By robin M. Sundstrom
AccESS TO cAPITAL
BIOTECH ANGELS Uppers AT WORK – onor Downers? And Can You Change Their Meds?
T
o the joy of biotech CEOs everywhere, the NASDAQ Biotech Index rose more than 50 per cent through 2013, indicating the continuation of a powerful surge of interest after years of what can most politely be described as lacklustre performance. And it’s not just the U.S. -one Toronto merchant banker described the public biotech market right now as “frothy”, with lots of companies seeking (and many finding) capital even beyond the medical marijuana bubble. Investment bankers see opportunity. Despite an estimated 25-to-30 per cent of the $20 billion U.S. Angels invest annually going to biotech (according to the Center for Venture Research at the University of New Hampshire), it is hard to say if the excitement is trickling down to earlier stage initiatives in Canada, or if Canadian Angels are taking note. 14 BIOTECHNOLOGY FOCUS April/May 2014
On the organizational side, among the 35 descriptions of national angel and incubator organizations listed in the widely read Backbone Magazine’s “Tech Resources in Canada” (https://www.backbonemag.com/ Tech-Resources-for-Companies-in-Canada/ angels-and-investors.aspx), only four even touch on biotech. Of those, one (eSight Corp.) deals specifically with visual assistive devices, and another (DNA Genotek) develops products for entities requiring high-quality biological samples – very narrow targets, and hardly your traditional angel biotech investors. The third (Blue Sky Capital Corporation) has an investment in NoNO Inc., a biotech company that focuses on stroke screening and treatment, but that seems to be the limit of their involvement in the sector. The fourth has a life sciences / healthcare orientation (Medica Venture Partners), and is the only one of the group that even looks like a traditional biotech angel group. One other company, Georgian Partners, that has histori-
cally supported a couple of medical device companies and has a stable of active Angel investors, has moved entirely into big data and cloud-based business solutions. But does this reflect the actual current activity in Canada? The Network of Angel Organizations – Ontario (www.nao-ontario.ca), Ontario’s voice for Angel investor groups, boasts that Angel groups have made $91.6 million in investments into 169 companies. Although the website doesn’t provide timelines or sector breakdowns, a short (and highly unscientific!) poll among members produced estimates that perhaps ten per cent of those investments are in biotechnology. Given that one of the challenges for earlystage biotech companies is actually getting access to Angel investors, it makes sense to look at events connecting Angels and capital-hungry companies. So, among its upcoming events, MaRS does list what it boasts as “Canada’s largest healthcare venture showcase”, the MaRS HealthKick 2014 (15th of May, for those interested), but this is MaRS’s only upcoming biotech listing. The other mention is actually an annual event put on by ventureLAB in Markham, the MedEdge Summit (to be held June 19, 2014). Randomly polling a couple of Angel groups themselves, Golden Triangle Angel Network (GTAN), based in the tech hub of southwestern Ontario, has 37 investees listed on its website. Four are healthcare-related – eSight eyewear with visual assistive devices, MyndTec Inc. creating therapies using electrical stimulation for brain and spinal cord injuries, Rna Diagnostics delivering clinical efficacy testing for cancer treatments, and Spartan BioScience focussing on DNA testing. Maple Leaf Angels, the Toronto-based angel group, has 17 investments on its website. Of these, three are healthcare oriented: well.ca is a retail operation specializing in wellness products, Spartan is described above, and ChipCare develops point-of-care diagnostic technology. If these groups are typical, it means that somewhere between 10 and 30 per cent of Angel capital goes to healthcare-related companies, with the number likely being closer to 10 than 30. In fact, a recent Forbes article, “Biotech’s “angel” funding market” (http://www.forbes.com/sites/brucebooth/2013/12/11/crowdfunding-angels-inbiotech-or-devil-in-the-details/) indicates that Angel groups per se may not be the source of a great deal of biotech investment at all: “A quick review of the Boston market’s angel shops suggests, at the very least, that these new biotech startups aren’t working through angel investing groups…”. And individual Angels state unequivocally
