Canada’s biotech challenge

pharmafile | July 27, 2009 | Feature | Research and Development |  Canada, Transition Therapeutics, biotech, funding 

The Niagara Falls are one of the wonders of the natural world, and every year millions of visitors from around the globe flock to the US/Canada border to see the mighty thundering cascades of water.

Fed by the four upper Great Lakes, an astounding one fifth of all the fresh water in the world pours over the falls.

Actually composed of three separate waterfalls, two are on the US side of the border, but it is Canada’s horseshoe falls which is the biggest and most impressive.

In keeping with their reputation for good manners and national pride, this is just the sort of fact that Canadians will politely draw to your attention.

This reflects the fact that Canada is frequently, somewhat inevitably, overshadowed by its economic powerhouse neighbour the US.

Canada has always had to fight hard to attract talent and investment – and has done its best to make the most of its similarities with the US, and make the most of its differences too.

Canada’s open-door policy to skilled immigrants and its very competitive tax regime for businesses have helped it attract talent and investment from around the world.

The country is renowned for its excellent quality of life, making it a leading location for business. But global competition for the best talent and for investment is fierce, not only in North America, but on an international stage.

Canada and the global biotech crisis

Canada’s more conservative banking system protected it from the excesses seen in the US and UK, and the subsequent credit crisis, but its economy has not escaped the downturn unscathed. This is seen clearly in Ontario, Canada’s most populous province and home to its biggest city Toronto.

Ontario’s steel industry is in long-term decline, and the province is also home to manufacturing plants of crisis-stricken US-owned car makers Ford and GM, which have shed thousands of jobs over the last few years.

These problems have reinforced the need to find new industries to support the economy, and the Ontario provincial government has identified new industries, which it believes, could be the future employers and wealth generators of the future.

Biotechnology, medical devices and the life sciences field are among the emerging areas identified by Ontario for support and investment.

Canada’s system of independent provinces means its regions are not just competing for investment with the US, but with each other – Ontario is also vying with Canada’s other major biotech centres, Montreal (In Quebec) and Vancouver in British Columbia.

Most global pharmaceutical companies have their headquarters in Quebec, but Toronto and Mississauga in Ontario are also major centres for pharma and biotech R&D.

The Ontario government’s Next Generation of Jobs Fund has helped sustain and encourage more investment, and includes a specific Biopharmaceutical Investment Program (BIP). In April 2008 vaccines company Sanofi Pasteur announced an investment of C$100 million in a new research facility at the company’s existing campus in north Toronto.

The investment includes the construction of a C$80 million facility and the support of high-value R&D jobs over the next five years.

Sanofi’s investment has helped consolidate the region’s existing base, but Toronto is looking to brand new innovation-based companies to boost its economy.

In biotech, this aim has been endangered by the drying up of venture capital funding in Canada. Funding for early stage biotech companies has been cut back dramatically in the US and Europe, but Canada has been hit hardest.

Ernst & Young’s annual Beyond Borders global survey of the biotech industry concluded in May this year that Canada’s biotech sector was facing a make-or-break point.

It warned: “Without new approaches and solutions, the next few years could cripple the sector.”

Biotech clusters – reaching critical mass

The problem for biotech clusters and early-stage companies is in achieving critical mass. It’s not certain any biotech company emerging now can mimic the huge success achieved by Amgen or Genentech, the two stars of the US biotech industry. But regions all over the world are trying to create the environment in which biotech and life sciences hubs can flourish and grow beyond the early stages.

Toronto has North America’s third largest biotech cluster, after New England and California in terms of the number of biotech companies in the region. Ontario is home to over 100 biotech firms and 21 research institutions, together employing over 2,500 scientists. And nearly a quarter of Canada’s population is in the Toronto region, giving it the scale and critical mass needed to compete internationally.

But unlike the biotech hotbeds of California, a world-class biotech company has not emerged from Toronto or any other Canadian cluster.

Like any good R&D driven enterprise, Toronto is nurture a balanced and diverse portfolio, so it is supporting other emerging fields such as medical devices, which may provide the next leap forward in medical care.

MaRS

Vital to Toronto’s life sciences vision is MaRS (derived from Medical and Related Sciences) a non-profit organisation and business centre located in the heart of the city. Its core function is as a biotech incubator and business park, known as MaRS Discovery District. The venture was first established in 2000 to help foster and accelerate the growth of successful Canadian businesses and, after some uncertain times, it is now gathering momentum.

A separate technology transfer office, MaRS Innovation, has also been established that, it is hoped, can be a world beater in its own right (see Turning good ideas into world beaters below).

The location of the MaRS building in central Toronto is important, as it is just a stone’s throw away from an existing cluster of universities and academic hospitals.

MaRS has many links with other research-based organisations, including collaborations with three local universities, 10 academic teaching hospitals and the Ontario Institute for Cancer Research.

MaRS occupies the Old Toronto general hospital, where insulin was first discovered by Best and Banting in 1921 and then developed for use in human trials. The 21st Century organisation can build on this heritage in patient-focused discovery and development.

Formerly the head of venture capital firm Primaxis, Ilse Treurnicht is chief executive of MaRS Discovery District. She acknowledges the crisis in venture capital funding, and says Canada’s sector has always had less access funds through this route than other countries.

This is one of the drivers behind the search for a new approach. Treurnicht says the old models of building biotech and life sciences businesses have to be discarded, as they have failed to build companies with critical mass.

She says MaRS’ new ‘Convergence Innovation’ strategy of bringing science, capital and business together will pay off.

“We call our strategy ‘Convergence Innovation’ and what we are trying to do is move away from the old linear model of academics struggling in their spare time to build companies or entrepreneurs doing this in a very incremental way.

“It takes time and it has many risk points along the way. So using this Convergence centre model to create a much more dynamic organisation which can help accelerate good ideas towards the commercialisation.”

But she says Canada’s geography and demographics are always going to be a challenge. “This is a very large country with a small population. If you think in terms of clusters and hub regions, Canada’s business hubs are separated geographically, and there is not much in between in terms of people.

“That means we can’t try to be a little United States, because we just won’t show up on the radar. We have to take a different approach. We have to think about collaboration as our potential competitive advantage – that means using networks and associations to solve problems and build businesses.

“So as new opportunities emerge, we can take them to market faster and hopefully with a higher success rate.”

The centre currently accommodates numerous start up companies, as well as those providing legal and financial services to them. AstraZeneca and GlaxoSmithKline also have offices on site. In all, MaRS provides mentoring for over 200 different companies across Ontario, and runs courses on entrepreneurship and preparing products for market.

A pragmatic approach – Transition Therapeutics

Transition Therapeutics is one of the companies based at MaRS, and is an example of a biopharmaceutical company that is taking a new approach to the science and business of drug development.

Its chief executive is Dr Tony Cruz, a former academic who had a lot of experience in commercialising new molecules before he set up Transition. He says academics looking to spin-out companies based on their ideas have to be wise to the realities of the business.

Cruz says biotech entrepreneurs have to turn their back on the go-it-alone mentality of building up a company from scratch and trying to take it all the way to market.

“We [at Transition] have been through that mistake and I can tell you we will never go back to that again.”

Transition’s business model is identifying promising molecules in early-stage biotech companies. Cruz says the key to this model is in understanding other people’s drug discovery, and seeing the commercial and clinical potential that others have missed.

One of the company’s lead compounds is diabetes drug TT-223, which it acquired by buying another company, Waratah. Currently in phase II development, it agreed a co-development deal with Lilly in 2008. The drug is a Gastrin-based therapy, an emerging class of potential disease-modifying therapies for patients with diabetes.

Tony Cruz says the company’s strategy is to bring compounds to the ‘sweet spot’ in phase I/II, at which point they should be attractive to big pharma investors.

Cruz says companies have to take a more hard-nosed and pragmatic approach to success and failure.

“Many biotech companies fail because they’re not vigilant enough killing things that aren’t going anywhere. And I think governments too have to do the same thing, because drug development exists within a culture where businesses dying off is the natural state of the industry.”

Time will tell if Canada can one day produce a world-class biotech company, but new approaches like MaRS have to be tried as the old business models fail.

Cruz says biotech companies must focus on the best candidate drugs and retain a patient-focused goal. “If you see a molecule that’s better than yours, grab it,” he said. To gain funding for research, start-ups have to be able to adapt to the commercial environment. “In biotech, you have to go where the market is. Flexibility is all-important.”

MaRS INNOVATION: TURNING GOOD IDEAS INTO WORLD BEATERS

Speeding up the translation of academic ideas into marketable treatments for patients is one of the hot topics in pharma R&D today. But this process, known as ‘technology transfer’, is as much about intellectual property and business as it is about science.

Many – if not most – of the greatest advances in medicine have their origins in universities and academic hospitals, but development and commercialisation is often slowed or killed off by obstacles such as funding and intellectual property issues.

In technology transfer, they refer to this as the ‘Valley of Death’ between clinical discovery and development, where many great ideas perish.

Now Toronto’s MaRS Innovation (MI) has been launched to try to guide and accelerate these promising ideas out of the wilderness and onto the market.

MI is a not-for-profit technology transfer company that will channel all the best ideas to come out of Toronto’s renowned academic centres.

In the Toronto and Ontario area there were between 14-16 different technology transfer offices in the different institutions, and MaRS Innovation resolved to bring these interests together into a single entity after industry partners told them it was an inefficient way to do business.

Bringing together the different institutions under one umbrella organisation has been an arduous task for MaRS, but the reward could be considerable for all parties. MI now oversees probably the largest intellectual property pipeline of its kind, representing about $1 billion in annual research spending.

This means MI will be a unified route for all of Toronto’s academics and their institutions when they want to develop and commercialise a bright idea.

Most importantly, investors from industry who are looking to collaborate will now be able to deal with just organisation and one IP process.

MI will cover patentable ideas across a broad range of areas, and not just life sciences – the discovery pipeline in physical sciences, information and communication technology, and green technology (‘cleantech’) will all be funnelled through MI.

MI now represents three universities, 10 academic teaching hospitals and the Ontario Institute for Cancer Research. MaRS Innovation, with support from MaRS and BioDiscovery Toronto, will advance commercialisation through industry partnerships, licensing and company creation.

Its chief executive is Dr Rafi Hofstein. Hofstein has been headhunted from Israel where he was chief executive of Hadasit, the technology transfer company of the Hadassah Medical Organization in Jerusalem and chair of the publicly-traded company Hadasit BioHolding.

He brings this considerable experience in technology transfer to what he thinks is a groundbreaking enterprise.

“MaRS Innovation is a unique global initiative, and I must commend the institutional leaders in Toronto for pulling this innovation powerhouse together to strengthen commercialisation output.”

He adds: “I believe this is going to modernise the whole notion of tech transfer.”

He says the scale and diversity of MaRS Innovation’s remit puts it into a league of its own. Other research clusters elsewhere in the world have attempted similar projects before, but have been thwarted by the difficulty in bringing parties together.

MaRS Innovation will also help launch and grow new spin-off companies and incubate them for 2-3 years to ensure a strong commercial footing.

Hofstein says MI will also fund proof of concept trials which will persuade major pharma companies to invest in their development.

Stem cell treatment for diabetes

MI has just announced its first two commercialisation deals with academic partners in the city. The first is with the Samuel Lunenfeld Research Institute of Mount Sinai Hospital to develop stem cell from umbilical cords to treat cardiovascular disease, diabetes and neurological disorders.

“With the Toronto area identified as a world-leading cluster in stem cell research, we are extremely excited to have identified this technology as our first commercialisation opportunity,” said Dr Hofstein.

The technology – invented by Mount Sinai scientists Dr Ian Rogers and Dr Robert Casper – offers a proprietary method to create multi-potent stem cells (MPSCs) from human umbilical cord blood. Pre-clinical data demonstrating efficacy of MPSCs in diabetes, peripheral vascular disease (a complication of diabetes that can lead to amputation) and neurological conditions, the technology has potential to address multiple unmet medical needs.

The partnership will initially focus on diabetes, as research has demonstrated that these cells uniquely secrete insulin in response to glucose, thereby mimicking the ‘normal’ physiological state. Although there are other technologies currently being developed for diabetes treatment, very few have the potential to replace insulin injections like the MPSC technology developed at Mount Sinai.

“The great advantages of stem cells from umbilical cord blood are their abundance worldwide,” explained Dr Rogers, scientist, Samuel Lunenfeld Research Institute of Mount Sinai Hospital. “Transferring this knowledge to the clinic could mean a feasible alternative to insulin injections and treatment for peripheral vascular disease.”

Dr Jim Woodgett, director, Samuel Lunenfeld Research Institute of Mount Sinai Hospital, underscored the Institute’s drive to improve patient care. “Mount Sinai is focused on translating discoveries into technologies that will improve patient care,” Dr Woodgett said. “Our partnership with MaRS Innovation on developing methods for using stem cells for diseases such as diabetes will allow us to work towards advancing care for these critical conditions.”

Nitric oxide therapy for foot ulcers

The second collaboration is between MI and The University of Toronto (U of T) and involves a novel sustained release formulation of nitric oxide (NO) for applications in wound healing, including diabetic ulcers.

“There are 300 million diabetics worldwide, of which some 15% develop troublesome foot ulcers. This wound healing technology is extremely exciting, making it an early commercialisation opportunity that MaRS Innovation has identified as being a potential win for some 45 million diabetics globally,” said Dr Hofstein.

The device, which releases a therapeutic dose of NO over a two-week period, was developed by Dr Ping Lee, professor at the Leslie Dan Faculty of Pharmacy and GlaxoSmithKline Chair in Pharmaceutics and Drug Delivery at U of T. The role of NO in various biological applications, including wound healing, has been well documented for some time. But as a gas, NO has a half-life of two to four seconds, making it difficult to use as a treatment. Although there have been other sustained release NO formulations in pre-clinical development, stability and duration of NO release have hampered further development. Preliminary data demonstrate a therapeutic benefit of this novel technology in diabetic ulcers with a single administration. Furthermore, NO has a dual mechanism of action – not only does it enhance wound quality and closure rates, but it can also act as an anti-infective agent, which is also an important clinical property in wound healing.

“This is one of many new commercialisation ventures that will be initiated by MaRS Innovation, our partner in commercialisation of research with 13 other academic institutions across the Greater Toronto Area,” said Paul Young, U of T’s vice-president, Research. “We at U of T are delighted that this innovation from Dr Lee will be taken to the marketplace to the benefit of society and the economy of Ontario and Canada.”

By aggregating the leading edge science of its institutional members and being a one-stop commercialisation centre for industry, entrepreneurs and investors, MI could really help put Toronto and Canada on the map.

“MaRS Innovation is deeply committed to facilitating strategic research collaborations with industry partners, strengthening the innovation capacity of Canadian industry through adoption of new technologies, and launching a new generation of robust, high-growth Canadian companies that will become global market leaders,” added Dr Hofstein. “We look forward to working closely with all of our institutional members and to continue to jointly announce exciting commercial opportunities.”