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Technology transfer: Ending the patent agreement with Celltech


Private vs public funding
Aaron Klug Scientist
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I went to Headquarters, MRC Headquarters, and I said, 'We must make an MRC spin-off company, and... we have... well, we will have £750,000 invested in making antibodies, human antibodies and also possibly humanised antibodies', which had already been licensed to other people, they had been licensed. So they said, 'Oh no...' – this was the second Secretary, who said, 'Oh no, we can't have equity, have shares in the company'. I said, 'Why not?' He said, 'We're not allowed to by the Treasury.' I said, 'Well, you may not know this, I didn't use those words, but you already own shares in MRC.' They were aghast, he and Norman Morris, the second Secretary, 'We're not allowed to do that.' I said, 'Well, I'm sorry, but I've acquired some shares in a company called Somatogen, and I have to explain the background of that.'

These were the days of Mrs Thatcher who didn't believe that anything in the public sector was going to be much good, and we were supposed to channel everything, channel everything through private... through companies. That refers later to the con-focal microscope, by the way, because there again we were supposed to have sent it out, not develop it in house. So they were aghast and I didn't know what to do, so I said they must take 10% of the equity. Peptech who were putting up the money would have 40% and the rest would be from other investors. And I said that if the MRC invested, it would be a mark of confidence, you see. Obviously, they didn't have to pay any money, they would just be given the equity and royalties and so on. So I said, 'Well, you already have shares. Well, how did these shares arise?'

In the Lab we'd had Kyoshi Nagai who'd been a post-doc of Max Perutz and he was the man... the first person to express the eukaryotic gene in bacteria. This was going on at the time, people expressed bacterial proteins. This was the new technology, you know, we were living through this revolution, recombinant DNA technology and so on, and making proteins and bacteria. But he showed that you can make globin inside a bacteria... a rather large molecule, and you could make haemoglobin by... it's just simply a haem group which made haemoglobin and the point of all this was that you could make basic-recombinant haemoglobin. People had made recombinant insulin by this time, but this was... but those were really a small molecule. And this is a big thing, four sub units and so on. And the reason for making it is because blood supplies were poisoned by herpes, various sexually transmitted diseases where you got them from donors if you want to get blood supplies. And also AIDS by this time, HIV. It was very clear that a lot of specimens had HIV and herpes, so there was a market for blood products. And then you wanted something that held... could supply a large amount of oxygen very quickly. Now, Kyoshi Nagai was working on haemoglobin, trying to modify it in such a way that you changed its binding characteristics for oxygen so that you could carry a whole load of oxygen. The binding properties of haemoglobin are very carefully controlled so that not only can they load up with oxygen in the lungs but offload them in the tissues. This depends on their pH and so on. It's a very beautiful biological system. We didn't want that. We simply wanted to have a great load, and so what he was doing was trying to take bits of proteins from the haemoglobins of crocodiles which are diving animals and others which would... trying to fuse bits of it doing protein engineering, you know, trying to make a new kind of haemoglobin and again in the tradition. There was a small American biotech company called Somatogen which was paying for a post-doc... and Somatogen working on this very problem, and nobody else was doing anything like this and they had confidence in this, and they were paying for a post-doc. And of course, expenses and things of that sort, and they would have a... they would get royalties if they produced something, so one day... an industrial liaison officer, who had been set up by Sydney, there was a certain amount of industrial liaison, David Secker came and said, 'They can't supply, they've run out of money and they can't pay for this post-doc.'

Now, there was a set of posts that I had additional to our Lab establishment, the number of posts which the MRC gave to the Lab. This was one of Sydney's wheezes, Sydney Brenner, and he was marvellous about these things. He had reckoned that we needed extra posts for special projects, and MRC are reluctant to give us more posts in the establishment, but they agreed with Sydney's... Sydney had got... they were three lots of three posts, and each post lasted for three years and these had started one year after the other, so at any one time we had nine posts, and after three years one group of three would return to the MRC so they weren't permanent in the establishment. So we had some posts and Sydney had set up a Director's Division to control these posts, and what he did with them is another story, he pursued all sorts of adventures of his own, including new ways of sequencing DNA which didn't succeed. But this was a pretty effective... thing to have, and it did mean we could put people on... hire people for new projects and if I can interrupt the story, I'll come to another application of having these Director's posts which may have helped to lead to John Walker's Nobel Prize. Anyway, to return to this subject, so... so I then decided I had these posts, and they weren't specified what I could do with them. Earlier on I'd asked the MRC whether we could use some posts for what I call applied work and they said, no. I asked for extra posts, and they wouldn't give it to us, but there was no barrier on these posts. So I said, 'We'll continue with it ourselves', and Somatogen offered 25,000 shares. I said to them, 'Ask for 50', so when I... To return to the story, when I told David Noble and Norman Morris at MRC Headquarters that they owned 50,000 shares in Somatogen, they said, 'Well, we're not allowed to own those.' I said, 'Well, you have them, you'll only send them back – they're worth something', in fact, eventually they were sold for a million dollars, something just under a million dollars. So they said, 'Well, we'll have to think about all this', and in the end they came back some weeks later to say the Treasury would agree to our accepting, to MRC accepting a small fraction, so what's a small fraction? I said, well, instead of 10, why not 4, which is 10% of 40, you see. They said, 'No, no, that's too much.' So we eventually settled on 2%, so little it needn't be noticed. You must understand the culture was very different at the time. They were like... they were civil servants, you see. So we accepted 2% and we set up Cambridge Antibody Technology.

Born in Lithuania, Aaron Klug (1926-2018) was a British chemist and biophysicist. He was awarded the Nobel Prize in Chemistry in 1982 for developments in electron microscopy and his work on complexes of nucleic acids and proteins. He studied crystallography at the University of Cape Town before moving to England, completing his doctorate in 1953 at Trinity College, Cambridge. In 1981, he was awarded the Louisa Gross Horwitz Prize from Columbia University. His long and influential career led to a knighthood in 1988. He was also elected President of the Royal Society, and served there from 1995-2000.

Listeners: Ken Holmes John Finch

Kenneth Holmes was born in London in 1934 and attended schools in Chiswick. He obtained his BA at St Johns College, Cambridge. He obtained his PhD at Birkbeck College, London working on the structure of tobacco mosaic virus with Rosalind Franklin and Aaron Klug. After a post-doc at Childrens' Hospital, Boston, where he started to work on muscle structure, he joined to the newly opened Laboratory of Molecular Biology in Cambridge where he stayed for six years. He worked with Aaron Klug on virus structure and with Hugh Huxley on muscle. He then moved to Heidelberg to open the Department of Biophysics at the Max Planck Institute for Medical Research where he remained as director until his retirement. During this time he completed the structure of tobacco mosaic virus and solved the structures of a number of protein molecules including the structure of the muscle protein actin and the actin filament. Recently he has worked on the molecular mechanism of muscle contraction. He also initiated the use of synchrotron radiation as a source for X-ray diffraction and founded the EMBL outstation at DESY Hamburg. He was elected to the Royal Society in 1981 and is a member of a number of scientific academies.

John Finch is a retired member of staff of the Medical Research Council Laboratory of Molecular Biology in Cambridge, UK. He began research as a PhD student of Rosalind Franklin's at Birkbeck College, London in 1955 studying the structure of small viruses by x-ray diffraction. He came to Cambridge as part of Aaron Klug's team in 1962 and has continued with the structural study of viruses and other nucleoproteins such as chromatin, using both x-rays and electron microscopy.

Tags: MRC, Somatogen, Peptech, Cambridge Antibody Technology, Norman Morris, Margaret Thatcher, Kyoshi Nagai, Sydney Brenner, John Walker

Duration: 8 minutes, 26 seconds

Date story recorded: July 2005

Date story went live: 24 January 2008