[Ip-health] Wall Street Journal: Oxford Developed Covid Vaccine, Then Scholars Clashed Over Money
thiru at keionline.org
Wed Oct 21 23:15:12 PDT 2020
Oxford Developed Covid Vaccine, Then Scholars Clashed Over Money
Early deal with Merck was scotched for fear poor countries would be left
out; now university could make over $100 million with AstraZeneca if
By Jenny Strasburg and Stu Woo
Oct. 21, 2020 1:13 pm ET
OXFORD, England—Just weeks before the University of Oxford announced a
mega-deal aimed at rolling out a Covid-19 vaccine worldwide, university
leaders had a revolt on their hands.
Publicly, Oxford scientists were touting progress in the laboratory. But
behind the scenes, two renowned vaccinologists leading the effort were
fighting a proposed deal with U.S. pharmaceutical giant Merck & Co.
The scientists’ small biotech company—a spinout partially funded by
Oxford—was refusing to hand over intellectual-property rights. To outflank
their bosses, the scientists asked a London investment banker to help
explore other potential deals.
For the 900-year-old university, the stakes were as high as at any time in
its modern history. As the coronavirus pandemic ravaged lives and economies
around the globe, Oxford found itself ahead of the pack with an encouraging
vaccine candidate. But feats of science were just part of the battle.
Publicly funded Oxford needed to combine its high-minded ideals with the
profit-driven ethos of the pharmaceutical world. Academics and their allies
clashed repeatedly over control of the university’s strategy for delivering
the jab to the world.
“We were headed into the jungle without a machete,” says John Bell , a
twice-knighted Oxford geneticist tapped by university leaders to find a
pharmaceutical-industry partner. “We happen to be a rather good university,
but universities don’t do this stuff.”
Oxford ultimately hammered out a deal with British multinational
AstraZeneca PLC to oversee the manufacturing and distribution of billions
of doses. Previously unreported terms hashed out in April, described by
people familiar with the discussions, include a potential royalty cut of
roughly 6% for Oxford. If the vaccine passes regulatory hurdles and becomes
a must-have seasonal shot, as some scientists think it might, payments
could be worth well over $100 million.
The turmoil around Oxford’s vaccine deal featured on-campus clashes of ego,
hastily made threats and promises, and layers of public and private
investors with competing incentives.
Despite the infighting, supporters and critics alike credit Prof. Bell with
bridging the divide between Oxford’s history of nonprofit medical
innovation and the pharmaceutical industry’s shareholder-driven motivations.
“He can be very abrasive,” says Graham Richards, a former Oxford chemistry
chairman. “He can get people very upset. But he just gets things done.”
The science behind the Oxford vaccine dates back decades. In the 2000s,
Merck scientists researched using a cold virus from a chimpanzee to make
any number of vaccines. Merck dropped the project, in part because it
worried that a vaccine based on a chimp virus would face a difficult time
getting approved by the Food and Drug Administration, according to Stefano
Colloca, a former Merck researcher.
But the work continued, including at Oxford’s Jenner Institute. Named after
British smallpox-vaccine pioneer Edward Jenner, it is one of the world’s
foremost centers for vaccine study.
Two scientists there, Sarah Gilbert , an Oxford vaccinology professor, and
Adrian Hill , the institute’s director, developed their own version of the
chimp vaccine technology. They patented it and in 2016 founded Vaccitech
Ltd., with Oxford’s support, to create vaccines and treatments for profit.
The scientists remain at Oxford but also help oversee Vaccitech.
The biotech company was an early product of a grand Oxford experiment aimed
at making the university—and the U.K. in general—more commercially
competitive in technology and life sciences.
Vaccitech’s biggest shareholder is a university-backed venture firm called
Oxford Sciences Innovation PLC. Oxford started the firm in 2015, attracting
some £600 million from outside investors ranging from hedge funds to
Chinese conglomerates. The idea was to emulate American rivals like
Stanford University and the Massachusetts Institute of Technology by
fostering profit-making lab spinouts. Oxford takes a cut of the
spinouts—typically between 10% and 50%—and doles out half of that stake to
Oxford Sciences. Prof. Bell sits on the venture firm’s board.
When Vaccitech set up shop, Oxford Sciences received a big founding stake,
and has invested more since then, supporting the company as it struggled to
turn its research into commercial hits. Vaccitech has other private
shareholders as well, but Oxford holds particular sway.
At the start of the year, the Jenner Institute was making an Ebola-virus
vaccine in its small manufacturing plant. In mid-January, shortly after the
new coronavirus started spreading globally, Chinese scientists released its
genetic sequence. The next day, Prof. Gilbert’s team got to work.
Prof. Gilbert, 58 years old, spent hours in the lab, waking at 4 a.m. and
working into the evening.
Vaccitech Chief Executive Bill Enright says the idea was that the Jenner
Institute and Vaccitech would work in tandem, speeding up lab research to
boost chances for success. Profs. Gilbert and Hill, who together own about
10% of Vaccitech, started exploring whether the university could roll out
the vaccine on a global scale, using Vaccitech and other partners and
without giving any one big company exclusive rights, according to Vaccitech
officials and other people familiar with the matter.
In late March, Mr. Enright says, the university’s internal innovation
office, the keeper of its vaccine intellectual property, told him Oxford
didn’t plan to grant any company exclusive rights to the Covid-19 vaccine.
In fact, Oxford’s senior leaders were already moving in just that
direction. “We have no ability to distribute this, to manufacture this,”
Oxford’s vice chancellor, Louise Richardson , recalls thinking. She worried
about squandering the opportunity and knew Oxford needed a big corporate
One longtime Oxford donor, the Bill & Melinda Gates Foundation, was
assisting with Covid-19 efforts globally. In March, Prof. Bell says Trevor
Mundel , head of the foundation’s global-health program, told him, “You
guys need a partner.”
Prof. Bell says he told Profs. Gilbert and Hill that they had a conflict of
interest in any talks between Oxford and potential partners, because of
their ownership stake in Vaccitech.
The scientists’ dual roles as private-company founders and university
researchers posed a quandary: Oxford wants to encourage its researchers to
be entrepreneurs but faces criticism, even within the university, when they
stand to profit from their inventions. Oxford’s vaccine effort brought
those tensions into the spotlight, academics, administrators and investors
Prof. Bell also didn’t want Vaccitech at the negotiating table, and
considered it inconceivable that the company, with just a few dozen staff,
could help coordinate a global vaccine rollout.
“You might as well have done it in my garage,” he says.
Earlier in the pandemic, Prof. Bell had heard from Roger Perlmutter , the
soon-to-retire top scientist at Merck. The two have known each other since
“What do you know about the Oxford vaccine?” Prof. Bell remembers Dr.
Perlmutter asking him. He texted back: “I think it’s probably real, Roger.
It’s really interesting.” That discussion didn’t go anywhere, but in late
March, he called Dr. Perlmutter back, and soon they were working toward an
exclusive licensing deal. Dr. Perlmutter didn’t respond to requests for
Prof. Bell ‘can be very abrasive,’ says a colleague. ‘But he just gets
As governments around the world ramped up their own vaccine efforts, many
inside the university started to worry rich countries might leave others
behind in securing access to a shot. They agreed providing an affordable
vaccine to rich and poor countries alike trumped profit.
But at the same time, university leaders say they didn’t want to give away
all of the financial upside to some pharmaceutical company.
Last century, Oxford pioneered the use of penicillin in humans. Written
into university lore is how Oxford ceded control, letting the drug
companies make all the money.
“We could have funded an awful lot of medical research since the Second
World War,” says Prof. Richardson, the vice chancellor.
In Prof. Bell’s words, without decent financial terms, “people are going to
come back and say, ‘Oh my god, another British university inventing
something worth a ton of money, and guess what, they gave it away for
Merck proposed giving Oxford around 1% of royalties, according to people
familiar with the negotiations, with a sliver of that going to Vaccitech.
As talks progressed, the drug company’s estimate of how many doses it could
guarantee went from more than 1 billion to around 300 million, according to
As Merck’s proposal circulated, scientists including Profs. Gilbert and
Hill closed ranks against it, in part over concerns about whether Merck
could supply poor countries, according to people familiar with the
discussions. They say Prof. Hill, the Jenner Institute director, told
colleagues he’d fight any deal that wouldn’t promise an affordable global
Vaccitech told Prof. Bell the company wouldn’t sign over its share of
rights to the vaccine for the proposed Merck deal, says its chairman, Robin
Other barriers were rising as the global vaccine race turned increasingly
political. Senior U.K. cabinet officials and advisers worried the Trump
administration would hoard doses made in the U.S., potentially putting a
U.K.-developed shot out of reach of its own citizens, according to people
familiar with the matter. By mid-April, after calls with officials
including the country’s health secretary, Prof. Bell says he understood the
government would resist any tie-up relying on a single U.S. company.
A U.K. government spokesman said a vaccine “is not a competition between
countries,” adding: “Our ambition is to defeat this virus by working
together globally to develop and mass-produce a vaccine.” Paul Mango,
deputy chief of staff for policy at the U.S. Department of Health and Human
Services, said U.S. vaccine agreements aren’t inhibiting supplies to the
rest of the world, though he said the priority is to protect Americans.
A Merck spokesman said it was talking with multiple potential vaccine
partners and is committed to serving health needs globally. He said
negotiations with Oxford ended cordially in late April. Citing
confidentiality agreements, Prof. Gilbert declined to comment on talks with
potential industry partners. Prof. Hill declined to comment.
Prof. Bell says the Merck proposal was the best on the table at the time,
and other potential partners were already pursuing their own vaccine plans.
“If there’s only one girl to dance with at the party, then you dance with
the girl,” he says. “The clock was ticking.”
Profs. Gilbert and Hill, still worried Prof. Bell would forge ahead with
Merck, sought to pull other companies to the table, calling on a London
banker to help, according to people close to the matter. In mid-April, the
scientists briefed AstraZeneca executives in-depth on Oxford’s vaccine.
Prof. Bell says he was told the meeting went well, so with the Merck deal
all but dead and few prospective partners left, he called AstraZeneca
executives on a Saturday morning. AstraZeneca isn’t a giant in vaccines,
making it a less-obvious choice. But it was global, British and willing to
After 10 days of talks, AstraZeneca agreed to commit to global distribution
that wouldn’t favor any one country or region. It also agreed to provide
the vaccine at cost during the pandemic, or at least until next summer,
pending terms they were still hashing out. U.K. government officials worked
on a deal to pay up-front for doses.
A successful vaccine could prove profitable for AstraZeneca in the long
run, while burnishing the reputation of the company.
As the deal took shape, Prof. Bell ratcheted up pressure on Vaccitech to
sign over its rights. Mr. Enright, the CEO, balked, wanting first to know
the terms, he says. In a heated phone call acknowledged by both men, Prof.
Bell told Mr. Enright his job could depend on his cooperation.
“You might say, well, that was a veiled threat, which it might well have
been,” Prof. Bell says of the phone call. “But CEOs do need to pay
attention to the shareholders of the company.”
Mr. Wright, the Vaccitech chairman, says the CEO’s job was never in danger.
“A lot of John Bell’s crazy threats were simply borne out of frustration
and pressure,” he says.
With deal talks progressing, the chairman of Oxford Sciences, in a terse
April 22 letter to Mr. Enright, told Vaccitech executives to fall in line.
Details of Oxford’s agreement with AstraZeneca are private. But a company
spokesman said it guarantees to sell at no profit the roughly 3 billion
doses for which it already has agreements in place.
“We have also promised to make the vaccine available to low- to
middle-income countries at no profit in perpetuity,” the AstraZeneca
People begin to return to the streets of the historic university city of
Oxford after a long coronavirus lockdown period in September, as vaccine
Back in late April, though, Vaccitech remained a wild card. Menelas
Pangalos, AstraZeneca’s head of biopharmaceutical research, asked Prof.
Bell what might be done. Prof. Bell says he told Dr. Pangalas he might want
to reach out to Vaccitech.
The big drugmaker offered a sweetener: It said that as long as Vaccitech
signed over its Covid-19 vaccine rights to Oxford to enable an exclusive
license, AstraZeneca in turn promised to explore ways to collaborate with
the small biotech firm, according to an agreement signed by Dr. Pangalos.
The nonbinding agreement cited “AstraZeneca’s potential participation in
Vaccitech’s proposed Series B financing.”
Vaccitech acquiesced and signed over its rights.
AstraZeneca and Oxford announced their deal on April 30. According to
people familiar with the terms offered, AstraZeneca agreed to give Oxford
$10 million up-front and another roughly $80 million in so-called milestone
payments if the vaccine passes regulatory and sales hurdles.
That’s in addition to around 6% of royalties Oxford can make if the vaccine
succeeds, starting as soon as next summer, the people say. Some details of
the financial terms have remained fluid, according to one of these people.
Oxford’s deal press release said neither the university nor Vaccitech will
receive royalties during the pandemic. It said anything Oxford makes after
that will be funneled into a new Pandemic Preparedness and Vaccine Research
Centre that Oxford is developing “in collaboration with AstraZeneca.”
Oxford has described the vaccine as “developed jointly by the Jenner
Institute and Vaccitech.” Vaccitech’s Mr. Enright wanted a 50-50 split for
his company of whatever payments roll into Oxford, to reflect the IP
ownership, he says. He got 24%.
Prof. Bell says Oxford did most of the work and Vaccitech should be
“The university didn’t enter this discussion with the idea of making a ton
of money,” Prof. Bell says. But it didn’t want to be naïve, either: “Let’s
say [the vaccine] becomes a seasonal coronavirus vaccine, and it sells a
billion dollars a year. For us to be sitting there and making no money
looks pretty dumb.”
—Max Colchester in London contributed to this article.
Write to Jenny Strasburg at jenny.strasburg at wsj.com and Stu Woo at
Stu.Woo at wsj.com
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