Big player: the Bavarian biotech cluster

As of May 25, 2013, Munich can claim to host the best football team in Europe. With some of the strongest players from across the world anchored by a core of home-grown talent, Bayern Munich are sweeping all before them.

Like its main football club, Munich’s biotechnology sector is a success story: if not necessarily the undoubted best, then regularly challenging for the major honours. In 2012, 348 companies in the biotechnology and pharma sectors were headquartered or had subsidiaries operating in the region. The Bavarian Biotech Cluster employs more than 26,000 people, not including academics working in Bavarian research institutions. In the city of Munich alone, more than 19,000 people work in the industry.

The Bavarian cluster is managed by BioM, a not-for-profit that provides consulting to start-ups, business development support and PR services to the sector. Linked to that organisation is m4, which describes itself as “the joint biotech initiative in Greater Munich that pools the strengths of the hospitals and scientific institutes, the biotech and pharmaceutical companies and the cluster management company BioM”.

With federal and regional government backing, the two organisations work to ensure that the cluster provides the best environment possible for innovative biotech and pharma business. Of course, Munich has some other advantages in this area too.

The European Patent Office is located in the city, as is the German National Patent Office. This in turn means that the legal landscape is geared up to help new businesses secure their IP rights. The city hosts numerous patent experts who can provide legal advice to innovative companies looking to protect themselves.

Couple this patent expertise with a city that has historically been not just a national but a European powerhouse economically, and you begin to realise why it looks attractive to companies including Roche Diagnostics, GE Healthcare, Daichii Sankyo and Bavarian Nordic, who LSIPR profiled in the July issue.

The academic research base is solid too. There are Max Planck Institutes for biotechnology, IP, physics and neurobiology in the city; several universities and research hospitals provide further academic muscle.

Traditionally, the cluster has been strong in so-called ‘red biotechnology’, that is to say medical processes as opposed to plants and agriculture. Cancer therapies form the bulk of work undertaken in the Munich cluster (in 2013 56 percent of drug development programmes by SMEs in the city were for oncology), but therapies for autoimmune diseases and inflammatory diseases also rank highly in terms of development.

In recent years, the focus has increasingly turned towards personalised medicine across the industry, and the Bavarian cluster reflects this. The aim is to develop Munich into an International Competetence Center for Personalised Medicine, and to that end the Federal Ministry of Education and Research will provide additional funding to the cluster, as will the Bavarian Ministry of Economic Affairs.

The cluster is becoming more productive too: in 2012, total revenues for biotech SMEs in the region stood at $525 million, an increase of 2 percent on 2011, revenues for which were in turn up more than 7 percent on 2010. This is all the more impressive when we consider the difficult climate for private funding in the industry, with venture capital investment well down on previous years, and an overall deal volume for funding that declined from 2011.

That said, financing for early stage projects has increased, and the signs for the next few years look promising, especially if the wider eurozone recovery gathers pace. And if merger activity is anything to go by, there is plenty of reason to be hopeful. In 2012, Amgen acquired Munich-based Micromet for more than $1 billion, the company’s largest-ever acquisition and an example of a robust M&A market in the region.

So the future looks bright. However, not all the trends are positive. According to BioM’s most recent annual report, the drugs pipeline in the cluster has reduced over the past few years. In 2010, there were 38 products in Phase I clinical trials, 38 in Phase II and 11 in Phase III. In 2012, those numbers were 23, 37 and six respectively. There’s no cause for alarm: there are always failures in the industry, and successful exits also affect the number, but nonetheless, BioM will be hoping the trend reverses in the coming years.

Company focus: MorphoSys

Listed on the Frankfurt Stock Exchange, MorphoSys is a world leader in the field of therapeutic antibodies, partnering with pharmaceutical companies to develop therapies for cancer, arthritis and Alzheimer’s, to name a few. Founded in 1992, the company has licensing agreements with GlaxoSmithKline and alliances with Celgene and Novozymes among others. It has a broad patent and trademark portfolio in the US, Europe and further afield, covering its pipeline of more than 70 human antibody drug candidates.

Company focus: 4SC

Bavaria-based 4SC discovers and develops small-molecule drugs to target cancer and auto-immune diseases. With an emphasis on early-stage research, it looks for partnerships with large biotech and pharmaceutical companies. Cutting-edge research focuses on epigenetics, cancer stem cells and cancer immunotherapy, among others. It currently has four products in various stages of clinical development and several programmes in early-stage research.

Company focus: Origenis

Origenis is a privately-owned small molecule drug discovery company based in the Bavarian cluster. Its patented drug discovery platform MOREsystem combines drug design, patent analysis, chemical synthesis and biological characterisation. Working both in-house and in alliance with other companies, Origenis is currently focused on anti-inflammatory and central nervous system drugs. The MOREsystem is coupled with its proprietary patent database Cippex to compare new compounds with existing IP to avoid collisions.

Company focus: Lophius Biosciences

Lophius develops novel, innovative T-cellbased diagnostic test systems based on patented platforms. Its UREA technology is an innovative method to enhance the T-cell stimulatory characteristics of proteins and allows the sensitive detection of a broad spectrum of clinically relevant populations of effector cells.

Its reverse T-cell technology is a unique technology platform for the detection of pathogen-specific activated T-cells. Activated T-cells appear transiently in active microbial infections as well as in chronic inflammatory diseases and are thus an interesting immunological marker for a reliable diagnosis of active infectious diseases and the early diagnosis of autoimmune diseases.

Company focus: Till Photonics

Recently acquired by American company FEI Life Sciences, Till Photonics is a producer of fluorescence microscopes and imaging systems based in Munich. Founded in 1993, it develops and markets live cell fluorescence microscopes for research applications as well as routine, applied science and diagnostics. Based on patented technology developed in conjunction with Ludwig-Maximilians- Universität in Munich, the microscopes are used by companies in neurobiology, cell biology, biomedicine and pharmacology.

Company focus: Biogents

With backing from the Bill and Melinda Gates Foundation, Biogents’s patented trapping systems for mosquitos and flies are widely used to prevent transmission and spread of diseases such as malaria and yellow fever. The technology is used by health organisations worldwide, and also by armed forces and public entities for research and prevention work.