The Cross-Border Biotech Blog

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

Monthly Archives: August 2011

Monday Biotech Deal Review: August 29, 2011

Welcome to your Monday Biotech Deal Review for August 29, 2011.  In addition to the usual private placement announcements and various commercial transactions, the ongoing hostile bid for Afexa Life Sciences was in the news, with the board of Afexa confirming its recommendation to shareholders to not tender their shares pursuant to the unsolicited bid by Paladin Labs.  Read on to learn more.   Read more of this post

Q2 2011 in Canadian Healthcare – Commercial Events were the Focus

There is a tendency to focus on clinical and regulatory events when looking at the biotech sector. However, the list of sector events in Equicom’s Q2_2011 Canadian_Healthcare_Review (which I co-author with Ross Marshall, Senior VP at Equicom) shows a greater number of commercial events, including mergers, acquisitions, in-licensing, partnering, R&D agreements and product launches. In the initial weeks of Q3, commercial events have continued to be the focus.

From a financing perspective, it was very similar to Q1. Gross proceeds of equity financings completed in Q2 totalled $157.3 million, with 5 companies completing financings over $10 million: $46.01 million – Leisureworld Senior Care; $34.49 million – MethylGene; $17.40 million – Medicago; US$13.07 million – YM BioSciences; and $12.60 million – Resverlogix.

The financings for public development stage companies in the first six months of 2010 and 2011 were almost the same at $187.9 M and $200.9 M, respectively. There were 16 financings under $10 million with total proceeds of $33.7 million in Q2, versus 25 financings for $37.8 million in Q1.

We often group companies according to their product focus – therapeutics, drugs & diagnostics, services, and others. The companies could also be grouped according to their revenues and profitability. The following assessment was based on a review of the most recent financial statements from each company and occasional assumptions by the authors on performance expected in 2011.

  • Revenues – 50 public companies, or about one third of the public Canadian healthcare group, are anticipated to have revenues of $5 million or more in 2011.
  • Profitability – 25 of these 50 companies are profitable based on positive net income or, in the case of some REITs, on positive AFFO (adjusted funds from operations). Additional companies have positive EBITDA or cash flow from operations and are close to profitability.
  • Dividends and distributions – 10 companies in the sector provide dividends or distributions, important attributes to some investors.

There is something in Canadian healthcare for all types of investors.

Valuation and Other Biotech Mysteries – Part 11: Changes in Pharmaceutical Industry Product Portfolios and Strategies

[Ed. This is the eleventh part in Wayne's series. You can access the whole thing by clicking here. Please leave comments or questions on the blog and Wayne will address them in future posts in this series.]

As described in the prior post, the modern pharmaceutical industry has evolved from the patent medicine companies selling herb and alcohol combinations into an industry developing complex and personalized medicines such as gene and cell therapy. The first blockbuster drug, Tagamet (cimetidine), developed by Smith, Kline & French (SK&F) is a great base for a case study of various industry strategies. Read more of this post

Monday Biotech Deal Review: August 22, 2011

Welcome to your Monday Biotech Deal Review for August 22, 2011.  This week’s deal review is brought to you by Norton Rose OR LLP articling student Keldeagh Lindsay, who will be with us during his articles and assisting in the deal review.  Steven Zuccarelli has done a great job over the summer, and we wish him well in his final year at law school.  

There has been quite a lot of activity over the previous two weeks, with significant equity investment activity, debt financings (public and private), and mergers and acquisitions on the go.  Read on to learn more. Read more of this post

Valuation and Other Biotech Mysteries – Part 10: Some Pharmaceutical Industry History

[Ed. This is the tenth part in Wayne's series. You can access the whole thing by clicking here. Please leave comments or questions on the blog and Wayne will address them in future posts in this series.]

Very few novel drug development companies have made, or are likely to make, the transition to profitable and sustainable entities which market their own drugs in competition with pharma companies. Most companies have chosen to license their products to larger pharma companies, generally during the clinical development program. In addition, all drug development companies are potential acquisition targets. Since the larger pharma companies play such an important role in the fate of the smaller companies, it is important to understand both the history and current status of the pharmaceutical industry. Read more of this post

Friday Science Review: August 19, 2011

Host-Cell Nucleolin, A Helping Hand for RSV

University of British Columbia ♦ University of Toronto ♦ Published in Nature Medicine, August 14th, 2011

Human respiratory syncytial virus (RSV), a Pneumovirus that is widely responsible for respiratory tract infections worldwide, appears to use host-cell nucleolin for viral entry. After making the discovery, researchers corroborated their finding with several experiments to show the importance that nucleolin plays in RSV infection. Neutralization experiments with nucleolin antibodies in vitro decreased RSV infection, while competition experiments with soluble nucleolin placed in cell culture medium also inhibited the virus from passing into cells. Interestingly, insect cells that are typically immune to the virus could be made susceptible through the transfection of human nucleolin. Mice given a prophylactic dose of RNAi, knocking down nucleolin in the lung, exhibited significant reduction in RSV infection. RSV interacts with host-cell nucleolin with a glycoprotein found in the viral envelope. There is currently no effective therapeutic or vaccination for the virus. Palivizumab (manufactured by MedImmune) is available for patients considered to be at high risk, but remains expensive.

Calpain-Mediated Degradation Spurs Autoimmune Disease

University of Toronto ♦ Samuel Lunenfeld Research Institute ♦ Toronto General Research Institute ♦ Princess Margaret Hospital ♦ Others..

Published in Nature Genetics, August 14th, 2011

The human Lyp protein tyrosine phosphatase (Lyp620W) plays a critical role in immune homeostasis by regulating T-cell antigen receptor signaling. A mutant of Lyp620W, Pep619W, is associated with increased risk of autoimmune disease. The mechanism by which this mutation promotes autoimmune disease is largely unknown. Recent findings suggest that degradation of Lyp protein is at the root of immune dysfunction. When analyzing Lyp transcripts in both wild-type mice and mice containing mutant alleles of the gene encoding Lyp620W, researchers found that transcript levels remained the same despite mutation. However, in the case of mice homozygous for the mutant allele, there was a drastic reduction in Pep619W protein. It appears that the enzyme calpain-1 degrades mutant versions of the protein, preventing Lyp protein from regulating the immune system. In the absence of functioning Lyp620W, lymphocyte and dendritic cell hyperresponsiveness ensues, leading to deleterious disease conditions.

Also see this review (written by U of T researchers and published in Trends in Biotechnology) on the use of biomaterials to create supportive micro-environments for the transplantation of neural stem/progenitor cells into the central nervous system..

Friday Science Review: August 12, 2011

Acquisition of Animal Gene by Horizontal Transfer

University of Ottawa ♦ University of British Columbia ♦ University of Illinois ♦ Albert Einstein College of Medicine

Published in Current Biology (Cell Press), August 9, 2011

Researchers have recently made a rather surprising discovery — an animal gene that appears to have been taken up by the microsporidian Encephalitozoon romaleae. This is the first time that an animal gene has been documented in a microsporidian genome. Microsporidians often parasitise arthropods, and have been known to take up foreign DNA from bacteria through a process known as horizontal gene transfer. New DNA allows microsporidians to gain new functions that promote survival. After carrying out a screen of the microsporidian genome they found but one candidate animal gene, which was identified as a purine nucleotide phosphorylase (PNP). Phylogenetic analysis later revealed that the gene was likely of arthropod origin and could have been taken up by E. romaleae after it parasitised an insect.

Genetics Underpinning ALS

University of Montreal ♦ Published in PLoS Genetics, August 4, 2011

Using the zebrafish as a model, researchers have elucidated the connection between some of the common mutations associated with amyotrophic lateral sclerosis (ALS). Mutations in the genes SOD1 and TARDBP have been known to cause ALS, as has a mutation in the Fused in sarcoma gene (FUS). In this study researchers show that mutations in the FUS gene cause a loss of function; they cannot rescue the motor phenotype caused by a knockdown of the zebrafish Fus gene. It seems that the FUS and TARDBP mutations share a common pathogenic mechanism, as there co-expression did not exacerbate the phenotype observed when either were expressed alone. Findings indicate that SOD1 works through a second distinct mechanism however, as wildtype SOD1 was unable to rescue the phenotype observed after overexpression of FUS and TARDBP mutations.

Balancing Host Defense and Wound Repair

University of Toronto ♦ Hospital for Sick Children ♦ Benaroya Research Institute ♦ University Hospital Erlangen

Published in Immunity (Cell Press), August 3, 2011

Tak Mak’s lab provides some new insights into the mechanism by which thymic stromal lymphopoietin (TSLP) modulates the immune system in order to curb inflammation and launch the healing process in the colon. Using a knockout mouse model researchers illustrate that the absence of TSLP does not increase the severity of colitis, but instead prevents healing and recovery from the disease. Mice without the TSLP gene exhibited increased concentrations of an enzyme known as neutrophil elastase and decreased expression of secretory leukocyte peptidase inhibitor (SLPI). Typically SLPI serves to stomp out some of the immune response following insult to the colon by acting as a serine protease inhibitor and inhibitor of NF-κB. In the absence of TLSP signaling, however, it seems SLPI is downregulated, preventing mucosal healing.

Monday Biotech Deal Review: August 8, 2011

Welcome to your Monday Biotech Deal Review for August 8, 2011.  The previous two weeks witnessed a flurry of investment activity, including the filing of final prospectuses by each of Lorus Therapeutics and Atrium Innovations in respect of equity and debt offerings, respectively.  Read on to learn more.  Read more of this post

Friday Science Review: August 5, 2011

High-Throughput Platform for Single-Cell qPCR

University of British Columbia ♦ BC Cancer Agency ♦ Centre for Translational and Applied Genomics

Published in PNAS, August 1st, 2011

An achievement in microfluidics this week as researchers from the University of British Columbia report on the development of an integrated microfluidics device that performs high-throughput mRNA analysis on a chip. The platform is capable of analyzing hundreds of single cells per run, and operates on a nanolitre scale, offering very high sensitivity. The goal of advanced microfluidics systems for single cell analysis has been to incorporate each step of the process into seamless automation. Although current devices provide the necessary high-throughput qPCR readout, they require micropipettes or cell-sorting to trap cells for analysis on the front-end. This novel device does it all, and is the first example of a fully integrated platform for single-cell qPCR on a chip. Among the other advantages of this platform are improved performance, reduced cost, and scalability.

Melarsoprol Exacerbates HIV-1 Infection

Laval University ♦ Sherbrooke University ♦ Published in Journal of Molecular Biology, July 29th, 2011

Recent findings suggest that melarsoprol, a drug commonly used to treat sleeping sickness in Africa, improves the HIV virus’ ability to replicate in human cells. Due to the fact that Trypanosoma brucei infections are often seen along with HIV-1 infection, researchers were curious to investigate potential interactions between the two pathogens. In doing so they found that melarsoprol can stimulate the replication of several strains of HIV-1 in dendritic cells. These findings raise concerns for patients receiving the drug because it can exacerbate disease conditions and may have implications on disease transmission. Melarsoprol seems to boost HIV replication by inhibiting a certain cellular restriction factor, which under normal circumstances exerts a slightly antagonistic effect on the HIV reverse transcription process.

Recombinant BCL-X Enhances Pre-Implantation Embryo Development

University of Toronto ♦ Mount Sinai Hospital ♦ Washington University in St. Louis

Published in PLoS ONE, July 20th, 2011

More automation this week with the introduction of a fully-automated robotic system for high-throughput microinjection of pre-implantation embryos. Infertility is on the rise, and as more and more couples require the services of IVF doctors, there is more demand for treatment options that can continue to increase the success of IVF in the clinic. This new system combines motion control, computer vision microscopy, and micro device technology to accurately and efficiently deliver small quantities of recombinant material. Researchers injected the anti-apoptic agent BCL-X into mouse zygotes, and found that they could enhance the viability and pre-implantation development of mouse embryos grown in sub-optimal in vitro conditions. The system could offer a new treatment paradigm for couples experiencing difficulty with IVF.

Valuation and Other Biotech Mysteries – Part 9: Retail Investors

[Ed. This is the ninth part in Wayne's series. You can access the whole thing by clicking here. Please leave comments or questions on the blog and Wayne will address them in future posts in this series.]


In addition to the private institutional VCs, there are the retail investors who are willing to take similar risks with both private and public companies. I will focus on Canadian retail investors in this post.

Retail investors who invest in private companies usually do so through a fund which offers tax incentives. I have discussed flow-through funds, which are not currently available to biotech companies, in a previous series of posts. Historically, the largest investment vehicle has been the LSIFs or labour-sponsored investment funds, which are now being referred to as RVC funds or retail venture capital funds. There are a number of fund managers and the tax incentives vary by province.

Read more of this post

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