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

Tag Archives: biotechnology

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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TBI Mentorship Program Announced

TBIMentorshipLogoI’ve been working on the committee developing a new mentorship program for life sciences professionals in Ontario.  The formal launch will coincide with National Biotechnology Week in September.  Here’s the blurb:

The TBI Mentorship program is designed for science and business professionals at any stage in their career. It provides ongoing opportunities for career and skills development, and addresses one of the most pressing needs faced by the industry. The program matches people based on interests of proteges and industry experience of mentors to facilitate a good fit between the mentoring partners. The TBI Mentorship program allows mentors and proteges to define their goals and expectations, while providing tools, resources and training conducive to a meaningful mentoring experience.

The PwC report released in April cited “access to an experienced talent pool” as one of the most critical factors influencing the success of the Canadian life sciences and biotechnology industry, so we need as much involvement as possible. We’re accepting pre-registrations now.

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This Week in the Twitterverse: August 8, 2009

twitter_logo_headerSince I’ve been using Twitter to note short but interesting items that don’t require a whole blog post, I thought I’d post a re-cap of the week’s Tweets.  So, for those who aren’t on Twitter and haven’t been reading the @crossborderbio feed in the column to your right (or who read the blog by RSS), here’s what you missed:

  • Big confirmations day in the U.S. Senate: Sotomayor (S.Ct.), Collins (NIH) and Kappos (USPTO) in one fell swoop
  • Things are looking up when … biotech bankers and analysts have job options! Some movement in Toronto:
  • First EU guidelines for growing GM plants for pharming published, get positive initial reviews, says Nature
  • Today’s Canadian science = tomorrow’s Canadian start-ups. Check this week’s Friday Science Review on the blog: Go Richard!
  • New blog post analyzing Q2 VC investment numbers for Canadian biotechs – bad, but Q3 is already better H/T @startupcfo
  • OncoGenex goes it alone, sells $9.5 mm of straight equity and net $9.4, ISO for Phase III H/T @ldtimmerman @FierceBiotech
  • Another cancer personalized medicine success for DxS: AZ partnership for Iressa after BI & Amgen deals
  • Saskatchewan proposes new isotope reactor as part of nation-wide expressions of interest for Nov. 30 report
  • RT @gw_dailyscan: GI Bill and More Scientists: President Obama says this GI Bill, like the last, may lead ..
  • New Blog post: What makes MIT so good at entrepreneurship:
  • Adaltis Inc. (TSX: $ADS) files for liquidation under BIA follows July’s CCAA filing noted on the blog
  • For anyone thinking of not vaccinating their kids… RT @drval: NewPost: Dr. Sears Cashes In On Vaccine Fears
  • Canadian Science Policy Conference speaker list grows. Oct 28-30. Res Forum Blog >> CSPC web >>
  • H/T @FierceBiotech: Lilly Ventures has spun out of Eli Lilly with $200M, WSJ says it’s more “Ventures” less “Lilly”
  • Another environmentally friendly application of genetically-modified plants: lure nematodes, use less pesticide:
  • I will! RT @drval: Everyone check out @scotthensley ‘s new health blog at NPR: <– Hope you’ll blogroll
  • Old SBIR extended (again) to Sept 30 as conference committee fails to reconcile House and Senate bills before recess
  • Just now getting caffeinated this morning… RT @fodden: RT @slaw_dot_ca Civic Holiday Today >> Slaw
  • Isotope shortage in Canada not affecting patients as much as expected, but costing hospitals a lot for alternate supply

Do the Q2 Venture Capital Numbers plus the HGS Success Indicate a Light at the End of the Tunnel for Biotech Funding?

light at the end of the tunnel smallMany of the articles and talks on biotech funding over the past year or so have lamented that public markets are closed to biotechs, and that the absence of a public exit, coupled with the preference for licensing over M&A by big pharma, would seriously dis-incentivize venture funding for biotech startups.  Two data points this week suggest the tide may be turning:

  1. Human Genome Sciences’ drug candidate for Lupus shocked analysts, showing positive results in its clinical trial, which sent HGS shares up almost 400% and boosted shares of two other companies working on products in the same pathway.  More importantly, it reminded risk-seeking investors of the outsize returns that make them love biotech stocks.  Remember last week’s NVCA study showing a 20% cost-of-capital for biotech?  Everyone (including me) focused on the take-away argument for biologics exclusivity, but now is a good time to remember that the cost-of-capital calculations are backed into from the historical (outsized) returns shown by biotech’s success stories.
  2. PwC-NVCA numbers released Monday showed biotech as the biggest recipient of funds in Q2, exceeding every other industry (thanks in part to the crappy numbers for other industries, but still…), and getting $3.67 billion for 612 companies January-June.

The change in mood has been immediate.  One obvious example is this piece in the WSJ’s Venture Capital blog that touts the value of biotech partnering deals as a boon to investors.  The same partnering deals that just a few weeks ago were described as barriers to VC exits are now a rationale for follow-on investment.

Not that there aren’t still challenges.  The Aveo Pharma deal in the WSJ post has two important features — they retained key assets for an M&A or public exit and their partner took equity in the licensing deal —  but a few more headlines like “Biotech Start-Ups Striking It Rich With Partnerships” and we could be on the road to a biotech recovery.

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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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Relocation, Relocation, Relocation: Biotech Incentives and Economic Development

Despite the skepticism expressed in the New York Times article last week, the efforts by various jurisdictions to attract biotech business continues apace.

For one, the Mayor of Jerusalem announced a $25 million program to build infrastructure and human resources for a biomedical research park at Hebrew University School of Medicine.  Of course, they’ll have to do it without Rafi.

And at least one jursidiction — Wisconsin — seems to have been having some recent successes:

Stay tuned to the money=jobs post on our Biotech Bailout page for more.

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Flow-Through Shares for Cleantech and Biotech in Canada

800px-SieveRick Sutin, a partner at Ogilvy Renault (my home-away-from-home), has a post up at Cleantech in Canada singing the praises of flow-through shares.

So far, the flow-through program in Canada has been available (mainly) to resource exploration and development companies, but we have been arguing for a while that the program would be ideal for Cleantech and Biotech as well.

Why? See if any of these points sound familiar to a Biotech audience:

  1. Success comes from discovery and development programs, and relies on large amounts of high risk venture capital where revenues are uncertain and remote; flow-through shares filled the gap for resource exploration by providing venture capital at premium valuations through the public markets.
  2. Flow-through shares have made Canada’s capital markets the recognized global leader in resource finance and home to more resource companies than any other country in the world. The Canadian industry now develops and attracts the top resource management talent in the world.
  3. Government participates not by picking potential winners, but by giving private sector investors a tax incentive to make those choices and take those risks.

Here’s how flow-through shares work:

A company that issues flow-through shares must spend the proceeds on qualifying expenditures in Canada.  The expenditures are then renounced by the issuer to its investors, who can treat the expenditures as if they made them themselves.

How does it look from government’s perspective?

The government incurs an expense by foregoing tax that would otherwise be paid by the investors. However, the government recoups tax revenues from the recipients of the expenditures that would otherwise not have been made without this program and on the subsequent sale of shares, as the tax cost of shares is reduced to zero in the hands of the investors.

This is one of the few government programs that has successfully run for 20 years, contributing to Canada’s dominance in a significant sector without any problems or abuse.

A good deal all around.

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Scientific American and BIO worldVIEW Scorecard: A Global Biotechnology Ranking

world_map_2002Scientific American gathered and crunched a large amount of data to try to generate an objective, empirical ranking of 36 different countries’ biotechnology output and potential.

Here’s the special issue homepage, and here’s the scorecard page; but there are several interesting accompanying articles, particularly for those who have been following our Trends in 2009. See if either of these ring a bell:

I encourage you to check out the whole thing; but for all the Canadians out there who don’t want to read it for the articles, here’s the centerpiece:

Good news:

Canada ranks in the top 10 globally in IP Protection and ranks 5th globally in Intensity (a measure designed to give proper weight to “small countries with strong biotechnology activities”).

Bad news:

Canada misses the top 10 globally in Enterprise Support, Education/Workforce [really?], and Foundations.

Canada misses the overall top 10 by a hair as well, scoring an overall 2.9 versus a tie of 3.0 for Australia, Finland, New Zealand and Switzerland.

I am off to their presentation to “discuss” Canada’s failure to crack the top 10😉

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Trends Update — IP Constituencies: China Moves to Boost Biotechnology

world_map_2002An announcement by the State Council in China that was picked up by Fierce Biotech yesterday touted $9.2 billion in technology spending that will include biotech and genetically modified products (as well as large-scale aircraft, broadband wireless technology and new oil, gas and coalbed methane exploration).  The cabinet also reportedly approved new policies with the goal of creating large internationally competitive biotech companies as well as fostering the formation of smaller biotechs.

Check out the Trends in 2009 page for our other posts on increasing innovative activity in China and India and the effect on global IP policy.

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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.

Canada — and MaRS — Draw Notice on List of Biotechnology Clusters

world_map_2002A report at Genetic Engineering and Biotechnology News, picked up today by FierceBiotech, discusses emerging biotechnology clusters.  It’s worth excerpting the whole bit on Canada:

Both Toronto and Vancouver have good, small companies, but they’re struggling for capital. They have the benefit of government support and strong universities, particularly the University of Toronto, the University of Guelph, and the University of British Columbia. Entrepreneurship skills need to be honed, however.

In the heart of Toronto, the MaRS Center incubates a host of companies within about a mile of five teaching hospitals, the University of Toronto, the provincial parliament, and the financial district. The local government takes a close interest in the Center’s success, and several promising research projects are moving toward commercialization.

Vancouver, on Canada’s west coast, consistently ranks as a fast-growing cluster, attracting more than 90 companies, some with late-stage trials. The University of British Columbia has an active tech-transfer department that has spun out several companies.

The report also discusses innovative activity in China and India, among others, that fits with the trend we have observed.  Read the whole report here.

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200th Post – State of the Blog

7 contributors, 106 days since launch, 200 posts, 1047 tags, 7604 hits.

BioFinance tomorrow.  Over and out.

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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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Some Good Clean Tech Synergy: Biotech + Cleantech + Nanotech = $

A story today at GenomeWeb shows a collaboration among biotech, cleantech and high-tech interest groups successfully generating government support:

Illinois life-science industry advocates for the second straight year are urging state lawmakers to set aside $25 million in grants and tax credits to assist biotech, pharmaceutical, and medical-device startups commercialize new technologies.

Unlike last year, when the proposal died in a state House of Representatives committee, the state’s life-sci industry group expects this year’s version to pass. One key reason: The legislation … would award cash to other tech industries, including alternative-energy, or so-called “clean,” technologies, and the state’s fast-growing nanotech sector.

This type of cross-tech synergy has contributed to government support for other funding initiatives as well.  Look no farther than MaRS, or go as far afield as the UK; common needs for tech commercialization build stronger constituencies.

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Existential Question for 2009: Is a Virtual Company Virtually as Good?

A thought-provoking piece over at Capital Rants (and the BlackBerry Partners Fund Blog) from Pierre Donaldson says, basically:

virtual-schmirtual, there’s no substitute for the interpersonal benefits of a physical headquarters where the whole team is regularly under the same roof and interacting face to face.

On the legal side, we have a tendency to view virtual/physical, outsource/in-house issues from a straightforward economic perspective, basically:

is the price of the virtual/outsourced service, plus the cost of managing the service, plus the transaction cost of setting up the service, less than the cost of providing it in-house?

Nominally, the issues Pierre is talking about fall into the service management costs bucket, but his post draws attention to some opportunity costs of virtualization, something generally not given enough attention in the  accounting cost version of these calculations.

Overall,  I agree that lack of physical interaction is an impediment to team spirit — the post’s central “Locker Room Theory”.  

The point I want to quibble with is:

“We can e-mail, IM, SMS, blog, tweet… you name it.  It is exactly as if we are constantly sitting right next to each other, right? … I’m sorry, but I don’t buy that at all…

“It’s about the water cooler conversations and finding out that your sysadmin’s favourite uncle has a golf buddy who is CIO at that large corporation you’ve been trying [to] partner with.” 

Lumping e-mail with Twitter, and leaving out LinkedIn and Facebook from his list is obviously leaving out a lot of nuance.  All three are useful virtual tools with far greater reach (though maybe less (normalized) utility) than sysadmins and uncles and golf buddies.

But, can we really virtualize networking the way we’ve virtualized companies?  When the BlackBerry Partners Fund shackles their portfolio company teams to an office and sends them on corporate trust-building retreats, are they building the next … BlackBerry … or are they taking valuable time away from meetups and status updates and the next great tweet

The current economic climate will likely result in a large-scale experiment as companies in a variety of industries either hunker down and go back to the water cooler or attempt to tweet their way out of their individual crises.  Hindsight, no doubt, will be 20/20.

Pharma and biotech companies are constantly faced with these virtual/physical outsource/in-source questions; and I expect we’ll continue to see a lot of comepeting approaches.  Fully virtual companies are possible and successful, with R&D, formulation, CMC, regulatory and clinical trial capabilities fully available on a contract basis from a bevy of worldwide competitors.

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There’s No Bailout Like a Good Exit

A Bloomberg article this morning takes a look at the recent boom in Israel’s biotech and device stocks, and credits the government cash infusion (which we noted at the time) for some of the buoyancy; but also attributes much of the gain to speculation that the J&J-Omrix deal is the beginning, not the end, of acquisitions in the well-priced sector.  According to Bloomberg data, bargains still abound in Israel:

Most of the stocks still trade below their initial public offering prices and are valued at less than half of their global competitors relative to cash, according to data compiled by Bloomberg.

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100th Post – State of the Blog

5 contributors, 46 days since launch, 100 posts, 544 tags, 3300 hits.* 

Thanks for stopping by!  Leave a comment; take the poll: 

* Hits as in page-views.  Don’t assume stuff just because we’re in Canada.


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