Inside: Living Cell Technologies

Inside: Living Cell Technologies

Living Cell Technologies (LCT) is an Auckland-based company working towards making Type I Diabetes a thing of the past. The biotech's flagship product, Diabecell, shows promising signs to help Diabetes sufferers – especially those who've lived with the disease for several years.

LCT was founded by Professor Bob Elliott in 1987 as Diatranz Limited. Elliott's research uses cells within a pig's pancreas which are transplanted into humans in order to produce insulin. His research was briefly put on hold in the '90s because of fears of diseases transferable between pigs and humans, but resumed when a herd of pigs was discovered on the Auckland Islands which had been isolated from mainland stock for 150-years – so not carrying the same transferable disease.

The company holds promising (and potentially lucrative) patents utilising pig cells from this herd. Currently it's in the second stage of clinical trials for Diabecell and working on another product which supports cell regeneration, with the potential to be used by Parkinson's patients and treat hearing loss.

I speak to chief executive Andrea Grant, who started her career working on the lab bench at GlaxoSmithKline. We talk about New Zealand's biotech sector, the importance of holding IP and what needs to be done to grow more businesses like LCT.

(Living Cell Technologies CEO Andrea Grant)

LCT is up for Emerging Company of the Year at this year's NZ Hi-Tech Awards. It's also one of the few non-silicon based companies on the list. What do you put that down to?

I think without doubt the sheer amount of innovation we're doing at Living Cell. The work we're doing is world-class and has global potential ... The insulin market is worth around US$2 billion world wide and we're on our way to cracking into that.

How is LCT funded?

We're now a listed company, since 2004. Until that time it was all private venture capital from the likes of David Collinson and Stephen Tindall.

There was an initial listing raising $6 million ... We've raised $80.9 million of which we've spent $68.7 million in New Zealand itself. And there's also $7.3 million in government grants.

In 2011 we formed a partnership with Japanese pharmaceutical manufacturer Otsuka [worth AUD$25 million from Otsuka and matched by AUD$25 million of Diabecell product and IP from LCT] ... This is a 50/50 agreement and it's a real coup for us. Pharmas generally don't partner with companies in our stage – it's cheaper to invest in early stage companies and less risk to invest in companies after clinical trials, we're in between.

LCT has some important intellectual property up its sleeve. Does New Zealand's IP laws do enough to protect the investment the company has put towards research?

In general yes. We have the same sorts of IP guarantees in New Zealand as we would overseas.

We would like to see the ability to extend patents for the types of research that can take a decade to get going, like we're doing here. The US government is looking for ways to grant extensions but this is something the New Zealand government is opposed to, so it will be interesting to see where that goes.

Is there any difficulty in attracting talented biologists and physicians to a New Zealand biotech company, locally and internationally?

The challenge is New Zealand isn't a high wage economy. We like to look locally when we can, but we have to look internationally too because of the numbers. When we do there's difficulty when the conversation turns to pay parity.

We're able to attract the top people right now because we're leaders in this field of diabetes research. We have a good reputation. But when they come here they know they'll take a hit in the back pocket.

What do you see as the biggest challenge to biotech companies in New Zealand?

Infrastructure is a major problem and something we're constantly thinking about. This is a barrier that's not unique to New Zealand, but it's definitely more acute here. When you go through this building you'll see almost every dollar is invested in the technology and lab space. There's no gold-plated executive offices

Now imagine you're growing very fast as we are, that requires a significant amount of infrastructure to keep pace with growth. Where I could see the government helping is private-public partnerships which help companies like ours build the facility we need for the next ten years to accelerate our growth. We lease it from the government which helps it justify its cost, and it also has the economic benefit which comes from a company employing several hundred high-waged workers.

How does New Zealand's relatively small size affect the ability for the biotech sector to be competitive overseas?

You risk putting me on my soap box here. We don't recognise our size enough, in that I mean we should recognise that we're small and leverage it.
When we're investing in research we should be targeting and focusing on research that can not only compete on the world stage financially, but benefit New Zealand directly downstream. We should be doing more to target health research into areas that already affect us.

Rather than each economic zone within New Zealand competing with each other we should be looking for – and I hate to use this word – synergies. There are already areas of expertise that should be able to help each other, a hub and spoke model ... Fragmentation is holding us back and there needs to be more cross industry support for different fields of research ... We need to move away from this attitude of being a nation broken into 1.43 in Auckland, and 700,000 in Christchurch, and 500,000 in Wellington. We need to become a powerhouse of 4 million people.

You mention the hub and spoke model. There's some effort within the government to create innovation hubs, such as EPIC in Christchurch and the Wynyard Quarter in Auckland. There's also several incubators popping up around the country. What do you think of these initiatives from a biotechnology point of view?

Incubators are a great concept, when they work. The challenge with these kinds of projects is the incubation phase isn't the phase which contributes the biggest return to the economy.

If we keep investing in early stage companies, we'll keep getting early stage companies. What we need to do is put more effort into funding second stage companies because when you accelerate their growth it has a far more dramatic impact on economic multipliers.

I think with the innovation hubs there might be some negativity because of a perception that when government wants to drive economic growth it invests in a new government department. People want help with real world business problems and are afraid of facing just another layer of bureaucracy.

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