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THE LAST WORD
By Roberto Bellini
DAWN OF A NEW Québec BIOTECH ERA?
Roberto Bellini, President and Chief Executive Officer, BELLUS Health Inc.
Many in our industry remember the golden era during the mid-1990s when biotech flourished in Québec. At that time, there was a thriving group of biotech companies supported by a varied cast of players that helped these companies push their projects forward. Québec was also home to the big industry players including many of the Canadian regional arms of the large pharmas, which contributed expertise and human resources; a deep group of contract organizations providing valuable support services; and a large number of venture capital groups to spur startups. There was also a modest banking industry in Montréal to help raise capital and both Toronto and New York were only an hour’s flight away. The “fleuron” of Québec’s biotech industry was Biochem Pharma, a company run by my father Dr. Francesco Bellini. It grew from a fledgling spinoff of L’Institut Armand Frappier with six employees to a biotech behemoth. At its peak, it had a market capitalization of $6 billion. More importantly, it was a fully integrated global player with more than 1,000 employees, strong recurring revenues and an independently sustainable business plan. Unfortunately, our Québec biotech industry has largely suffered and generally not recovered – unlike our biotech counterparts in the U.S. – since the global tech and biotech bust in the early 2000s. There is, however, reason to believe that within the next
Life Science Funds Created Since 2011 With Québec Activities
few years, we will see a flourishing biotech industry in Québec. The following are key factors to support that:
Growing Access to Venture Capital With approximately 35 per cent of their $1.5+ billion fund of funds committed to biotech, the establishment of Montréal-based Teralys in 2009 was hailed as a major step towards rebuilding the biotech venture capital community. While it has taken a number of years to see the fruits of their labour, Teralys’ capital has contributed to kickstarting a number of new funds and an overall unprecedented amount of venture capital dedicated to biotech. With the announcement of CTI Life Sciences II earlier this year, it’s estimated that seven funds have been created with varying forms of Québec investment commitments in the last four years. These funds have approximately $875 million of capital to deploy. While many of these funds can invest across Canada (and often globally), much of the focus is on Québec. This group of funds also excludes the evergreen funds at Le Fonds FTQ and BDC Capital, as well as certain foreign VCs who are known to invest in Québec, including Domain Associates, Forbion, SR1 and Orbimed. More importantly, the VC community has been rebuilt with a vision and purpose in mind. There are a diversity of investment strategies (incubators, single purpose vehicles, traditional company building) ranging from seed stage to clinical proof-of-concept. This new generation is also comprised of a diverse group of VCs that have been supported with new capital (CTI, Lumira) and foreign VCs that have been attracted to set up offices in Canada (TVM, Sanderling). While early stage capital is plentiful, Canada is still lacking market depth for later stage development companies to find the financing they require. IPO and follow-on financing markets have been routine lately in the U.S. and several Canadian companies have already accessed this market or are in the planning process to take advantage of this. However, domestic support is lacking.
Rise of Specialty Drugs Providing Growth Opportunity to Small Companies Spending in the U.S. on specialty drugs, which have traditionally been developed and commercialized by biotechs, will likely surpass the spend on traditional drugs by 2018 according to market analytics firm Artemetrx. Specialty drugs are typically higher-cost therapies used to treat complex and chronic conditions. These drugs have several important characteristics that favour the biotech development model: • shorter development timelines • lower cost of development Biotechnology Focus / August/September 2015
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