Cancer Research UK has launched a £25m investment fund with the European Investment Fund which will pay for early-stage research into cancer drugs.

The fund, called the CRT Pioneer Fund, is being backed by three investors – Cancer Research UK’s commercial arm, Cancer Research Technology (CRT), the European Investment Fund (EIF) and fund management firm Sixth Element Capital.

All three organisations have collectively invested £25m so far. Dr Keith Blundy, CEO of Cancer Research Technology said all three may invest a further £25m at a later stage.

Dr Blundy told civilsociety.co.uk that the fund would seek to offer a commercial return, but there was "inherent risk" in investing:

“The model is to take an asset, a drug development project, and licence it to pharmaceutical companies as developers. If the drug gets through to patients you’ll get royalties.

“But there is inherent risk. Only one in 20 drugs make it to market. But if it makes it, it’s quite a lot of money.”

Any returns which CRT makes from the investment will go back to Cancer Research UK.

Blundy added that there would be room to enlarge the fund with other investors if they wanted to be involved.

Commenting on the fund’s focus, Dr Blundy said: “The creation of this landmark fund addresses the problem of funding the development gap which is restraining cancer drug development in the UK.

“The gap has appeared because investment from industry has moved away from early stage discovery and there’s less funding for small biotechnology firms who previously helped bridge the gap between academia and pharmaceutical companies.

“This important investment means we can take forward the most innovative approaches using our in-house drug discovery and development capabilities, to progress promising treatments from the lab all the way to clinical trials, translating our world-class scientific research into new treatments more quickly.”

Richard Pelly, EIF chief executive, added: “This investment now becomes the largest technology transfer operation partnered by EIF to date.”

CRT and EIF have worked closely with a specialist fund management firm, Sixth Element Capital LLP (6EC), to create and implement the fund.  6EC will establish committees of independent experts to provide guidance on the investment and commercialisation of individual projects.  International law firm Reed Smith acted as sole legal counsel on the establishment of the fund.

Dr Blundy said 6EC’s management fee is much more modest than other funds of a comparable size. He added that 6EC, which is a new firm, was backing the fund out of its own pocket.