The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Monthly Archives: July 2010

FedDev Ontario is Feeding $45 million Through NRC-IRAP to Support SMB Innovation

During a visit to Sernova (TSXV: SVA) today, Gary Goodyear* announced that $45 million of FedDev Ontario money will be deployed through the NRC’s Industrial Research Assistance Program (IRAP).

IRAP has been a relatively effective vehicle for funding life science companies and has taken a prominent role since having been allocated $200 million in the 2009 federal budget. In 2010, NRC-IRAP has funded companies directly, including Isotechnika, Critical Outcome Technologies and Covalon (among others) and indirectly through the Health Technology Exchange (HTX).

Sernova press-released the announcement today, noting that they received $486,000 from NRC-IRAP in the 2009-2010 cycle; but it was unclear whether that funding was part of the FedDev allocation or whether FedDev-IRAP funds were forthcoming in the 2010-2011 cycle.

* Yes, Gary Goodyear is now the Minister of State for FedDev Ontario.

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Monday Biotech Deal Review: July 26, 2010

Things were interesting for Forbes Medi-Tech (or at least its creditors), which saw a new bidder emerge for its assets. A few placements and other deals closed, some lower than expected. See who made it through the heat without wilting this week after the jump…

This Week in the Twitterverse

Here’s some reading for the weekend from our Twitter stream on @crossborderbio:

Q2 Canadian Healthcare Review Shows Biotech Financing Weakness but Some M&A and Regulatory Wins

Data in the Q2 2010 Canadian Healthcare Review from the Equicom Group (co-authored by James Smith, Vice President Healthcare at Equicom and myself) shows a continuation of the weakness in biotech financing that was outlined in last week’s Toronto presentation of Ernst & Young’s Beyond Borders global biotech report. The public Canadian development stage companies raised $72.7 and $187.9 million in Q2 and H1, respectively. The financing total in the first half of 2010 for these companies is 78% of the H1 2009 total but is less than one third of the first half average for 2005 to 2007.

As in the first quarter, the events for the sector were largely positive, including two NCEs receiving positive regulatory recommendations: Theratechnologies’ tesamorelin (Egrifta) from an FDA advisory committee, and Cardiome’s BRINAVESS (iv vernakalant) from a committee of the European Medicines Agency.

In the largest M&A transaction by a Canadian therapeutics company since Shire acquired BioChem Pharma, the Biovail name will be replaced by Valeant after the merger of the two companies. M&A was also prominent among the private Canadian companies as three companies announced in the second quarter that they will be acquired – VisualSonics, Resonant Medical and Verio Therapeutics – followed by Sentinelle Medical in early July.

After over thirty years in this industry, I have learned that the only constant in biotech is change – business models, funding levels, hot technologies, approval hurdles at the FDA, investor strategies, etc. Every company has its own unique set of risks and rewards and management has to balance these in the context of this constantly changing set of environments – not an easy task.

However, simply complaining and waiting for markets to improve is not an option. For companies which cannot afford to run the next clinical programs, shareholder value declines as the cash dwindles and the companies with competitive products and cash move ahead. Reduced R&D spending is an opportunity for those companies which have the clinical data needed to sell or license their products, but the markets for those products can also change rapidly.

Monday Biotech Deal Review: July 19, 2010

Lots of deals this week. Some good news, some bad news. On the good news front, a steady volume of securities and M&A activity is continuing through the summer; and one Canadian firm benefits from the U.S. Defense Departments exploration of RNAi products as anti-virals. On the other hand front, though, a licensing option expired, a liquidation proceeded and marketing rights were voluntarily surrendered. See who’s who after the jump…

This Week in the Twitterverse

Here’s some reading for the weekend from our Twitter stream on @crossborderbio:

E&Y Beyond Borders Biotech Report 2010 — Canadian Biotech Data

I went to Ernst & Young‘s Toronto presentation of this year’s Beyond Borders global biotech report (pdf) this morning. The report is a retrospective of 2009, so many of the data points and trends reflect things you’ve seen already; but as always, I’d encourage you to read the whole thing for good synthesis and commentary.

E&Y’s headline was: 2009 showed strong overall sector performance including global profitability, which was largely buoyed by U.S. profits (good) and by a global reduction in R&D spending (bad).

The Canadian data generally reflected global trends:

  • Canadian biotech revenues were up 9% over last year; but
  • R&D spending in Canada was down 44%; and
  • The number of Canadian public companies was down from 72 to 60

The principal challenges identified in the report are:

  • a higher bar for seeking capital; and
  • big cuts in R&D (21% global decrease)

E&Y describes the new normal as “seeking efficiency,” which is they say is leading to new models:

  • Investors are embracing virtual R&D, failing fast, strategic outsourcing and risk sharing, and (to some extent) open innovation.
  • Pharma wants optionality, out-licensing, commercial milestones, and (ditto) open innovation.
  • Governments and payors are pushing comparative effectiveness, outcomes-based pricing models (where pharma reimburses payors for cost of treating non-responding patients), and formularies; all with the goal of trying to provide increased access with reduced budgets.
  • Biotech companies are turning to creative fundraising (e.g., foundations), “deep pockets” partnerships (e.g., Roche-Genentech pre-acquisition) and strategic outsourcing.

Global deal data was decent: $800m IPOs, $6.6b follow-ons (second-highest of the decade), $5.8b venture, $10b “other” (PIPEs, etc), but the distribution shows a big split between haves and have-nots. There was a sustained high level of licensing deals in the U.S., but a small blip downward for pharma-biotech M&A (likely temporary).

The Canadian financing data was worse: absent Biovail’s debt deal, 2009 would have been among the worst of the decade. VC financing was the worst of the decade at only $21million. The one bright spot was that there were six Canadian licensing agreements each over $100m value.

One interesting dataset followed companies reporting less than one year of cash. This has been a staple of BIOTECanada’s data, and E&Y’s global data reflected the Canadian trends:

  • The steady state (normal) level of companies with less than 1 year of cash is about 25-30%, but 2008 saw a big jump – to over 40% in E&Y’s data (vs up to 70% in BIOTECanada’s 2009 survey).
  • The expectation was to see a lot of culling and consolidation after this jump, and consensus was a 25-33% reduction, but only an 11% reduction was observed (globally and in Canada) and remaining companies regained cash.
  • Of the 44% at the end of 2008 that had less than 1 year of cash, 57% of those still had less than 1 year of cash in 2009, 13% had disappeared, and the remainder had achieved over 1 year of cash, including 9% that managed to get more than 5 years of cash.

Overall, the industry showed significant resilience and continues to demonstrate creative approaches to cash efficient operation, which it will continue to need as the dearth of new VC funds raised means an even wider “valley of death.”

Monday Biotech Deal Review: July 12, 2010

This week saw several interesting deals, including an $85+ million exit for Sentinelle, some “bio-bucks” made good for Cipher, a licensing deal for Amorfix’s vCJD technology, a $10 million malaria deal for BC-based Artepharm and a new name (Medwell Capital) to go along with BioMS’ new business model. Read more of this post

This Week in the Twitterverse

As you may have surmised (from my out-of-office email or from my attempts to get the attention of Delta’s customer service tweeps) I was out of town this week. Still, here’s some weekend reading for you from our Twitter stream @crossborderbio:

Monday Biotech Deal Review: July 5, 2010

Not a bad week for deals, considering the holiday weekend in both Canada and the U.S.. Response Biomedical placed a PIPE with OrbiMed funds, CTI did a follow-on round in Zymeworks and LAB Research took an equity line. Plus a companion diagnostic deal from Aeterna, just as I’m planning for Diagnostics Asia in August. The week’s rounded out with $450k from the NRC and a spin-out from Ondine. Read more of this post

This Week in the Twitterverse

Here’s some reading for the weekend from our Twitter stream on @crossborderbio:

  • RT @IBMResearch: Roche and IBM Collaborate to Develop Nanopore-Based DNA Sequencing Technology – 
  • RT @CBCHealth: Chalk River reactor to restart in July: AECL 
  • RT @ogilvyrenault: Ogilvy Renault’s Rick Sutin quoted in Financial Post article on TSX/TSXV’s strength in cleantech 
  • RT @markrmcqueen @theC100 Another C100 financing: Altos Ventures backs Toronto/SF-based Kontagent for social analytics
  • SV Life Sciences closes Fund V. Aimed for $400m, got $523m. Congrats! Come invest some of that extra $ in Canada! 
  • RT @FierceBiotech: Developers lobby for new federal R&D incentives for rare diseases. 
  • via @genomicslawyer Prometheus remanded to Federal Circuit post-Bilski 
  • RT @davidcrow @bwat: The VC Shakeout – Harvard Business Review: 
  • CTI makes $3.2m follow-on investment in Zymeworks (Vancouver antibody therapeutics co) 
  • Immunovaccine (TSXV $IMV) and Oncothyreon ($ONTY) developing a potential therapeutic cancer vaccine. $ not disclosed. 
  • Where head on = minimalist tiptoeing? RT @genomicslawyer: GLR Post: Bilski and Biotech: Business As Usual, For Now:
  • RT @AHCJ_Pia: coming July 1 
  • Aeterna Zentaris ($AEZS) & Almac working on Cancer Therapy+Companion Diagnostic for LHRH expression. $ not disclosed.
  • Notable awards: Fate Therapeutics wins Red Herring QIAGEN-DxS wins Medscience Txn of the Year
  • RT @ogilvyrenault: OMERS and Dutch pension fund, ABP, Establish €200 Million Fund for Canadian and Dutch Start-Ups
  • New Post: Key Quotes from the U.S. Supreme Court’s Decision in Bilski Shows No Current Impact on Biotech 
  • Solving today’s SCOTUS issues in <140: The President can appoint an oversight board to patent methods of gun use. Ta da! 
  • Everybody relax. Sarbanes-Oxley Act “remains ‘fully operative as a law’ with [the PCAOB] tenure restrictions excised” 
  • Tesla increases # of IPO shares by 20%. from Bloomberg via @cleanlantern
  • @lindaavey still reading, but even if Bilski was seismological I think it’s more “tremor” than “quake”.
  • More Bilski:”all members of the Court agree that the patent application at issue here falls outside of §101 b/c it claims an abstract idea.”
  • More Bilski “while §273 appears to leave open the possibility of some business method patents, it does not suggest broad patentability…”
  • From Bilski: “The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible ‘process.’”
  • Bilski process is unpatentable, but SC disapproves “an exclusive machine-ortransformation test”! Link to full pdf
  • RT @SCOTUSblog: Real-time SCOTUS: Bilski v. Kappos, affirmed, Justice Kennedy writes for the majority.
  • RT @FierceBiotech: AstraZeneca is opening up ~500,000 of its chemical compounds to the Medicines for Malaria Venture.

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