Drug and Market Development

D&MD: The first thing I picked up was about the difficulties about the company’s share ownership. Would you like to outline the current position?

AG: The company was listed both on the London and New York stock exchanges since, I believe, 1983, when it became a PLC (public liability company). The New York Stock Exchange had much higher level equity requirements for a publicly quoted company than the London Stock Exchange (LSE).

If you’re a company on the LSE, and you’re a PLC, you have a share administrator and a share administration index, which is open to the public, so any member of the public can go into your share administrator and get a list of your shareholders’ names and addresses. People from the animal rights world did that and were able to get hold of weekly updated lists of our shareholders. When shares changed hands, they would immediately write a letter to warn them that, now that they had bought our shares, they could be targeted by animal rights activists. For them, that worked very well because they could target institutional shareholders and private shareholders and subject them to threats and intimidation.

As a company, we thought that was entirely wrong. But, within the UK share marketplace, it is only possible for shareholders to withhold their names if they use nominee accounts—held by banks, for example. But the animal rights activists could get hold of the lists of nominee accounts and very heavily targeted their holders and targeted the major shareholders of banks, such as Barclays or the Royal Bank of Scotland, to stop them holding nominee accounts.

We wondered what we could do about that. In that area, the government was very loathe to change the legislation, which is why we came to look at the United States. Although the US has freedom of information, giving out the names of shareholders is not part of that freedom of information. Certainly, where we now have our financial domicile, shareholders owning up to 5% of the company are totally protected. Above 5%, the names are only available to other shareholders who own above 5%, so they’re partially protected.

We therefore decided to move our financial domicile to the US to protect our shareholders. The easiest way of doing that is to opt to be listed on the American exchanges only. We could also have decided to register in the UK, but that would have cost us a lot more. We set up a shell company in the States—Life Sciences Research. So we have protected our shareholders from the animal rights activists in the UK, who want to close down all animal research in the UK, and we obviously don’t want that to happen.

D&MD: I read that the animal rights activists were claiming a victory because 18 months ago HLS managing director Brian Cass had said that the company would not abandon the UK. But, in reality, it just seems to be a financial move to protect your shareholders. Is that right?

AG: Yes, that’s right. The management, direction, everything about the company remains here (in the UK).

At the time, Brian said: “We will never leave the UK,” because we were trying to get the government to change. We’ve got new legislation from the government—the Criminal Justice Act—and protection of directors’ privacy, which we initiated and other people then supported. That lobby has been enormously successful. If we’d said: “Oh, by the way, we’re thinking of leaving the UK for the US,” we’d have got nowhere very quickly.

Our shareholders were being targeted awfully. Why should anyone who’s a shareholder in a legitimate company have to put up with that stuff?

There have been moves to change the rules of the LSE—and those are supported by the Association of the British Pharmaceutical Industry (ABPI) and the BioIndustry Association (BIA)—but they could take another three or four years to come into force. In the meantime, why should our shareholders have to put up with all that?

D&MD: How did HLS actually get into the situation where the company became such a high-profile target for animal rights activists?

AG: If you go back five or six years, there was covert filming here by an animal rights activist—a girl who worked here on behalf of the BUAV (British Union of Anti-Vivisectionists) for four or five months. During the time she was here, she was fitted with a spy camera—very cleverly done. There was an incident—which should never have occurred—when a technician here hit a dog. It was shown on television a few months later. At that stage, the animal rights people got more and more interested.

An animal rights–sympathetic MP asked a question in the House of Commons just before the summer recess in August 1997, which embarrassed the new Labour Government (which had taken lots of money from animal rights prior to the general election).

This incident was very bad for the company and sales slumped—something like a third of its sales in a 12-month period. We [had] just gone past the sales position that we were in five years ago, before that incident. The company was very profitable before that stage—and was doing very well. But we’ve just returned back to profitability.

That’s how we became a target for the animal rights activists. This company was on the hook. We were a company listed on the London Stock Exchange. We were a serious company with lots of blockbuster products. The animal rights activists had had some success in closing down a dog-breeding establishment and a cat farm, but they wanted to target a much bigger company, so they decided that Huntingdon would be a good choice.

Nothing happened until September 1999. The cat farm was closed down in the August. So they started discussing who to target. Some people wanted to target us. Other people wanted to continue to target small companies.

D&MD: You’ve mentioned what you’ve done to protect the identity of shareholders. What have you done in terms of trying to get the company back to the position it was in before the animal rights activity, in terms of customers?

AG: Companies pulled back for a period. If you had talked to people involved in research or to management in these companies, they would have said: “It could have happened anywhere”. But big companies’ PR said: “Can we afford to be seen to be involved with this company (HLS),” so they pulled back.

However, we’re currently working for 43 of the 50 biggest pharmaceutical companies in the world. That will be in our annual report for last year. We’re also working for other small, emerging companies.

New management came in three and a half years ago and totally rebuilt the business. In the last year, orders grew by 37%. We are now bigger, in terms of orders, than we were five years ago. The company is progressing and progressing very well.

D&MD: What do you offer your customers now that you didn’t before?

AG: We’re continuously developing new services, depending on what companies want to outsource. Our focus is on preclinical (nonclinical) development activities, such as high-throughput screening. It covers a lot of in vitro work.

We concentrate on offering help on lead optimization, and we help with biochemicals, computer modeling, cell cultures, work in the animals, and out the other side with good associations with a number of clinical research establishments. Obviously, we offer preclinical trials—not clinical. Our focus is the development of new medicines, but not clinical trials. We don’t have new offerings as such, as the nature of our business has changed very little. We’re trying to extend at one end and at the other end.

D&MD: This area of activity is reckoned to be one of the bottlenecks in pharmaceutical development, as the number of leads is piling in and there’s a need to test them.

AG: That’s right. Combinatorial chemistry and high-throughput screening have resulted in a great surge of possibilities. We’re getting to the stage where the companies have to consider outsourcing the testing. As the development side of the business is regulatory-driven, they probably can’t add value to that, so many of the companies are thinking it is an area in which they shouldn’t be involved.

As you say, there are lots of leads coming through, but the companies want to get a lot more of them through and into clinical trials, and that’s our business—that’s us.

There will be another upsurge, as biotechnology takes over new compound development—that will allow a lot more compounds to come through—so that there will be many more drugs available in ten years’ time or whatever.

It’s very expensive if drugs fail when they get into clinical trials. Where we are, because of the heritage, the skills, the experience and the expertise of the people we employ—1,100 in the UK and 200 in the US—as companies are not themselves focusing on this area, we have a lot of business from very big companies and many small companies.

D&MD: Given the situation with harassment by animal rights activists, how do you manage to retain highly qualified staff and other support and technical staff, who could move elsewhere?

AG: When companies have looked at restructuring, refocusing what they do, the development side of it is one where they could reduce resources. So, quite often, when there are cuts, quite often they come in that area. As more compounds come through, there are capacity problems internally, and that can help us. If you look at our costs versus an in-house lab’s costs, it is more cost-effective to choose us to take things forward—particularly when you take into account the overheads of a large pharmaceuticals company.

When you ask how, with all this going on outside, we retain staff. We do have world-renowned scientists here but, equally, we have technicians. Our turnover rate over the last few years has been about 15%. If you compare that with other companies, it’s remarkably similar—when you think that you’ve got all this stuff going on outside.

We’ve concentrated on communications about what is going on. We’ve focused on external and internal communications—letting everyone know what is happening, giving security support, counseling, and so on, and that helps. I think that it’s enormously appreciated by the staff. But the truth is that without the staff—and we’re a research and development service organization that relies on its staff—we have to retain that. Whatever we’ve done, it works.

D&MD: Last year, there was a high-profile trial after Brian Cass (Managing Director of HLS) himself was attacked. That must have been extremely worrying for the rest of the staff, if they thought that the animal rights activists could get through security even to the managing director?

AG: Just before Christmas [2000], I was attacked. It’s interesting that, with Brian Cass and myself, neither of us had touched an animal for years. But we had the high profile. I was hospitalized. I didn’t want too much publicity, though, as I have a young family and it was just before Christmas.

Brian was hospitalized, too. But he said: “We’re going to go for this. These people are not going to get away with this. I’m going on the tele[vision] tomorrow.” He was awfully brave.

D&MD: It seemed to be a long time before they caught those involved, wasn’t it? From the outside, it looked as if nothing happened for ages, so it looked as if his attackers had been very devious in covering their tracks.

AG: It took a while to do the necessary DNA profiling, for example. There were three people arrested for that, and the police knew who was involved, but they were only able to get one conviction. In one case, the police found his trainer mark on the ground at the site of the attack, but they couldn’t prove that he was wearing the trainers that night.

D&MD: What about the court case last November?

AG: That was nothing to do with that (attack) at all. The three people arrested—originally there were four, but one had the case dropped—were Gregg Avery, Heather Avery, and a lady called Natasha Dellemagne. There was a huge amount of material confiscated from the house they were living in and the police worked through all that. In the end, although they had appeared on television claiming they had done nothing wrong, they pleaded guilty to two charges (of conspiracy) and were sent to prison for six months. They could be out in two or three weeks.

D&MD: One thing I read about last year was that HLS had decided to pursue lawsuits against animal rights organizations in the US. Has that been successful?

AG: Yes, that’s the RICO legislation, which is the Racketeer Influenced and Corrupt Organizations Act, which is one of the things we lobbied for to be introduced in the UK. It (the lawsuit) was set up by our bankers in the US, Stephens, and there have been agreements with two animal rights groups which limit their protesting against the companies in the US.

D&MD: That’s one way you can counteract the activities of the animal rights activists?

AG: Yes. Judges in the US can say that protesters cannot come within 200 yards of our laboratories. The injunction also limits any protests outside an employee’s house. When they have broken that in the US, the police have come down on them pretty hard.

A couple of other things are going on in the US. For example, a pretty high-level congressman is pushing forward legislation against home terrorists . . . which are doing a lot of damage, causing financial costs to research establishments and colleges, and other people like that.

D&MD: In view of the September 11 attacks in the US, how has the change in attitude toward terrorism affected the animal rights activists, for effectively they were seeking to terrorize you?

AG: I don’t think that anybody has changed their opinion on any of these issues. In the end, it comes down to law and order.

In the UK, we have laws that are actually not protecting people, not protecting staff who are working for a legitimate company, who are doing work which the British government demands. And the work is controlled—the animal work especially—by government. So, we demand that the work is done, but the people who are doing the work can’t. That’s why it comes down to law and order. Huntingdon Life Sciences, science in the UK, then law and order. It then becomes anarchy versus democracy—which government takes very, very seriously. The government has been enormously responsive, as it was quite important, so they changed legislation.

D&MD: What legislation?

AG: At the end of the last Parliament last April, there was a cross-party agreement to amend the Criminal Justice and Police Act in specific areas—one was protesting outside people’s homes. Before that, 20 people could turn up outside your home in balaclavas [hooded headwear] and with placards. That was incredibly threatening. Now, if people turn up, the police can move them on straight away, and arrest them if they don’t move on.

They also changed what you could send people. Before, if you believed something, you could write to someone else, by e-mail or whatever, to threaten. Now, you can only write to protest if a body of people in the UK believe whatever it is. That has changed things dramatically, and the police can make arrests. That has brought things under control to some degree, and the police have made a lot of headway.

Another item was the legislation to protect the identity of company secretaries and managing directors. The government is investigating the way forward with Companies House. That needs a change in the Companies Act, which is being looked at.

There’s also the police bodies. There was always an animal rights information service at Scotland Yard, but they never had anyone regionally to take up information that they disseminated. So the information people were quite frustrated about that. They wanted an operations unit that could help get the information out there. We never thought that we’d get that, but there are now 40 police. We have a committee, chaired by David Blunkett, focusing on this. We have reports from the DTI, explaining how it is affecting business in the UK, and that’s quite helpful.

The government has been incredibly supportive. Even [British Prime Minister] Tony Blair spoke in support in the House of Commons [recently]. That’s the level of commitment, both in terms of legislation and doing whatever else they can do to help. Because the government realized the implications if this (animal rights activity) carried on, we got support. That’s been incredibly helpful in terms of getting changes of legislation—quite dramatic.

D&MD: In terms of alternatives to animal research—and you probably don’t like that phrase—what are they and does HLS pursue them in any way?

AG: We have the biggest range of non-animal methods (or animal alternatives)—although they’re not really alternatives, because legislation does not give you any choice in the matter—which are not accepted by any regulatory authority.

We offer the biggest range of these non-animal methods in Europe. That’s not the impression you get from animal rights—we are “that notorious animal-testing lab.” In fact, we are a product-development company. We are in a situation where, if we didn’t have to test animals, we wouldn’t have to run them. We were involved in developing the very first non-animal test—the Huntingdon Test—20 years ago.

We offer cell culture, computer modeling, in vitro testing—the biggest range in the UK and in Europe.

And, if you want to validate a non-animal test, where else are your going to go (if you’re one of the groups, like the Dr. Hadwen Trust, which is supposedly pushing alternatives)? Yes, there are 500 non-animal methods, of which about four are accepted by regulatory authorities around the world.

D&MD: There is Good Laboratory Practice (GLP). How involved is HLS in promoting this?

AG: Because 99% of what we do here is regulatory, everything we do here is GLP. We are inspected by the Health & Safety Executive every two weeks. We have always passed with flying colors. There has never been a question of that. In truth, because everything we do is regulatory and so everything has to be GLP-compliant, if we weren’t, we wouldn’t have a business. Companies do carry out their own inspections when they are considering giving us contracts.

On the animals side of it, there are the Home Office in the UK, the Department of Agriculture in the States, and the AAALAC (Association for Assessment and Accreditation of Laboratory Animal Care). We are accredited with AAALAC in the US.

D&MD: I came across a Canadian scheme of Good Animal Practice. Is that something that HLS would consider adopting here?

AG: If it was relevant. We more or less have to have AAALAC accreditation in the US, otherwise we wouldn’t do business there. But, of the contract laboratories in Europe, we are the only one that has AAALAC accreditation.

The Home Office inspectors can come in any time, although in truth they tend to make appointments to discuss projects that they are particularly interested in. But while they’re here, they can go anywhere.

On the manufacturing side, we also have GMP (Good Manufacturing Practice)—no problem at all.

D&MD: The Stephens Group decided to sell its 16% stake in HLS. How will that affect the ownership of the company?

AG: Stephens as a company joined us as one of the backers three-and-a-half years ago, when the new management came in. They increased their shareholding in the next three years and were our biggest shareholder with 16%.

The company [HLS] had a loan with NatWest, which had been enormously supportive of the company. NatWest was then taken over by the Royal Bank of Scotland, which maintained that loan until August 2000, but they didn’t want to maintain that because NatWest had been targeted quite heavily by the animal rights guys. Royal Bank of Scotland had a slightly less robust attitude to dealing with animal rights, so they wanted out. Directors of the Royal Bank of Scotland were targeted at their homes on the outskirts of Edinburgh, so it was a difficult time for them. So, Royal Bank of Scotland wanted out.

Then Stephens set up the new loan. It was a five-year loan; £24 million ($34 million). It was not a huge amount of money, but no bank in the UK would touch it, simply because they didn’t want to be targeted. So Stephens said: “We’ll do it.”

Fine, but the animal rights people didn’t like that very much at all. Because of this, the animal rights campaign—the SHAC [Stop Huntingdon Animal Cruelty] campaign—was exported to the States. They made connections with other animal rights groups, and they got quite a head of steam behind their campaign in the States, using similar tactics to over here—what we would call secondary targeting over here. And not just secondary targeting, but also tertiary targeting—for example, Bank of America and Barclays.

Stephens had been enormously supportive in defense of our research— in defense of their customer, which was us—which was great. But they were taking a huge amount of flak—especially at the end of October, when there was a huge demonstration organized worldwide against us.

In the US, Stephens as a group is based in Little Rock, Arkansas, and they had about 350 people turn up to what was the biggest animal rights demonstration in the US. Apart from 350 people turning up in the center of Little Rock, outside the Stephens tower block, about 200 people were arrested, the police used lots and lots of pepper spray, in a robust response. The targeting became very personal, and Stephens said to us: “You’re back to profit as a company. This is difficult now.” Stephens has a retail presence in the States. If you have a High Street presence, these guys (animal rights) will just jump into offices and do all sorts of things.

So we said: “If you want to sell it on, sell it on.” And that is what they did. They have sold the loan and the shares to an interested party—to a party who has now got protection from being a target. If the shares are split into four, then no one will ever find out—which is part of the reason why we’ve moved to the States.

With the loan, that’s bound to become known. So, we’ve arranged the business so that there are fewer and fewer targets for the animal rights. Our end point is to give these people as few targets as possible that affect the business. It has taken a while to get there, but our relocation from the UK, our action with Stephens, and so on, are all going in that direction to protect the business.

D&MD: Is there a way of countering the animal rights organizations’ propaganda, because obviously it is targeted at young people who are looking for something to latch onto?

AG: I couldn’t agree more. Sadly, there are people who are targeted—like Colin Blakemore at Oxford University, Mark Mattfield at the Research Defense Society, Brian Cass, and myself. People who speak out are targeted—targeted very heavily—yet the animal rights people say they want debate. Yet all they do with their activities, especially their more dramatic activities, is stifle debate.

So, why should people join in this? It’s a fairly unpleasant life. Yet, supposedly, they want to discuss.

The worst thing in the world for these (animal rights) people outside is if people come in. We’ve got [BBC news program] Panorama coming in on Friday and they’re allowed to film anywhere. We’ve got nothing to hide here. They can visit the animal houses and they’ll see good animal welfare. Their [animal rights] argument loses all credibility. But, if you happen to see their propaganda, it’s horrendous. Yet, with freedom of speech, you’re allowed to do this stuff. Some of it is beyond the law, especially if you start giving out people’s names and addresses, but they don’t have any money, so it’s not even worth trying to shut them down. We have succeeded in shutting down some of their Web sites, but they just move them on to censorship-free Web sites, where nothing can touch you. There’s absolute crap on these Web sites, but people believe it if they want to.

So you ask how can you counter that. There is a coalition going forward in the UK of interested parties. We’re involved, as is the ABPI, the BIA, other big companies, the Medical Research Council, the Wellcome Trust, major research charities association—anyone you might imagine to be interested in biomedical research in the UK. A MORI Poll is being conducted and focus groups organized. This will form the focus for a campaign by a communications company.

If you want, one of our other objectives is to pull together a coalition campaign with many interested parties to support the coalition—which makes it quite a powerful coalition of people—and that’s going forward.

That’s one thing: We’ve taken a stand of being a target, which has its own problems. We were open enough to allow three or four documentary crews ’round and we did that to allow us to make the politicians aware of what’s going on. Now, we’re in a situation where we’ve got political awareness, we’ve got some changes to legislation, [and] we want more changes to legislation.

We’d like to work with the police and the Crown Prosecution Service, of course, and this communications campaign is on top of that. There aren’t many people in the UK who will stand up and talk. There’s probably 100,000 people involved in research in the UK, and then, if you put the marketing people on top of that, the pharmaceutical industry is enormous. We’ve got to get that huge cohort of people to think that they can do something about it—number one for your job. Then, with the communications campaign running alongside that, what was the best way of informing different areas of the public that we identified.

I don’t mind if people disagree with animal research—I think that people who do that don’t know what they’re talking about. That’s my opinion. But I respect their point of view. Sadly, they don’t respect mine.

This interview was conducted by D&MD contributor Alex Crawford on March 6, 2002. An article examining Good Animal Practices, as well as a full profile of Huntingdon Life Sciences, appear in the July 2002 issue (Vol. 13, #7) of D&MD Newsletter.

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