Biotech Case Study
There is significant interest in the pesticide industry to develop products with high loadings of active ingredient to allow the potential for lower doses to be applied to crops which decreases application costs and reduces environmental risks. This is no easy feat because pesticide formulations are finely balance across a host of variables such that any change in one chemical constituent has the potential to compromise product performance, formulation stability or cost point.
Many agribusinesses had been attempting to increase the active ingredient of a particular herbicide for broad leaf weeds for a number of years. These attempts had failed either because the new formulations had been too expensive or because of product efficacy and stability issues.
AgPure wanted to make another attempt to solve these problems but this time decided to retain the services of a third party consultant to conduct the formulation work.
Core R&D activities
AgPure self-assessed that its laboratory formulation work would qualify as core experimental R&D activity. This work involved the raising of hypotheses about how the chemical constituents and their rate of addition should be changed in concert with an increase in the loading of the active ingredient.
In this context, the third party consultant’s advice was critical in respect of the inclusion of a new emulsifiable concentrate that would purportedly prevent the active ingredient from precipitating out of the formulation at the higher dosage rates.
Bench scale formulations were prepared and tested in the company’s pilot reactor under different heating and cooling regimes.
AgPure sought NOAH’s help to determine to what extent the scale up of the formulation in field trials would qualify as part of the suite of experimental activity. While the company understood that some amount of field trials would be necessary to validate the efficacy and the stability of the new formulation in commercial quantities, it was uncertain about where to draw the boundaries in terms of the scale of the field trials.
NOAH worked with AgPure to determine the technical arguments that would justify the number and scale of the field trials that were needed to provide sufficient data across a range of crops and weeds to enable a statistically meaningful conclusion to be drawn. This assessment also had to take into account the impact of environmental factors including climate (temperature, rainfall, humidity etc) and soil type.
New knowledge was generated about the critical inter-relationships between the chemical constituents in the formulation (i.e. excipients) especially the new emulsifiable concentrate that contributed to the high loading of the active ingredient whilst also preventing crystallisation.
Outsourcing R&D to a 3rd party contractor
AgPure was concerned that the outsourcing of the formulation work to a third party consultant might prevent it from making an R&D tax claim. The company was confused about whether it was the consultant that had the R&D tax entitlement, given that this third party had conducted a good proportion of the work.
NOAH reviewed the commercial arrangement between AgPure and the third party consultant and was able to clarify that AgPure was indeed the entity entitled to the R&D tax claim. This was because under the terms of the contract it was the entity that:
• Incurred the financial risk or whose expenditure was at risk
• Had effective ownership of the results (not necessarily just the formal holder of any IP) and
• Controlled the conduct of the R&D.