While the US is recognized as the dominate player in the global biotech sector, its Canadian neighbor to the north also recognizes the strategic importance of biotech as a key economic driver for the country, and its critical role in the economy. Helping to facilitate that growth is BIOTECanada, whose mission is to lead the advancement of the Canadian biotechnology ecosystem. The organization does this through a working relationship with policymakers and regulators; helping to increase investment in Canadian biotechnology innovation, research and commercialization with the aim of establishing globally competitive and commercial Canadian-based biotechnology companies; and growing Canada’s capacity to attract and develop C-suite entrepreneurial talent and biotechnology leadership.

Leading these efforts is President and CEO Andrew Casey. As part of its series at looking at the unique challenges countries face in bringing the benefits of biotech innovation to people around the globe, WuXi AppTec asked Casey his views on why he believes Canada is well-positioned to take advantage of biotech’s potential to ameliorate the challenges facing the country’s healthcare system.

WuXi: How would you describe the biotechnology industry in Canada?

Andrew Casey: Canada is home to a thriving and diverse biotechnology sector which stretches across the country.  The ecosystem includes large multi national pharma and biotech companies, early and mid-stage biotech companies, research institutes, universities and a support network that includes contract research and manufacturing organizations.

Biotechnology holds enormous promise to introduce innovation into disease prevention and treatment. With the ability to map the human genome and edit genes comes the promise of precision medicine and the potential to combat disease, including the estimated 7,000 rare diseases that fall outside the traditional economic model for the pharmaceutical industry.

Canada is well-positioned to take advantage of biotech’s potential to ameliorate the challenges facing our healthcare system. As well as our rich history of scientific discovery and development, we have a robust, diverse biotech ecosystem that extends across the country and includes: world-class research institutions and hospitals; proven biotech entrepreneurs and enterprises; a highly-educated workforce; and scientific, regulatory and legal expertise.

The Canadian biotechnology sector has been identified by the government as an economic asset and key priority for the economy.  It is recognized that a strong and growing biotech sector strengthens our economy with its R&D and clinical activities, and through the manufacture and export of its products and services. With the launch of a successful new product, the results are high-skilled jobs, economic growth and solutions to the healthcare challenges facing Canadians. The biotech ecosystem also plays a role in bringing innovation to the country’s mainstay industries such as forestry, oil and gas, mining and aerospace – stabilizing as many as 250,000 jobs by making those industries more competitive.

WuXi: What are some of Canada’s recent major scientific advances?

Andrew Casey: As a result of past success and innovation, Canada is now home to a thriving biotech ecosystem consisting of clusters in every province, which bring together world-class universities and research institutes; biotech entrepreneurs; large multinational players; and, a highly educated workforce. The Canadian biotech ecosystem is an economic strength that positions Canada well to successfully deliver innovation to a world looking for solutions.

One example of that is genetic sequencing of the SARS Virus. In 2003, researchers at the Michael Smith Genome Sciences Centre in Vancouver were the first to sequence the genome of the virus that caused the SARS outbreak in China and Canada. Their work paved the way for the development of potential vaccines.

Michael Smith was a Canadian biochemist who won the Nobel Prize in Chemistry in 1993 for his work at the University of British Columbia on site-directed mutagenesis, a technique that furthered the investigation of the structure and function of DNA, RNA and proteins.

Another great example is the world’s first biofuel jet flight. Canada’s Agrisoma developed and markets a biofuel from an oilseed crop that was used in the first biofuel jet flight in 2012. Its Resonance™ brand carinata is an environmentally sound alternative to petroleum fuels and has the added benefit of producing a high-protein animal feed.

I’ll give you one more example: Following the 2014 outbreak of Ebola in West Africa, Canada’s National Microbiology Laboratory in Winnipeg developed an experimental vaccine that shows promise in animal studies to prevent Ebola infection. PHAC licensed the rVSV-ZEBOV vaccine to NewLink, which is working with Merck to bring it to clinical trials and market. The vaccine received breakthrough status from the FDA and priority medicine status from the European Medicines Agency in 2016.

WuXi: How do biotech companies get started in Canada? Where does most of the funding come from?

Andrew Casey: Canada is no different from other jurisdictions in terms of the creation and growth of companies. Companies find their origins in any one of a number of places, including university labs, research institutes, unused molecules from pharmaceutical companies, and clinical trials.

Supporting the early stage company growth are some important government programs and initiatives including a competitive corporate tax rate, the Scientific Research & Experimental Development Tax Incentive Program and the Industrial Research Assistance Program, and a federal venture capital, fund of funds initiative. In addition, the non-profit Genome Canada, Centre’s of Excellence for Commercialization & Research program, and business growth accelerators such as MaRS, the Centre for Drug Research & Development, IRICoR and the NEOMED Institute, JLABS in Toronto along with dozens of organizations located in every province are all positioned to help Canada attract the investment and business expertise we need to move ahead.

WuXi: How is the Canadian investment capital landscape for biotech start-ups?

Andrew Casey: Investment capital is key to drive biotech innovation forward to commercialization, but the type of investment required demands a special type of investor. The risk profile and extended length of time to reach full market potential requires patient and specialized investors who understand the science and commercialization path.  Canada has a strong venture capital and investment bank industry but the Canadian investors just like those outside of Canada are global in nature- they are looking everywhere for biotech investment opportunities.  Identifying and attracting these investors is key for Canadian companies. In this context, Canada must be as globally competitive as possible to gain the attention of investors for Canadian biotech projects.

Another vital source of capital and support comes from the multinational pharmaceutical and biotech companies that are commercially active in Canada. The new business model for innovation and pipeline replenishment is one where the large multinationals invest in or partner with early stage companies. This is a global business trend for the industry which aligns itself nicely with the nature of the Canadian biotech sector and its history of developing early stage companies. As a result, the pharma-led investments and partnerships have led to the maturation of several significant Canadian companies with a number now poised to become commercially active.

WuXi: What role do universities play in the development of the Canadian biotechnology industry?

Andrew Casey: Canadian universities are a key breeding ground for discovery and innovation. Many of the early stage biotech companies can trace their roots to Canadian academic institutions. Established biotech companies are relying on the expertise from Canadian Universities for future talent acquisitions.

As a result of its history of scientific discovery and innovation, Canada is home to a strong network of biotech hubs in every region of the country. Canada’s world class universities are often central to these hubs. These combine with a national network of incubators, accelerators and hundreds of small start-up companies helping to draw biotechnology research into the development of innovative products.

Several universities have established or are in the process of establishing biotechnology programs which combine business and science streams. Increasingly, there is a recognition that it takes a combined set of business and science skills to successfully drive innovation forward, find investment and develop a company that can commercialize the innovation. These programs will be important in not only creating innovative solutions but also developing the leaders to drive the innovation forward.

WuXi: What kinds of partnerships are important for biotech companies in Canada?

Andrew Casey: The Canadian biotech ecosystem’s core strength lies in its ability to connect various entities to support the commercialization of innovation. Key partners include investors and the large multi-national companies that often perform the dual role of investor and commercial partner. These cooperative strategic partnerships are mutually beneficial. Emerging biotechnology enterprises rely on these partnerships to get stable financing and the clinical, regulatory and marketing expertise of a large company. They depend on these partnerships because of the complexity of the research and the length of time required for development and regulatory approval. Licensing or selling a product or platform tool provides revenue for the smaller firm to grow and to further R&D of its own product pipeline. This hybrid business model, in which a company licenses platform technology to pharmaceutical companies and has its own slate of drug candidates, is attractive for companies confronted with the high costs and risks of bringing new products to market.

Canadian companies like Zymeworks in Vancouver, Clementia and Repare in Montreal and Blue Rock in Toronto serve as good examples of how the different components of the Canadian biotech ecosystem come together to support the growth and success of a company.

WuXi: What business-related challenges do biotech start-ups face in Canada?

Andrew Casey: The challenge is that talent and capital are both getting harder to access due to competition from emerging economies and countries with established biotechnology industries. Canada is not alone in recognizing the economic value of generating solutions to a growing population, climate change and healthcare problems. The United States has the most successful biotechnology clusters in the world, in San Francisco, Boston and Research Triangle, while the United Kingdom, Belgium, Australia and Israel are among the countries with strategies in place to commercialize the fruits of their robust biotech industries.

Access to investment and talent remain the two most significant business challenges for the industry.  Both investment and talent are inherently mobile.  Canada must compete with other jurisdictions in order to attract and retain both. Accordingly, both the industry and government policy must be as competitive as those in other jurisdictions that are vying to attract the industry. Ultimately, if we are not competitive, we stand to lose not only investment and talent but ultimately the innovations themselves as they will move to more competitive jurisdictions as well.

WuXi: What financial incentives does the Canadian government provide for biotech companies?

Andrew Casey: The industry will continue to develop new science and innovation but government policy and initiatives, ‘hosting conditions’ play a huge role in creating a healthy ecosystem that is able to attract the investment and talent needed for commercial success.  Hosting conditions include supportive tax regimes, intellectual property protection and support, regulatory efficiency, and supportive government programs such as the Industrial Research Assistance Program (IRAP) and Scientific Research and Experimental Development Tax (SR&ED) incentives all combine to establish the hosting conditions necessary to attract the talent and investment needed to successfully commercialize innovation.

Some of the key government financial incentive programs include the Strategic Innovation Fund, which allocates repayable and non-repayable contributions to firms of all sizes across all of Canada’s industrial and technology sectors. The program has a budget of $1.26 billion over five years.  Another one is the SR&ED Program, a federal tax incentive program that encourages Canadian businesses of all sizes, in all sectors, to do R&D in Canada. The SR&ED Program provides more than $3 billion in tax incentives to over 20,000 claimants annually, making it the single largest federal program that supports business research and development (R&D) in Canada. Meanwhile, IRAP supports the innovation activities –and helps build the innovation capacity – of Canadian small and medium-sized enterprise (SME) clients, by providing them with advisory services and financial support.

WuXi: What regulatory challenges do biotech companies face in developing new medicines in your country?

Andrew Casey: The pace of innovation, particularly in relation to biotechnology, is rapid and vast. Layered on top of that is the fact that most biotechnology impacts human health either directly or indirectly.  In this context, the regulatory oversight of the industry needs to be both nimble and rigorous to accommodate both the scope and pace of change. That’s said, a well-functioning and sound regulatory system can be a significant competitive advantage for the industry it regulates as it seeks to compete in the global space.

The other important part of the regulatory process for medicines is the need to approach regulation and reimbursement policy in a holistic way.  All too often governments tend to compartmentalize their regulatory and reimbursement responsibilities, i.e. the department with responsibility for health policy is not coordinating its work with that of the department responsible for innovation. Given the interconnected nature of the ecosystem, public policy and regulatory oversight of the industry must also be more interconnected.

WuXi: What do you think the biotech industry in Canada will look like in the next five-to-10 years? Will we see more advancements?

Andrew Casey:  Given the recent growth of the industry, it is very likely that several companies presently considered ‘early stage’ will realize commercial success over the next five-to-10 years. There are several BIOTECanada members that look poised to take the next step in commercial development. There is no question that having one or two globally competitive commercial companies based in Canada will establish an important foundation for the ecosystem to build off of and grow further. Experience in other jurisdictions demonstrates that anchor companies will help to attract more investment and talent to Canada, which will serve to enhance Canada’s ecosystem and its ability to develop more innovation. This, coupled with Canada’s reputation for strong science and scientific research, will most definitely result in new discoveries emerging from Canadian companies.