The Cross-Border Biotech Blog

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

Tag Archives: BIOTECanada

Reactions to Canada’s 2010 Federal Budget

Reaction in the biotech and innovation community to the 2010 budget was generally positive, since they (we) got something in a year when most groups got nothing.  As Rob Annan put it over at Researcher Forum:

“What a difference a year makes… Funding increases, though relatively small, are made more significant by the context of spending restraint evidenced elsewhere in the budget.”

There was also much celebration of the demise of Section 116, including from BIOTECanada (pdf), and the CVCA, both of which had recommended the change, and from Communitech, the organization that represents Waterloo Region tech companies.  Mark McQueen over at Wellington Capital blasphemously refuses to hail the event as Our Salvation, pointing out that (1) there has been a lot of investment by U.S. VCs even with 116 in place, (2) U.S. VCs aren’t having a great year either, and (3) those that are may not be as excited as we hope about early-stage Canadian deals.

Directly funded organizations wrote prompt thank-you notes:

  • TRIUMF, slated to receive $222 million over the next 5 years for its work on particle and nuclear physics, described the budget as a “firm commitment to science & technology.”
  • The Canadian Youth Business Foundation (CYBF), seeing its $10 million in funding, characterized the move as an “investment in young entrepreneurs.”

Others, perhaps encouraged by this year’s $75 million allocated to Genome Canada following last year’s kerfuffle, have been quick to point out other flaws they perceive in the budget as well:

Current Data on the State of Biotech in Canada

Canadian moneyEquicom published a report recently that takes a comprehensive look back at 2009 at the Canadian public healthcare sector.  Here’s the link to the press release, which has the headline numbers and a link to the full report.  If I use “therapeutics” as a rough proxy for “biotech,” here’s where we stood at the end of 2009:

  • The average stock price change in public Canadian therapeutics companies was up 53% in 2009 — better than the TSX composite index (+31%) and the NASDAQ Biotechnology index (+16%) — despite some notable declines following clinical trial failures
  • Therapeutics companies raised $257.5 million, with $6.3 million of that coming in as convertible debt and the remainder as equity (mostly incentvized by warrants)
  • The study notes 10 licensing deals totaling $212 million in up-front payments with the potential for almost $2 billion in future milestone payments (among the 8 that disclosed financial information)

Read the whole thing (pdf), and you’ll see some reason for optimism.

In fact, BIOTECanada released some data from an updated survey this week that also shows increasing optimism in the sector heading into 2010.  Whereas the data in July showed 70% of companies with under 12 months’ cash, the new results show the converse percentage — over 70% of companies now report at least 12 months’ cash on hand.

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New Data Shows 70% of Canada’s Biotech Companies Have Under 12 Months’ Cash. BIOTECanada’s New Ask: Government Loans.

Canadian moneyA Canwest story today highlights new BIOTECanada data showing 70% of survey respondents have under 1 year of cash, up from 50% in January.  FierceBiotech picked it up as well, guaranteeing a full dose of international attention.  

Even though the remaining 30% of respondents likely include some with big recent successes — Bioniche, Allostera and Zymeworks — and some with creative approaches — ConjuChem, Neuromed, etc. — the top-line number is grim indeed.  Plus, as Kasia Majewski points out:

“Most firms have found away to extend their cash, but they’ve done that by massive layoffs, by shutting done operations to the bare bones. So essentially the lights are on but there’s one guy home.”

Given that there has been no systemic cash infusion, it’s not surprising that the number of firms in trouble has gone up since January. 

On the other hand:

There is a bolus of fund-of-funds and direct capital waiting to be deployed, including:

Plus, Lumira Capital’s Q2 newsletter (pdf) points to the new BDC money, Alberta Investment Management Corp’s PE plans and the new Alberta Enterprise Corporation as potential additional sources of funding in the medium term.

BIOTECanada bottom line:

In the winter, the organization was focused on tax initiatives.  Yesterday, though, the focus was entirely on

“negotiations with Industry Canada to obtain a loan program for Canada’s biotech sector that can hold the industry over until capital markets rebound. … [Specifically,] government loans to be repaid after a two- year period at six per cent interest.”

Maybe it’s the new money looming on the horizon, or the seeming lack of traction for the tax policy asks, but the focus has definitely shifted.

My bottom line:

Even the new loan program advocated by BIOTECanada will not help if the other government funding doesn’t make it to biotech companies and VCs. We’ve been keeping an OVCF scoreboard that still shows a goose-egg for biotech investments.  It may be early days for these new capital sources, but the hour is late for Canadian biotech companies.

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What is the State of Canada’s Biotechnology Industry?

There have been a lot of opinions over the last couple of weeks, with little consensus.

On the pessimistic side:

  1. E&Y’s annual biotechnology report was released a week ago, and the reported taglines ranged from “time of reckoning” to “biotech business model crumbles“. 
  2. The first report from Canada’s Science, Technology and Innovation Research Council said that Canadian businesses are stingy in funding research and development.

On the other hand:

  1. The BIO SmartBrief story on E&Y’s report noted the E&Y data showing that mergers and acquisitions had a near-record year in 2008, amounting to $28.5 billion in the U.S. alone.
  2. And, Rx&D’s response to the STIC report notes that pharma R&D investment, MaRS and Montreal’s biotech/pharmaceutical cluster are all highlights of the report.
  3. Finally, BIO President and CEO James C. Greenwood said that most biotech firms likely will survive the financial crisis despite a shortage in cash assets and the lack of investments brought about by the deep freeze in initial public offerings.

My take?

E&Y’s 2008 data is consistent with the PwC-BIOTECanada report and likely reflects extra pessimism because it cuts off before the latest stimulus investments, including over $1 billion in Ontario and Québec.  As that money, plus the Ontario Venture Capital Fund, gets deployed, I think Greenwood is likely to be right and things will start to look up. 

Although Q1’s venture capital and private equity numbers still look grim, the Monday Deal Review is showing increasing activity the last few weeks and even a few offerings by public companies.

New Data in Canada: BIOTECanada-PwC 2009 Life Sciences Forecast

The BIOTECanada-PricewaterhouseCoopers 2009 Canadian Life Sciences Forecast was released today.

The Forecast was produced from data gathered in October and November 2008, so is (unsurprisingly) a bit bleak, but there are a few bright spots to be found:

  • Canadian companies are increasingly flexible about exit scenarios.  In the 2009 Forecast, 66% of firms looked to mergers (down from 80% in 2007), while 48% looked to co-development partnerships and 46% saw licensing or selling IP as their success strategy.
  • Some problems were reduced from levels reported in 2007:
    • Only 26% of respondents identified “attracting and retaining key employees” as one of the three most challenging issues, down from 39% in 2007;
    • In 2007, 33% of respondents identified “attracting a licensing or strategic partner” as most challenging, which was down to 22%  in 2009; and
    • 21% instead of 29% of respondents cited “managing the regulatory process.”
  • Finally, there was a 66% increase in the number of respondents who believed “protecting intellectual property” would be a top-three challenge, which is excellent news … at least for lawyers.

The predominant issue weighing on the minds of respondents was clearly access to capital:

  • Sixty-one percent of respondents ranked “increased Canadian venture capital” as critical to the industry; and
  • While the overall percentage of companies expecting to raise between $10 million and $100 million in their next round remained the same as it was in 2007, the percentage expecting between $10 and $25 million tripled while the percentage expecting betwen $25 and $100 million was cut nearly in half.

The really good news about this, though, is that since the survey was taken last Fall, over $1 billion in venture investment funding has been budgeted in Ontario and Québec, and the Ontario Venture Capital Fund has already made several commitments … some of which are bound to end up with biotech VCs, right? Right?? Stay tuned.

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Anyone Else Short on Cash?

Yesterday, the WSJ Health Blog picked up on Burrill & Co.’s report, noting that one-third (120 out of 360) of publicly-traded U.S. biotech companies have under 6 months’ cash left, a figure that sounds depressingly familiar…

In the UK, the BioIndustry Association put out a press release January 27 that said:

The current situation is grave – approximately a third of publicly quoted UK bioscience companies have less than six months cash remaining. 

And here in Canada, BIOTECanada’s latest Parliamentary Quarterly (pdf) includes this nugget:

As of December 2008, over 25% of Canadian biotechs have less than 6 months cash remaining and … for smaller public companies, more than 40% have less than 12 months cash remaining. 

So please, give now.  And if you can’t spare the cash, pick up a pipette and go volunteer.  Every microlitre counts. 

Seriously, this is ugly.  Check out the Biotech Bailout page and toss an idea into the ring.

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Bailout Update: UK and Canada

Two bailout developments to report yesterday:

In the UK, the science minister Lord Drayson is championing a call by Imperial College London and the universities of Cambridge, Edinburgh and Oxford to create a £1bn fund to finance the early stages of university spin-outs:

Medical research was given as an example, but Drayson is said to be pushing for the £1bn fund to finance ideas from all areas of science and engineering.

Here in Canada, the MaRS Blog posted yesterday about BIOTECanada’s Parliamentary Quarterly (pdf), which reiterates BIOTECanada’s previous bailout asks and includes some new data on the Canadian biotech industry, as well as some information on bailouts in other jurisdictions.

I would guess that some of the support apparently being generated by the UK proposal is due to the breadth of the project, with the potential to stimulate a wide range of innovative industries.  With so many common needs and challenges among biotech, cleantech and high tech, I would like to see further collaborative efforts in Canada as well.  Hopefully the Ontario Venture Capital Fund, which appears to be set up along the lines being proposed in the UK, will invest in all three areas and create a foundation for future collaboration.

Update: for some sense of common ground, see this NY Times blog post.

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Canada’s Budget: An Innovation Shortfall

A good piece by David Crane in the Toronto Star today that touches on the BIOTECanada and Genome Canada issues, as well as a broader indictment:

There are some initiatives in the budget that will help. But overall it falls far short of what is required for an innovative economy, one that will deliver the jobs, prosperity and productivity we will need in the highly competitive global economy that lies ahead.

There’s also a comment on Crane’s piece from Mary Serniak suggesting an “idea competition” parallel to the international arts competition that was in the budget.  This is along the lines of a program we’ve been talking about at the Life Science Coalition: an Ontario-based commercialization award of international scope, like the Gairdner Awards, that would seek out and reward internationally outstanding achievement in entrepreneurship.

Update: Another couple of good budget reaction pieces are up at the MaRS Blog here and here.

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Canada Budget Reax

Bailout Bedfellows

A brief was released jointly last night (pdf) by 7 Canadian national organizations:

  1. Association of Canadian Academic Healthcare Organizations(ACAHO)
  2. Association of Faculties of Medicine of Canada (AFMC
  3. BIOTECanada
  4. Canada’s Research-Based Pharmaceutical Companies (Rx&D)
  5. Health Charities Coalition of Canada (HCCC)
  6. MEDEC – Canada’s Medical Technology Companies
  7. Research Canada: An Alliance for Health Discovery

Update: the Brief calls for Government action in four areas:

  • Tax policy (the BIOTECanada asks, plus measures to encourage charitable contributions);
  • Continued investment in world-class infrastructure;
  • Support for research and management talent in research and innovation; and
  • Increased investment in discovery research (granting councils and a $100 million increase for CIHR)

More info from the press release after the jump:

Money = Jobs

As various constituencies make their arguments for bailout funding, the supporting materials have a common, unsurprising, theme: Money = Jobs.  How many jobs?  A collection of the data we’ve found after the jump:

Bailout Bonanza!!

bailout-pic1With every industry under the sun seeking bailout money, Biotech is not about to be left out. And with a record number of biotech companies with less than 6 months’ cash in the bank, there is good reason to fear that promising ideas could be lost before the credit markets thaw. There are, however, an abundance of views on what form help for the industry should take.

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