Biotechnology Focus, a compendium of the Canadian life sciences industry, has published a guest column by MaRS Innovation President & CEO, Dr. Raphael Hofstein.
The article explores the role life sciences assets, financing and talented management–the three Ms–must play in revitalizing Canada’s biotechnology sector:
At the close of the 20th century, Canada was perceived as a key contributor to the success of the global biotech voyage.
You know what happened next: the mechanisms to fund early ventures collapsed together with the collapse of the Canadian venture capital industry Finding suitable investment for early-stage technologies became incredibly challenging. Facing a dearth of opportunity, talented management sailed for other harbors.
It’s satisfying that on the eve of the 2014 BIO Convention, some indicators suggest to me that we are witnessing a rebound. But to accelerate our pace while holding this bearing, Canada needs to address certain strategic elements.
At MaRS Innovation, we call them the three Ms: merchandize, management and money.
(You could argue that there is a fourth M—market entry—but I would rather focus on the first three and defer this one until Canada’s biotechnology foundations are out of the proverbial dry-dock.)
The merchandise: The federal and provincial governments’ strong commitment to life science discovery research, which annually totals in the billions across Canada, has triggered numerous fundamental discoveries that have immediate relevance to the resurging biotech industry.
Greater openness to translational research has also led to an increase in the number of issued patents in recent years, some of which are already turning into promising products, such as Enobia’s hypophosphatasia drug that Axelion acquired in early 2012. Yet many others remain at a very early stage, keeping them off the radar screens of strategic partners who wish to replenish their pipelines but prefer to wait for technologies of interest to be de-risked.
Crossing the first chasm between discovery and translational research remains a crucial step in commercializing biotech innovations. Fortunately, several funding agencies have begun creative programs to address this most challenging chasm, such as Genome Canada’s Genomic Applications Partnership Program (GAPP) and the Ontario Research Fund (ORF).
Despite this shift from strictly curiosity-driven research to activities focused on practical outcomes, a deeper paradigm shift is required to excite more global strategic partners about Canada’s biotech merchandize. In a recently published Biocentury review (March 2014 edition), Doug Cole of Flagship Ventures suggested that following creative early-stage financing, projects would emerge with industry-led strategic support. Cole also indicated that larger companies have been collaborating with venture firms and start-ups in all sorts of innovative ways to influence the direction and outcome of their research. A tighter partnership between the research community and the funding agencies is required and now is the time to act.
The management: we used to suggest that money is the second M, but with time we have realized that the notional view that people invest in people is so profound in biotech startups that it ought to receive a higher priority.
Much has been said about the Canadian talent required to get ideas from the research lab to the R&D floor and yet not enough has been accomplished. It has been my experience over the years that a different skill set is required to successfully lead a biotech start-up after making a foundational discovery. It’s also no secret that a significant pool of such people resides in the Bay area and in the Boston area.
To sustain our biotechnology resurgence, Canada must strategically create a proper landscape with meaningful incentives for Canadian expatriates with the right skills and experience to return to our waters and captain this collective voyage. In particular, Canadian start-ups need to appoint CEOs with proven track records and the right entrepreneurial spirit. A nucleus of even just a dozen candidates will later on expand organically into a whole cadre, which will make all the difference to start-ups needing strong guidance at the helm.
The money: In the same issue of Biocentury, Abingworth’s Jonathan MacQuitty suggested that $10 million is nearly enough for discovery-stage companies. Ideally, he argued, they need to be able to finance up to M&A territory, which is probably Phase I and, even better, Phase IIa.
It’s certainly an ambitious goal, and a lot more will be needed to attain it.
While Canada is awakening to this very challenge, it’s still early days. If quality merchandise is put in the hands of talented management, sourcing financing remains the ultimate challenge on our collective horizon
Hopes were elevated across the country when, as a result of the Tom Jenkins 2011 report, the federal government announced the Venture Capital Action Plan as a catalyst to restart the venture capital industry. Obviously, those focused on financing life sciences opportunities in general, and biotech in particular, remain hopeful that a whole new life sciences venture capital scene will rise from these foundations.
In the meantime, I see encouraging movement in the channel between the public and private sectors at both the provincial and federal levels.
One example is the Ontario Life Science Seed Fund (OLSSF), announced recently by the provincial government of Ontario. OLSSF exemplifies the growing realization that the early-stage chasm between success and failure can only be bridged through private-public partnership.
It’s not a new idea. In the United States, the Small Business Innovation Research program (SBIR) fulfills this function. In Israel, it’s handled by the Office of the Chief Scientist (OCS); in Singapore it’s known as Agency for Science, Technology and Research (A*STAR). These programs have demonstrated that it is possible to establish effective bridging mechanisms.
To close, I cannot say it better than Bruce Booth of Atlas Ventures did in that same Biocentury article, “My experience would suggest that there are no great ideas that aren’t getting financed today.”
The article appears on Biotechnology Focus’ website.