The Cross-Border Biotech Blog

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

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 – http://cot.ag/9vbj8l 
  • RT @CBCHealth: Chalk River reactor to restart in July: AECL http://bit.ly/d66r72 
  • RT @ogilvyrenault: Ogilvy Renault’s Rick Sutin quoted in Financial Post article on TSX/TSXV’s strength in cleantech http://bit.ly/cFAXr2 
  • RT @markrmcqueen @theC100 Another C100 financing: Altos Ventures backs Toronto/SF-based Kontagent for social analytics http://fb.me/zG06wkZQ
  • SV Life Sciences closes Fund V. Aimed for $400m, got $523m. http://bit.ly/9SSCPv Congrats! Come invest some of that extra $ in Canada! 
  • RT @FierceBiotech: Developers lobby for new federal R&D incentives for rare diseases. http://bit.ly/bXxgeW 
  • via @genomicslawyer Prometheus remanded to Federal Circuit post-Bilski http://bit.ly/cuAGFH 
  • RT @davidcrow @bwat: The VC Shakeout – Harvard Business Review: http://bit.ly/bRmkvw 
  • CTI makes $3.2m follow-on investment in Zymeworks (Vancouver antibody therapeutics co) http://bit.ly/aQWhy5 
  • Immunovaccine (TSXV $IMV) and Oncothyreon ($ONTY) developing a potential therapeutic cancer vaccine. $ not disclosed. http://bit.ly/avjP69 
  • Where head on = minimalist tiptoeing? RT @genomicslawyer: GLR Post: Bilski and Biotech: Business As Usual, For Now: http://bit.ly/9isN5O
  • RT @AHCJ_Pia: Healthcare.gov coming July 1 http://bit.ly/b65NcV 
  • Aeterna Zentaris ($AEZS) & Almac working on Cancer Therapy+Companion Diagnostic for LHRH expression. $ not disclosed. http://bit.ly/bnCdXa
  • Notable awards: Fate Therapeutics wins Red Herring http://bit.ly/9vU9dp QIAGEN-DxS wins Medscience Txn of the Year http://bit.ly/9ZiUaP
  • RT @ogilvyrenault: OMERS and Dutch pension fund, ABP, Establish €200 Million Fund for Canadian and Dutch Start-Ups http://bit.ly/98EDOe
  • New Post: Key Quotes from the U.S. Supreme Court’s Decision in Bilski Shows No Current Impact on Biotech http://ow.ly/17UTQB 
  • 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” http://bit.ly/aOwHnG 
  • Tesla increases # of IPO shares by 20%. http://bit.ly/cgsKy4 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 http://bit.ly/aKIjCx
  • 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. http://bit.ly/bN8Nc4

Key Quotes from the U.S. Supreme Court’s Decision in Bilski Shows No Current Impact on Biotech

Many expected the U.S. Supreme Court’s decision in Bilski to have a far-reaching impact on methods patents, including biotechnology diagnostics and drug development. That turned out not to be the case, with the Court deciding on narrow grounds that the actual patent at issue was improperly granted and reminding the Federal Circuit that it prefers common law minimalism over broad rule-setting in this area.

A few key quotes give you a sense of where the Court reached consensus. Here was their message to the patentee:

“[A]ll members of the Court agree that the patent application at issue here falls outside of §101 because it claims an abstract idea.”

Here was their message to the Federal Circuit: 

“The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible ‘process.’”

And here was their message to future patentees:

“while §273 appears to leave open the possibility of some business method patents, it does not suggest broad patentability of such claimed inventions.”

Those interested biotech patenting will need to keep an eye on directly-applicable fact patterns.

Monday Biotech Deal Review: June 28, 2010

We follow a number of trends here at the blog, and two of them showed up as Canadian deals this week. Add those to the Biovail-Valeant merger, Æterna’s offering and a whole slew of commercial deals, and it’s been a pretty big week in Canadian deal-making.

check it out after the jump…

This Week in the Twitterverse

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

Monday Biotech Deal Review: June 21, 2010

This week saw a slew of licensing and commercial deals, including HIV programs for MedMira in Nigeria and Dignitas in Malawi. On the securities side, Aquinox’s $25 million B round headlined a $47 million week. Rounding out the week is Enerkem’s demonstration project funding, which will go towards reducing emissions from biorefineries.

Read more of this post

This Week in the Twitterverse

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

Health Canada’s Pharmacovigilance Program Provides Consumers with (Consumer-Unfriendly) Form for Direct Reporting of Adverse Effects

Health Canada added a potentially valuable pharmacovigilance tool to its post-market surveillance arsenal today — a web form for direct consumer reporting of adverse drug events.

Unfortunately, the implementation is terrible. The goal was “to make it even easier for consumers to report side effects to drugs and other health products,” but I doubt most consumers would make it past the first page.

Why? The form provided to consumers (direct link) is the exact same form that is provided to physicians (direct link) for voluntary reporting. It is hard to fill out. After clearing the intro screen and the privacy warning, I got stuck trying to figure out what I should use for my “Identifier,” which helpfully notes “for privacy purpose do not use the patient’s name.”

Once If you get to the second page, a note at the top informs you that not all fields are required, just the ones “that have a red asterisk displayed next to them.” Here’s an idea: how about starting with the mandatory fields on the first page?

The best advice, at this point, is in the press release:

Health Canada reminds consumers that all side effects, especially serious ones, should be reported immediately to a health professional. Consumers are encouraged to seek assistance from their health professional to report a side effect to Health Canada.

There are many ways direct reporting could work well: a useable web form, a Twitter hashtag, etc. Hopefully MedEffect will give this some more thought and help make direct reporting a viable supplement to the Canada Vigilance Program.

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Monday Biotech Deal Review: June 14, 2010

This week saw a series of transactions bringing Patient Home Monitoring to the TSXV with an accompanying private placement and a shiny new SEDA from (who else) Yorkville; ConjuChem is (pending court approval) on its way out of CCAA with some cash on hand; and the struggle between Northstar and its ex-CEO continues in the dramatic form of a directors circular. Check out these developments plus a full crop of other Canadian deal activity after the jump…

This Week in the Twitterverse

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

Biotech’s Murky IPO Window Increases M&A Attractiveness

A recent press release from Burrill & Company points out that only 1 of 8 U.S. biotech IPOs in 2010 is currently trading above its IPO price. IMRIS was the last Canadian biotech IPO, completed in November 2007 at $6.00, and it is currently trading at $5.50 after dipping under $2 in late 2008. Facing these difficult public markets and limited treasuries, it is not surprising to see Canadian VCs opting to sell companies in their portfolios, including the recent sales of two companies with revenues. Toronto’s Visualsonics was sold to U.S.-based SonoSite for about 2.4 times Visualsonics’ trailing 12-month sales of $30 M. Montreal’s Resonant Medical was sold to Swedish company Elekta for about 3 times expected 2010/2011 revenue of $10 M.

Monday Biotech Deal Review: June 7, 2010

This week saw a resurgence of deal activity on the Canadian landscape. Lots of good news here, including Resverlogix’s [$9.2m] haul and a $30m exit for Montreal’s Resonant Medical.  Not all was sunny though: Cynapsus downsized its unit price and Amorfix just downsized, while the Bankruptcy and Insolvency Act got its own workout (har) this week. Read more of this post

This Week in the Twitterverse

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

Biotech IPOs Past — 10 Years After the Biotech Venture Capital Boom of 1999-2001

You often hear people in this industry reminiscing about biotech booms and praying for another IPO window to open. The three most recent boom/windows were in 1995-1996, 1999-2001 and 2003-2005, each of which was impacted by both positive external market forces and a driving factor within biotech. The most spectacular boom/window was in 1999-2001, with the external trigger being the dotcom bubble and the internal trigger was two emerging technologies, genomics and proteomics, which had potential game-changing attributes that appealed to many dotcom investors. Co-authored with James Smith, Vice President Healthcare at The Equicom Group, this report looks back at the 1999-2001 boom/window, the IPOs and their subsequent performance.

Welcome to New Cross-Border Biotech Blog Contributor Wayne Schnarr

I am very excited to introduce Wayne Schnarr as a contributor to the Cross-Border Biotech Blog. Wayne has a ton of industry experience and always has smart things to say, as you will see for yourselves in a minute. Welcome!

Monday Biotech Deal Review: May 31, 2010

Things are picking up a bit this week, with a few new financings, some collaboration agreements and a deal in the venture capital community that coincided with the CVCA’s annual meeting. Read more of this post

This Week in the Twitterverse

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

Patent Cliff Will Not Save Biotech: Abbott Buys Indian Generics Company Piramal Healthcare

I often hear how the upcoming loss of patent protection for current blockbusters creates an insatiable demand at pharma companies for new pipeline products from biotechs. Here’s an example from 2007. Here’s one from last week. This is not true. Upcoming loss of patent protection creates a insatiable demand for revenue, but new products are not the only source of new revenue.

Abbott’s $3.7 billion deal for a unit of India’s Piramal Healthcare last week is a perfect case in point. This deal, which follows Abbott’s license of a slew of products from Zydus Cadila, will feed the company’s new “established products division.” Abbott’s purchase of Solvay in February also built its emerging markets revenue, which now accounts for over 20% of the company’s business.

Abbott is far from alone: Sanofi is the biggest generics manufacturer in Latin America, Pfizer also has an established products division, Novartis is diversifying into eyecare and has long sold generics, Merck is into follow-on biologics and GSK tapped South Africa’s Aspen Pharma for emerging markets growth through branded generics. These alternatives look even better as payors worldwide are setting more demanding standards for reimbursement, the placebo effect is mysteriously strong, and personalized medicine makes clinical trials even more expensive.

My bottom line? Emerging markets and generics opportunities create plenty of growth, thank you very much, with a far lower risk profile than most product in-licenses or biotech acquisitions (even the option deals). As big pharma gets more comfortable with “established products” and biosimilars, biotechs are going to have to demonstrate even higher value. Plenty of companies are being built and funded with that in mind; but anyone counting on pharma’s desperation will be disappointed.

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Monday Biotech Deal Review: May 24, 2010

The lead up to the long weekend here in Canada (Victoria Day, in case you’re wondering where we all went) saw only one new financing and two new commercial deals. A few more deals that were launched earlier closed this week, including MethylGene’s SR&ED financing; but stay tuned for an uptick next week as we move fully out of earnings reporting doldrums. In the meantime…

Read more of this post

This Week in the Twitterverse

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

Trends Update — Synthetic Biology: JCVI’s First Synthetic Cell (or, A Goat Walked Into a Lab)

World, meet "Mycoplasma mycoides JCVI-syn1.0", 1.08-Mbps of synthetic life.

Today’s issue of Science contains an article by scientists at the J. Craig Venter Institute, who have synthesized a Mycoplasma genome from scratch and transplanted it to a recipient cell. Those recipients have since reproduced using entirely the synthetic DNA.

In the quest to create novel organisms from scratch, Mycoplasma have been the tools of choice. Their small genomes suggest that they stick to the minimum genetic requirements for life (though they may contain unexpected complexity). Still, a megabase is a lot of DNA to assemble, so the JCVI gang uses a cool trick that combines long synthesized oligonucleotides by alternating between yeast and bacterial hosts to stitch the oligos into longer and longer segments. The host cells are controlled by, and exhibit the distinct characteristics of, the synthetic genome.

Venter, noting that the strain they made is a Mycoplasma that exists only in goats, is happy to illustrate the containment features:

"Unless a goat walks into the laboratory, or somebody walks out of our laboratory and injects a goat, we’re probably pretty good."

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Monday Biotech Deal Review: May 17, 2010

Lots of quarterly earnings announcements this week means a dip in deal activity. Still plenty of interesting stuff, though, including a new partnership and new listing plans for Tekmira. Meanwhile, for Medicago it’s graduation day, with a $10m present standby deal from Mom and Dad Yorkville Advisors on offer as it takes its symbol to the TSX big board from the venture exchange.

Read more of this post

This Week in the Twitterverse

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

Grand Challenges Canada to Mobilize $225 Million Over 5 Years For Global Health

A new nonprofit organization called Grand Challenges Canada has been formed to deploy the Canadian government’s $225 million Development Innovation Fund. In a fabulous marriage of theory and practice, Grand Challenges will be run by Peter Singer, who is also the Director of the McLaughlin-Rotman Centre for Global Health. It also draws on an impressive international scientific advisory board.

The program will identify and launch five “grand challenges” over a 5-year period. The first is

“to create a new class of point-of-care (POC) diagnostics that will be easy to use, low cost, multiplexed and able to assess disease stage and provide information on prognosis.”

Information on the RFP, policies and forms to apply for funding are here, and the deadline for this round of applications is July 12, 2010 at 11:59 pm EST.

Grand Challenges Canada is independent, but is being run in partnership with International Development Research Centre (IDRC), the Canadian Institutes of Health Research (CIHR), the McLaughlin-Rotman Centre for Global Health and with support from the Bill & Melinda Gates Foundation.

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Monday Biotech Deal Review: May 10, 2010

Some people were on the move this week — not only did Sanofi Canada announce 70 R&D job cuts, but BioMS took on a new banker and Labopharm, CardioComm and GeneNews all get new faces. Despite the fact that it seemed half of the country’s companies and deal-makers were at BIO in Chicago this week, there was still a fair amount of positive deal activity including numerous private placements, commercial agreements and a bit of M&Eh.

Read more of this post

This Week in the Twitterverse

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

  • RT @PharmProEditor: Intellipharmaceutics plans Effexor generic http://bit.ly/aKNOMp
  • RT @CVCACanada: VC deals: Montreal based Enerkem announces funding from Alberta Energy http://bit.ly/aznzgC
  • BELLUS Health ends NC-503 diabetes development program following Phase II results http://viigo.im/3q8b
  • Aeterna Zentaris Receives Orphan-Drug Designation from the FDA for AEZS-108 in Ovarian Cancer http://viigo.im/3q7M 
  • RT @tdmckee: A paper from my lab is online in Nature, and today’s Toronto Star! http://bit.ly/9lwRSa << Awesome! Congrats!
  • RT @nvca LP Panel: there is optimism for venture equal to late 1990s
  • SickKids is building a $400 million, 21-storey, 750,000 square foot Research & Learning Tower at Bay & Elm http://viigo.im/3psl
  • Sanofi-aventis Canada announces 70 jobs cut by July, criticizes Canadian IP and access to medicines policies. http://viigo.im/3prD
  • RT @FierceBiotech: Live from BIO 2010: Hamburg discusses advancing regulatory science. http://is.gd/bVgWp
  • RT @jensmccabe USAToday joins hospital stats game – see hospitals death/readmission rates for heart attack, heart failure, pneumonia at health.usatoday.com 
  • RT @SternIR Burrill: 09 best yr ever for biotech capital raise – just when Burrill etal were declaring biotech dead of capital starvation. #bio2010
  • BioMS is changing its name to MedWell Capital and hiring ex-Desjardins banker Nitin Kaushal as EVP/MD http://bit.ly/a8uNNp
  • RT @CVCACanada: From out of the ashes – blog by @davidcrow on Canadian VC rebirth http://bit.ly/9daSeQ via @startupnorth 
  • E&Y: 7 of 9 deals over $1B involved non-US buyers #bio2010
  • New Post: Biotech Trends Update: Non-Dilutive Financing and Fundraising by Partnering with Nonprofits http://ow.ly/17fTXj
  • RT @FierceBiotech: E&Y: In 2009, 14 percent of biotech companies closed their doors. Far less than the 25% to 33% expected..
  • Report on the Non-Dilutive Financing and Fundraising by Partnering with Nonprofits panel at #BIO2010 http://ow.ly/1GuqA
  • RT @curlygh RT @BIOConvention: Our nation faces growing racial disconnect between those that seek care & those that provide it. -Surgeon Gen
  • Latest data on biotech jobs and state initiatives from BIO and Battelle session at BIO 2010 http://ow.ly/17fGuN
  • Note to #bio2010 peeps from warmer climes: not too late to mutate. Mammoth hemoglobin released O2 equally at all temps! http://bit.ly/c36ggv

BIO 2010 Summarized In Song

To the tune of “It’s a Small World“…

It’s a world of swag
A world of beers
It’s a world of sessions
And a world of careers
There’s so much that we share
That the Fail Whale’s not rare

It’s a small world after all

There is just one room
Where the keynote’s done
BIO’s counter-programming
Reporters shunned
Though the press corp’s outside
Twitter can’t be denied

It’s a small world after all… [Chorus]

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