One of the oldest universities in the world has been spinning out companies with remarkable success for more than half a century

University of Oxford is a powerhouse of innovation, a message that the nearly 1,000-year-old institution has sometimes struggled to communicate effectively – though its cluster communications initiative launched last year is certainly helping to remedy this. But this apparent struggle in celebrating its achievements outside of traditional rankings (Times Higher Education ranked the university first globally in its 2020 list, ahead of Caltech and University of Cambridge) belies a simple truth: Oxford is incredibly efficient at commercialising its research.

Not only is the university efficient, it was the first to ever form a spinout in the UK when it incorporated superconducting magnets producer Oxford Instruments in April 1958. It puts Oxford Instruments’ creation nearly three decades ahead of the Bayh–Dole Act in the US that has been credited with kickstarting technology transfer across the pond.

Vikki Gault, group director of communications for Oxford Instruments, told Global University Venturing that the company “was proud to be the first spinout from the university” and even 60 years later is still engaged in cutting-edge work as the spinout is helping to tackle the global pandemic.

When you are the first at anything, it often means that there are no established processes in place and so, long before tech transfer office Oxford University Innovation (OUI) was even a vague concept in anyone’s mind, the university decided to make only one demand of co-founder Martin Wood: he would need to stay in his tenured position for a decade.

That meant Wood never had a defined executive position in the spinout and spent his nights and weekends focusing on marketing the company. He and his wife and co-founder Audrey Wood each put £200 of their own money into the company to get it off the ground and initially managed the business out of their home, before upgrading to a garden shed and eventually into a disused slaughterhouse – the early days of innovation were nothing if not glamorous.

Oxford Instruments eventually listed on the London Stock Exchange in October 1983 and today boasts a market cap of more than £722m with revenues of more than £333m. The Woods – knighted in 1986 to become Sir Martin and Lady Audrey – founded philanthropic organisation Oxford Trust to foster science and enterprise, two environmental charities and in 1986 bought a builders’ yard and turned it into Oxford’s first innovation hub.

Jim Wilkinson

Things have certainly changed since those early days. OUI, formed in 1987, is now a well-oiled machine with a dedicated incubator, a large team that processes thousands of patent applications each year and a partnership with the world’s largest university venture fund Oxford Sciences Innovation across town. OUI has even spun out its consultancy arm as a separate unit, Oxentia, and in more unusual news in 2016 decided a rebrand from Isis Innovation (Isis is the name for the Thames river in Oxford) was probably a good idea after the name became tainted by the Islamic State. Today, OUI not only commercialises research in the traditional areas of life sciences and IT but has also added social enterprises and humanities to its roster thanks to the expertise of Mark Mann, who took home the GUV Award for Personality of the Year in 2019 for precisely these efforts.

Jim Wilkinson, interim chief executive of OSI, said: “Over the last four years, OSI has transformed the ecosystem in Oxford, increasing by fourfold the number of spinouts and attracting significant global investment and talent to the UK tech industry.

Our strategy has always remained the same – to identify and develop cutting edge science and technology from the university and create and grow world-leading companies.

“We are proud of our maturing portfolio, with highlights over the past year including Latent Logic being acquired by Waymo and OMass raising its £27.5m series A round. We continue to be inspired by Oxford, and by Oxford’s potential.”

Out of the 223 companies supported by Oxford since that first spinout, a total of 149 were founded in the past ten years alone. That is an incredible speed at which the university is churning out new companies (the visualisation in the following chart above, provided by OSI, makes this abundantly clear).

The number of 149 also illustrates how good Oxford is on the international stage: it would put the university solidly in the top 10 universities in the US, according to a chart compiled by DJ Nag for IPWatchdog using Autm data.

The growth in spinout generation, while most pronounced in the past decade, really started around 2000 when Oxford increased its patent funding, Tom Hockaday – chief executive of OUI from 2000 to 2016 – said.

Hockaday, who now runs his own consultancy, Technology Transfer Innovation, knows a thing or two about commercialisation, not only because he has written the book on it, titled “University Technology Transfer: What It Is and How to Do It”, but also because he was fundamental in helping to build Oxford’s approach.

He noted that OUI began with a focus on recruiting qualified people, including staff with a background in investment banking, to build credibility both with researchers and industry.

Government, he added, also played a key role. There was one “disastrous tax change” around 2002, however, Hockaday said, when the government decided to tighten up a loophole in share schemes for employees. While that effort was laudable, it had the immediate effect that researchers had their shares counted as income and received tax bills – sometimes for £1,000s – despite not having earned anything.

“We fought very hard to fix that,” Hockaday recalled, but it took a year to fix. Ironically, this all happened at the same time as the government was trying to support spinouts.

An early, “huge turning point” for Oxford’s ecosystem was the launch of the government’s Challenge Seed Funds, of which the university received one equipped with £4m. Combined with tax relief schemes for investors, this started bringing in serious capital.

The number of spinouts started increasing – though Hockaday revealed his office did not count a company as a spinout until it had raised its first external round – and, he quipped, “we thought we were doing a good job until OSI came along and really sped things up.”

Hockaday said: “We were very careful to build companies that had a real chance of success because anything else would have had a negative impact within the university,” with bad experiences by one researcher potentially preventing another from approaching OUI in the first place.

Thankfully, Hockaday’s careful leadership prevented any such scenarios and the opposite happened: researchers opened up to innovation and grew more confident that their inventions would be in safe hands when commercialised.

Despite its impact internally, Hockaday noted that OUI never sought to influence the actual types of research being conducted. Any trends came from shifting interests by researchers. He cited the example of Yasa, a manufacturer of electric motors and motor controllers for use in automotive, marine and aerospace applications, that came about because its founders were interested in cleantech.

“Yasa was founded in 2008 and is still going strong today,” Hockaday noted with understandable pride. Indeed, the spinout raised another £18m in funding in September 2019 and has collected nearly £50m to date.

Tom Hockaday

Speaking of impressive funding rounds: to date, Oxford’s spinouts have raised more than £2.2bn in the UK and $245m in the US – this is equity funding only, raised before a company was acquired or went public, and based on accounts filed with Companies House by March 2020, figures supplied by OUI to GUV and press reports. Fluctuations in exchange rates over the decades make it difficult to accurately convert these numbers, but at the current rate, this would come to a total of approximately $3.14bn.

Out of the 223, 175 remain active today – that is a survival rate of 78.5%. Out of those no longer active, 12 completed a merger and acquisition before they were wound down so can feasibly still be counted as a success for the university. If we include those additional companies, the survival rate hits almost 83.9%.

There are a variety of statistics out there about the failure rate of startups – ranging from estimates of 50% to as high as 90% – but whichever way you look at this, to have more than two-thirds of companies still actively trading is nothing short of phenomenal and a true testament to the strength of Oxford’s innovation ecosystem.

Cash might be king for young companies, but in the post-coronavirus world we find ourselves in, another aspect of innovation – and arguably one much more important to tech transfer offices – is even more crucial: impact.

And here, University of Oxford is in a group racing to help people with treatment and a vaccine with OSI’s early funding of two vaccine developers, SpyBiotech and Vaccitech, crucial to their development ahead of their respective series A and B rounds expected to close shortly.

Also in this group are countless other companies, including Harvard University’s biotechnology spinout Moderna, which already has a candidate in the clinic, and pharmaceutical firms Johnson & Johnson, Pfizer and Sanofi advancing programs.

Johnson & Johnson alone has committed $1bn to the development of a Covid-19 vaccine and hopes to have a vaccine in the clinic by September, win emergency use authorisation early next year and add capacity to make more than one billion doses.

Meanwhile, Vaccitech is aiming to start human testing this month. It is one of the few with human clinical data on coronavirus, according to chief executive Bill Enright. This comes after Vaccitech’s partner, Oxford’s Jenner Institute, announced that it had started a phase 1 trial in Saudi Arabia for a vaccine against coronavirus in collaboration with King Abdullah International Medical Research Centre.

There have been a number of coronaviruses in circulation for decades, such as Middle East Respiratory Syndrome (commonly known as Mers) and severe acute respiratory syndrome (Sars), and the phase 1 trial was focused on one that had been known to move from camels to people and then on to human-to-human transmission, Enright said. Given coronaviruses share the same type of spikey proteins this meant developing a trial for the Covid-19 disease could happen rapidly, he added.

Vaccitech’s platform was licensed from the Jenner Institute – based on research by institute director and professor of human genetics Adrian Hill and professor of vaccinology Sarah Gilbert – for vaccine research and already had a pipeline of six clinical product candidates for infectious disease and cancer indications using T cell responses to clear foreign pathogens and tumours.

As well as OSI, Vaccitech is backed by conglomerate Alphabet’s early-stage corporate venturing subsidiary GV, molecular diagnostics firm GeneMatrix, Sequoia Capital China, Liontrust and Korea Investment Partners.

Enright previously worked for 11 years as CEO at Altimmune, a company developing immunotherapies and vaccines, leading its series B round, the acquisition of T cell vaccine company Immune Targeting Systems and taking the company public on Nasdaq through the acquisition of PharmAthene.

He said Vaccitech was trying to raise a $55m series B round and position itself for a flotation in the medium term.

Enright had been attracted to the company by his drive to remain helpful after a 30-year career, and Vaccitech’s company culture of open communication, transparency and ethics and its technology.

Recruiting experienced management is often the hardest part of turning a spinout into a scale-up success story. Lachlan MacKinnon, principal at OSI’s life sciences team, said it had good relationships with three to four US recruitment firms that made it easier to explain the OSI and Oxford story and how different options could be available if the company went wrong as there “is a diversity of opportunities here”.

MacKinnon said it was easier finding good role models now. OSI had made a cold start but now the environment was one where professors knew others with startups and the calibre of available management was world-class. Spinouts were easily attracting third-party investors.

In 2007, SpyBiotech co-founder Mark Howarth and his team in the Department of Biochemistry began studying the common bacterium Streptococcus (Strep) pyogenes, attracted by its “surprising chemistry” and how that might be applied to the development of protein superglues.

Strep pyogenes has exceptional anchors, rarely found in proteins, that enable it to attach to human cells. Howarth’s team worked to turn that locking mechanism into a glue by splitting the protein into two pieces and then re-forming it through an irreversible covalent bond. The result was that, unlike actual superglue, the two pieces – dubbed SpyTag and SpyCatcher – only stuck to each other.

A decade later and, in collaboration with Jenner Institute vaccinologists Sumi Biswas, Simon Draper and Jing Jin as co-founders, SpyBiotech was spun out to apply the technology to the field of vaccinology.

OSI and GV again chipped in for SpyBiotech’s £5m seed round and the company is now developing two vaccines.

MacKinnon described it as a versatile platform taking very little time to move from malaria to viral infections hepatitis B and Covid-19. However, given Vaccitech and SpyBiotech’s different approaches – T cells and proteins – to treating viral diseases, MacKinnon said there was little merit in forming one larger company.

That does not mean that mergers between Oxford spinouts are entirely out of the realm of possibility. One such example is the acquisition of Oxxon Therapeutics, the developer of immunotherapies for chronic infectious diseases and cancer, by Oxford Biomedica, which produces gene and cell therapies for ocular and central nervous system disorders, for £16m ($30.7m at the historical exchange rate) in 2007. Oxxon subsequently became a dormant business – that is a company which is not trading and not generating any income, but that has not been dissolved – in 2008, but according to an announcement at the time the all-share transaction equipped Oxford Biomedica with a cancer immunotherapy complementary to one of its own candidates, Trovax, although the asset appears to have been shelved.

Another noteworthy acquisition, if for different reasons, is the purchase of T cell receptor technology developer Avidex by biotechnology firm Medigene for €50m ($64m) in 2006. What happened next is unusual in that Medigene spun out two separate companies – Adaptimmune and Immunocore – to each focus on different aspects of Avidex’s technology. Adaptimmune has since gone public itself, following a $175m IPO in 2015, and Immunocore most recently picked up $130m in series B funding last month from a consortium that included pharmaceutical firms Eli Lilly and WuXi AppTec, and that was led by General Atlantic.

Mirada Solutions, a medical imaging software developer, has had a similarly eventful history. The spinout was the result of a merger between another Oxford spinout, Omia, and Oxiva, and was acquired by PET tracers and probes distributor CTI Molecular Imaging for $22m in 2003, before CTI was purchased in turn by electronics conglomerate Siemens for $1bn in 2005. For most, that point would have been the conclusion of a very successful journey, but Mirada’s chief executive instead decided to lead a management buyout in 2008 and reincorporated the business as Mirada Medical, which is still going strong today.

While acquisition prices of spinouts, in general, are often kept under wraps, a fact that is also true for Oxford’s portfolio, some celebrate the large sums they fetch. NaturalMotion, which has created interactive character animation technology, is one company that netted a significant profit when game developer Zynga bought the company for $527m in 2014.

Another is Nightstar Therapeutics, which is working on gene therapies for rare, inherited diseases, and raised $75m in an initial public offering in 2017 – after having collected $95.5m in funding – and was subsequently acquired by biotechnology firm Biogen for $877m in March 2019. That is an incredibly trajectory to complete within only
five years.

But for all the talk about mergers and acquisitions, one thing quickly becomes obvious when looking at the 223 companies: only 27 have completed such transactions (and five of them were acquisitions following an initial public offering). That stands in stark contrast to the UK government’s view that British spinouts needed to be supported better to survive on their own rather than being acquired by overseas competitors and peers. That is just 12.1% of companies that have been acquired so far – a percentage so low it is difficult to consider it a worrying trend.

Instead, many spinouts have survived for decades despite raising only relatively modest amounts of equity financing. A remarkable exception here is Oxford Nanopore Technologies, which has created real-time DNA and RNA sequencing technology and was launched in 2005. The spinout has secured £479m to date. There were rumours in late 2019 that the company was looking to collect a whopping $2.1bn in funding, but it never confirmed these reports and instead the now-defunct Woodford Investment Management was among the shareholders dumping stock in a $106m secondary transaction in early 2020. Oxford Nanopore’s backers include commercialisation firm IP Group, genomics company Illumina, Singaporean sovereign wealth fund GIC and Australian superannuation fund Hostplus, among countless others.

University of Oxford may be an internationally renowned institution for its research strength but this does not mean its researchers never work with others. Helio Display Materials is one example where Oxford collaborated with its peer – some would say rival – Cambridge. Helio Display is actually a spinout formed by the latter’s tech transfer office Cambridge Enterprise, but is also exploiting perovskite technology – the product commercialised by another spinout, Oxford PV – to create light-emitting diodes. The two institutions may have been battling it out in rankings (and boat races) for centuries, but such competition has no space in technology transfer where everyone is trying to make the world a better place.

Collaborations have also occurred further afield, such as with Karolinska Institute in Sweden that led to the formation of biotherapeutics developer Evox Therapeutics. Evox advances research from Matthew Wood at Oxford, together with Samir EL Andaloussi and Per Lundin at Karolinska, and has the backing of Oxford Sciences Innovation behind it. It has also raised £45.5m in four years, so is obviously onto something.

“People used to ask what our success rate is,” Hockaday said, “but that depends on your definition of success. Is it money? Is it impact?”

Not every spinout – or indeed startups in general – can be a success. Some of Oxford’s have turned out not to be – market research analytics firm Flying Fish Research lasted just over two years, for example – but the university’s successes, in impact and capital raised, far outweigh the bets that have failed.

If you require more proof as to the ecosystem’s strengths, on the following pages you will find a breakdown of all 223 companies that have come out of Oxford to date, with funding totals up to their exits and details on such exits.

Some notes about this data:

  • The date formed refers to the date provided by University of Oxford as the date on which the company was spun out, not when it was incorporated with Companies House. The incorporation dates are usually a few months before the completion of the spinout process, but in some cases differ by several years.
  • The total funding has been rounded. It includes the equity declared by the companies in their most recent annual accounts, by University of Oxford to GUV and press releases by the spinouts themselves. They are correct, to the best of our knowledge, as of March 2020. The figures do not include any non-dilutive grants, debt financing or bank loans. In some cases, these exclusions have resulted in nominal amounts or the absence of any funding.
  • Defunct companies have not filed any accounts for their most recent financial year or have an active notice in place by Companies House to be struck off and thereby be dissolved.
  • The status of some companies, despite GUV’s best efforts, could not be ascertained. In such cases, it seems safe to assume that the company is no longer trading, as no records are held by Companies House and searches for a website remained unsuccessful.

GUV would like to thank OUI and Angel News for their support with the initial data research.

Thierry Heles

Thierry Heles is the editor of Global University Venturing, host of the Beyond the Breakthrough interview podcast and responsible for the monthly GUV Gazette (sign up here for free).