strong interest from the outset and were also willing to enter into the venture as the sole capital provider.
Did the founding of Vaxxilon then become a matter of course?
Not entirely. We firstly drew up a business plan with Peter Seeberger and the current CEO of Vaxxilon, Tom Monroe, reached agreement on how much capital was required and how the start-up could be optimally positioned in terms of patent law. It nevertheless became clear from early 2014 that Actelion wanted to enter into this joint venture. They were very keen on Peter Seeberger’s approach. Our negotiating partners at Actelion have since always engaged with us constructively in the search for solutions whenever discussions were required. We negotiated hard at times but always in a pleasant, respectful and, most importantly, constructive manner.
What difficulties had to be overcome during the negotiations?
In addition to the negotiation of all relevant corporate and financing agreements as well as a cooperation agreement with the MPI, we at Max Planck Innovation primarily focused on the licence negotiations and had to resolve various patent law issues.
Have the differing requirements of a business and a research organization become evident?
As a research organization, the Max Planck Society cannot incur any financial risks. When companies collaborate, they guarantee one another certain services. That, for example, is something we are not able to do. In contrast to corporate researchers, Max Planck scientists are primarily interested in the publication of research results, a goal which sometimes conflicts with patent law criteria. Science and industry have to adapt to one another in this respect. In order to continue representing the Max Planck Society’s interests in future, we will place an observer on Vaxxilon’s Board.
Vaxxilon plans to test the first vaccines on humans within the next three years. That sounds very ambitious. Won’t it take some time before the company can really get going?
That will happen very quickly. As four researchers from Mr. Seeberger’s department are joining the company, Vaxxilon will get off to a flying start. Suitable laboratories have also been found at the technology centre in Berlin-Adlershof. A key factor was that chemistry-related procedures can also be performed there, which is not always possible in conventional biotech labs. Carrying out a significant amount of chemical synthesis as part of glycan synthesis processes is part and parcel of Vaxxilon’s activities. Several vaccine candidates have shown during experiments on animals that they protect immunized animals against infections. If further animal experimentation is required, Vaxxilon will not conduct this itself but will instead outsource it to contract research organizations (CRO) specialized in this field. Cooperation will also take place with CROs and, if necessary, cooperation partners at other stages of the commercialization process. It is not yet fully clear whether Vaxxilon will subsequently manufacture the vaccines itself. If it does, this will probably take place in Switzerland.
How can you generally help the set-up of spin-offs from our Institutes?
We are primarily involved during the preparatory stage before start-ups are launched. Max Planck Innovation staff support the optimization of the business model, business planning, the raising of funding from start-up programmes and financing through external investors. Max Planck Innovation is also involved in complementing the management team. Through licensing, Max Planck Innovation provides the spin-offs with access to technology developed at Max Planck Institutes on which the start-up project is based. A management support programme, currently still funded by the German Federal Ministry of Education and Research, is also extremely useful. This enables us to bring our researchers together with industry experts at an early stage who may then also make up an interim management team.
How does the Max Planck Society benefit if a company is successful?
Firstly, we participate in subsequent product revenues through the licensing of patents. However, findings in basic pharmaceutical research in particular often require extremely lengthy and high-risk development before market-ready products emerge. Only a short patent term often remains after launch on the market. It is therefore very important to us that we retain participations in spin-offs to ensure we profit from the increase in value of the company irrespective of the patent duration.
What has to change in Germany to facilitate the foundation of companies from science?
Various aspects can be improved in the environment. Access to the capital market could be made easier. The fiscal conditions for investors and start-ups are not particularly attractive in Germany. In contrast to media funds and shipping investments, there are few relevant tax incentives for investment in start-ups. A tax-free option to reinvest venture capital for business angels and allowing start-ups to claim tax deductions on research and development costs would help. However, the willingness to launch start-ups would increase most significantly if we had more high-profile success stories. Hopefully, Vaxxilon will prove one such success story.
Interview by Peter Hergersberg