This series of four blog posts focus on the entrepreneurial story of how the University of Oxford invented a COVID-19 vaccine and entered into a partnership with AstraZeneca to distribute 3 billion doses globally. This year’s ELO Oxford Entrepreneurial Leaders Programme will include a case study of the development and roll-out of the Oxford AstraZeneca Vaccine and the lessons on innovation and entrepreneurship to be learned for global business leaders. The ELO Oxford cohort will get first-hand insights into how to go from idea to opportunity to then impacting the world. This is one of the most important stories of the COVID pandemic. We will be at the epicentre of this success story.
ELO operates the “Entrepreneurial Leaders Programme” in collaboration with Wycliffe Hall, University of Oxford. This is a one-week intensive executive education offering each August for Christian marketplace and entrepreneurial leaders from around the world. ELO believes there is no better place in the world for this type of offering. Oxford offers an amazing combination of culture and history along with one of the leading universities in the world. The current COVID-19 pandemic and the race to find a vaccine has raised the profile of the University even higher.
The four blog posts will successively answer these questions:
Part I - How to go from an idea to an opportunity?
Part II - How to solve a global problem?
The University of Oxford had a potential solution to a global problem. There were, however, myriad challenges. How to get the Vaccine fully approved and then distributed? How to pay for it? Who to partner with and on what terms? These issues needed to be sorted out promptly—people were dying daily around the globe without hope.
The University is a publicly funded institution with lofty ideals such as spreading knowledge and inspiring leaders to be positive contributors to society. Yet the University had to work with pharmaceutical companies who need to make money in a profit-driven and highly-competitive industry. There was a Faustian dynamic brewing. Also, how to deliver the Vaccine to the entire world, including developing countries that might not have the means to pay for it? This could be “Colonialism 2.0.” There were ongoing stakeholder conflagrations, from professors to taxpayers, over the University’s strategy.
The University began to look for a commercial partner after quickly realizing it would struggle to distribute and manufacture the Vaccine on a global scale. The University appointed Sir John Bell, Regius Professor of Medicine, to navigate the process. He first needed to deal with the inventors of the Vaccine, Profs. Gilbert and Hill of the Jenner Institute. Oxford recognized their foundational role and has described the Vaccine as “developed jointly by the Jenner Institute and Vaccitech.” Profs Gilbert and Hill, though the inventors, were soon left out of the process of determining how to move forward to address the global pandemic.
They were told that they had a conflict of interest in any talks between the University and potential partners, because of their ownership stake in Vaccitech. Profs. Gilbert and Hill, own 5.25% each of Vaccitech. The scientists’ dual roles as founders of Vaccitech and University researchers also posed a strategic challenge. The University wants to encourage its researchers to be entrepreneurial and innovative but then faces criticism, even within the University, when they stand to profit from their inventions. Ironically, it was the success of Oxford’s Vaccine effort that brought those tensions into the spotlight.
Another interesting dynamic is that Profs Gilbert and Hill had the influence diminished as the size of the opportunity grew. Prof. Bell didn’t want Profs Gilbert and Hill, representing Vaccitech, as part of the negotiating team representing the University in relation to potential pharmaceutical companies. Prof Bell considered it inconceivable that Vaccitech, with just a few dozen staff, could help coordinate a global vaccine rollout.
Prof Bell eventually settled on dealing with the British multinational AstraZeneca PLC (LSE/STO/Nasdaq: AZN) to oversee the manufacturing and distribution of billions of doses. AstraZeneca is a global, science-led biopharmaceutical company that focuses on the discovery, development and commercialization of prescription medicines, primarily for the treatment of diseases. AstraZeneca is based in Cambridge, UK, in spitting range of “the other place,” and operates in over 100 countries and its medicines are used by millions of patients worldwide.
As part of the deal with the University, AstraZeneca committed to providing global distribution which did not favour any one country. Many inside the University were concerned that wealthy countries might leave others behind in securing access to a shot. The University agreed that providing an affordable vaccine to rich and poor countries alike eclipsed profit. A University statement in April, when the deal was reached, said: “Under the new agreement, as well as providing UK access as early as possible if the vaccine candidate is successful, AstraZeneca will work with global partners on the international distribution of the vaccine, particularly working to make it available and accessible for low and medium-income countries.”
The deal between Oxford and AstraZeneca is known only in outline as the details are private. It apparently guarantees to sell at no profit the roughly 3 billion doses for which it already has agreements in place. The Vaccine will be available to low- to middle-income countries at no profit in perpetuity.
AstraZeneca offered some inducements to Oxford to get a deal done. AstraZeneca said that as long as Vaccitech signed over its Vaccine rights to the University to enable an exclusive license, AstraZeneca, in turn, promised to explore ways to collaborate with Vaccitech. The nonbinding agreement cited AstraZeneca’s potential participation in Vaccitech’s future financing.
The initial agreement between the University (through Oxford Biomedica, which was described in Part I of this blog series), is that Oxford will provide AstraZeneca with multiple batches of the Vaccine. The production will be from one of Oxford Biomedica’s facilities in “Oxbox” (also described in Part I of this blog series). The Commercial Supply agreement may be extended further depending on the progression of the programme.
Other aspects of the deal include the following. There is a potential royalty cut of roughly 6% for the University. Of course, a royalty is due off of sales and not give-aways. Nonetheless, if the Vaccine passes regulatory hurdles in various jurisdictions around the world and then becomes a must-have annual seasonal shot, payments could be worth well over $100 million. In addition to the royalties, AstraZeneca apparently agreed to give the University US$10 million up-front and another roughly US$80 million in so-called milestone payments if the Vaccine passes regulatory and sales hurdles. Some details of the financial terms have remained fluid.
The University’s deal press release said neither the University nor Vaccitech will receive royalties during the pandemic. It said anything the University makes after the pandemic will be funnelled into a new “Pandemic Preparedness and Vaccine Research Centre” that Oxford is developing in collaboration with AstraZeneca.
The pieces were now in place to solve a global problem. The University, led by Prof. Bell, had the various parties on board: Profs Gilbert and Hill; the Jenner Institute; Vaccitech; University leadership; Oxford Biomedia; and AstraZeneca. What were the various aspects of the deal to satisfy everyone’s objectives and to motivate everyone to proceed expeditiously? This will be covered in the next blog post.