Biotechnology Focus December 2010/January 2011

INSIGHTS FOR THE LIFE SCIENCE INDUSTRY

DECEMBER 2010/JANUARY 2011 VOLUME 14, NUMBER 1

INNOVATION INSIDE:

SEDA: AN INNOVATIVE FINANCING TOOL AT YOUR FINGERTIPS

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STRATEGY CANADA’S COALITION

FOR ACTION ON INNOVATION DELIVERS ITS 10 STEP PLAN

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14 An innovative financing tool at your fingertips

contents DECEMBER 2010/JANUARY 2011 – VOLUME 14 – NUMBER 1

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FEATURES CANADA’S ACTION PLAN FOR PROSPERITY Biotech and Pharma industry introduce its 10-Point Action Plan to put Canada on track toward an innovative and prosperous future.

(Compiled by Shawn Lawrence)

Opinion

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STANDBY EQUITY DISTRIBUTION AGREEMENTS Another tool in a biotech company’s senior management arsenal.

(By Shawn Lawrence)

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Canada’s Coalition for Action on Innovation delivers its 10 Step action plan to make Canada an Innovation leader

THE POTENTIAL OF ONCOLYTIC VIRUSES Are they the future of cancer therapy?

(By Douglas W. Loe)

DEPARTMENTS

IN EVERY ISSUE

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RESEARCH NEWS

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BUSINESS CORNER

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26 CALENDAR OF EVENTS 27 NEW PRODUCTS 28 THE LAST WORD

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7 RESEARCH NEWS

Nathan Deleault wins Alberta Prion Research Institute’s International Young Researcher Prize www.bioscienceworld.ca

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ACROSS CANADA OBEST: fashioning a plan for a commercially viable, competitive bioscience community in Ontario.

(By Christopher Rogers)

SPOTLIGHT 2010 Gairdner Award Celebrations filled with Ontario Flavour (Compiled by: Shawn Lawrence)

THE LAST WORD (By Dr. K. Kellie Leitch)

DECEMBER 2010/JANUARY 2011 BIOTECHNOLOGY FOCUS 3

PUBLISHER’S NOTE

PUBLISHER/ EDITOR-IN-CHIEF STAFF WRITERS

Terri Pavelic Shawn Lawrence Christopher Rogers

CONTRIBUTING WRITERS

Douglas W. Loe K. Kellie Leitch

NATIONAL ACCOUNT MANAGER

Innovative by design?

One look at the headlines in this issue of Biotechnology Focus and you can understand why we considered dubbing this the innovation issue.

Usually we try to fill our pages with features on cutting edge methods and technologies, hot button trends, and other biotechnology related content, yet this collection of articles seems to be tied in one way or another to “Innovation.”

On the financial front, an interview with Dr. Michael J. Nowak, managing director at Yorkville Advisors, describes SEDA as an innovative financing vehicle for publicly traded life science companies. Essentially, the SEDA enables a company to raise money by selling newly issued equity, but the key is that the cash can be drawn on in portions, or when needed.

From a medical perspective, our oncology feature looks at cancer therapies and the potential of oncolytic viruses as an innovative treatment. With gruelling chemotherapy still the routine in the vast majority of cancer treatments, often in conjunction with other considerations - the space for an effective alternative is huge. Oncolytic viruses look to target the tumours without affecting the normal tissue, as is the case with chemotherapy. With several different types of oncolytic virotherapeutics already being tested, the results are looking promising.

On a provincial level, the Ontario lifescience and bioscience industry was hard hit during the recession of 2008 and in many ways, is still recovering but there is hope in the form of an innovative initiative called OBEST. OBEST represents a new program designed and implemented by OBIO (Ontario Bioscience Industry Organization) to lay the foundation for a structurally sound and competitive life science sector. This innovative program engages industry experts from all across the province, divided into a series of regional clusters. These clusters are responsible for distilling the needs of their constituents and reporting back to the OBEST advisory committee. The committee will refine the recommendations down to a strategic plan for the industry. There is even a task force to keep the whole process on track.

Continuing on that theme, but broadening the scope to a national level, the Coalition for Action on Innovation is a nationwide initiative brought together to position Canada as a world leader in innovation and close the innovation gap.

To round off the pack and provide a different perspective, The Last Word looks at leadership in the industry. Dr. K. Kellie Leitch, exposes two problems with health care in Canada: a serious innovation adoption deficit, and a shortage of skilled leaders and change gents within the system. However, where Leitch sees a problem, she also provides solutions.

These features showcase not only what the industry is capable of producing and achieving but also underline the theme of hope. Hope that the industry will thrive, and hope of what its innovations will bring to Canada and the world.

GRAPHIC DESIGNER CONTROLLER

Patricia Bush Elena Pankova John R. Jones

MARKETING MANAGER

Mary Malofy

CIRCULATION DIRECTOR

James Zammit

subscriptions@circlink.ca Tel 289-997-0711 Fax 289 997 8260 EDITORIAL ADVISORY BOARD Najla Guthrie, KGK Synergize; Pierre Bourassa, IRAP, Montréal; Brad Guthrie, Alberta Advanced Education and Technology; Carol Reynolds, Genome Prairie; Ulli Krull, UTM; John Kelly, Erie Innovation and Commercialization; Peter Pekos, Dalton Pharma Services; Brad Thompson, Oncolytics; Darrell Ethell, CanReg; John Hylton, John H. Hylton & Associates; Robert Foldes, Mentis Partners; Colette Rivet, BioTalent; Grant Tipler, RBC; Randal R.Goodfellow, P.Ag., Senior Vice President, Corporate Relations, Ensyn; Bob H. Sotiriadis, LLB,a partner with Leger Robic Richard; Dale Patterson, Genome Canada; Darcy Pawlik, Syngenta Seeds Canada Inc; Gail Garland, OBIO; Barry Gee, LifeSciences British Columbia Biotechnology Focus is published 10 times per year by Promotive Communications Inc. 24-4 Vata Court, Aurora, Ontario L4G 4B6 Phone 905-727-3875 Fax 905-727-4428 www.bioscienceworld.ca E-mail: biotechnology_focus@promotive.net Subscription rate in Canada $35/year; USA $60/year; other countries $100/year. All rights reserved. No part of this publication may be reproduced without written consent. Publications Mail Registration Number: 40052410 Return undeliverable Canadian addresses to: circulation dept – 24-4 Vata Court, Aurora, Ontario L4G 4B6 National Library of Canada ISSN 1486-3138 \ All opinions expressed herein are those of the contributors and do not necessarily reflect the views of the publisher or any person or organization associated with the magazine.

If you would like to order hard copy or electronic reprints of articles, contact Sandra Service 905-727-3875 x221 reprints@promotive.net

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R & D NEWS

Todd Hoare

McMaster Chemical Engineering professor wins Polanyi Prize

Todd Hoare, assistant professor of chemical engineering at McMaster University, has been awarded a Polanyi Prize in chemistry for 2010 by the Government of Ontario.

Prof. Hoare is one of five recipients selected to receive this annual award recognizing outstanding contributions in the areas of chemistry, physiology/medicine, literature, physics, and economics.

Prof. Hoare was recognized for his re-

search on the potential use of gel nanoparticles to help treat diseases such as diabetes. These nanoparticles would target a certain part of the body, remain in place over the treatment period and be activated when required.

“It’s a tremendous encouragement, particularly when you’re in the early part of your career and a lot of people don’t know what you’re doing,” said Hoare.

This year’s recipients were honoured in Toronto at a ceremony at Massey College on Tuesday, November 30, 2010. Recipients of a Polanyi Prize receive $20,000.

The Polanyi Prizes were established in 1987 by the Ontario government to honour the achievements of John Charles Polanyi, recipient of the 1986 Nobel Prize in chemistry. Five prizes are awarded annually to outstanding young researchers in the early stages of their careers at Ontario universities. Recipients of the Polanyi Prize are selected by a panel established by the Ontario Council on Graduate Studies, an affiliate of the Council of Ontario Universities.

Scientists capture antimatter atoms Simon Fraser University physics PhD student Mohammad Dehghani Ashkezari and his supervisor professor Mike Hayden have done something that sounds like it came straight out of a science-fiction movie. They are part of an international team of scientists that has managed to capture and hold onto some atomic antimatter. Despite Hollywood plot lines that would have you believe otherwise, this is the first time anyone has actually managed this feat.

“Even though scientists have now been producing antihydrogen atoms for about 15 years, no one has ever managed to hang on to them. Within a tiny fraction of a second, the newly produced antimatter atoms collide with some ordinary matter and disappear in a flash,” Hayden explained. “We’ve managed to create a complicated magnetic bottle in which the anti-matter can be stored, without ever touching the walls.”

Scientists from SFU and four other Canadian universities and research laboratories – University of B.C., University of Calgary, York University, and TRIUMF

6 BIOTECHNOLOGY FOCUS

– are part of the ALPHA Collaboration based at CERN, in Geneva, Switzerland.

Altogether, the collaboration involves about 40 scientists from eight countries (Brazil, Canada, Denmark, Israel, Japan, and the UK). A paper describing the groundbreaking anti-matter experiment was published online in the science journal Nature (www.nature.com).

Anti-matter – or more precisely the lack of anti-matter in the universe – has puzzled physicists for decades. It is believed that equal amounts of matter and anti-matter were produced in the early universe, but for some unknown reason matter won out. Almost nothing is left.

“Now that we can hold anti-matter atoms in a bottle, it becomes possible to perform careful measurements of their properties. We plan to look for minute differences between matter and antimatter atoms. Even a small difference might give us a clue as to where the anti-matter went,” said Hayden. “This experiment will address some truly fundamental questions about the universe.”

DECEMBER 2010/JANUARY 2011

Clinical Trials & Patents n YM BioSciences (Mississauga, ON) reports positive interim data including substantial anemia response from its Phase I/II trial of JAK1/JaK2 inhibitor CYT387, in myelofibrosis. The results were reported in an oral presentation at the 52nd American Society of Hematology (ASH) Annual Meeting held in Orlando, FL. “Anemia is the most serious symptom associated with myelofibrosis, so I am highly encouraged by the emerging activity profile of CYT387, which uniquely continues to demonstrate a substantial ability to improve anemia while producing similar results to its peers in reducing spleen size and controlling constitutional symptoms,” noted Dr. Alayew Tefferi, chair of the Study.

“I also encourage YM to evaluate CYT387 in other diseases where anemia has a significant impact.” “These unprecedented results highlight the potential safety and efficacy advantages of CYT387 compared with other JAK inhibitors. If CYT387 continues to demonstrate this unique anemia benefit in larger trials, it may ultimately serve as a drug of choice for the majority of patients with myelofibrosis who find anemia problematic,” said Dr. Nick Glover, president and CEO of YM BioSciences.

“We look forward to updated data from the full 140 patient trial in calendar mid-2011.” n Resverlogix Corp. (Calgary, AB) has filed additional new patent protection based on novel findings derived from its recently completed ASSERT Phase 2 clinical trial. A new patent application has been filed for novel dosing combinations of RVX-208 and leading statin therapeutics. Resverlogix’ findings in a post-hoc analysis of ASSERT data revealed that RVX-208 in certain doses along with leading statin drugs markedly improved not only ApoA-I production, HDL and large HDL particles, but also important aspects of LDL and ApoB particles. “The bonus finding of ApoB and LDL lowering while on statins and not in placebo’s was a surprise finding and is useful in selecting the best statin co-medications going forward for maximum treatment effect. The effects seem most efficacious in the leading stains, being Pfizer’s Lipitor and AstraZeneca’s Crestor. Resverlogix will further delineate this positive synergistic effect from a mechanistic point of view,” stated Dr. Jan Johansson, senior vice president of Medical Affairs of Resverlogix. “To have these additional findings of unexpected enhanced statin performance, in combination with RVX-208, offers us an added approach to providing an array of new therapies to reduce atherosclerosis and coronary vascular disease,” Dr. Johansson added.

R & D NEWS Nathan Deleault wins Alberta Prion Research Institute’s International Young Researcher Prize Nathan Deleault, International Young Researcher Prize Winner (center) is flanked by officials from the Alberta Prion Research Institute and the government of Alberta at the award presentation Edmonton.

To celebrate its fifth anniversary and promote work being done in prion and protein misfolding research, the Alberta Prion Research Institute is recognizing the work young researchers are accomplishing on the international scene.

Nathan Deleault was awarded with the Alberta Prion Research Institute’s International Young Researcher Prize.

Deleault’s paper “Formation of native prions from minimal components in vitro” was selected by an international jury as having the most innovative findings and anticipated future impact in the field of prion and

prion-like protein misfolding science.

Deleault started his prion work as a research technician is 2001 and quickly developed into a talented, insightful and rigorous scientist conducting independent research as a research associate in Dr. Suppattapone’s lab in Dartmouth College.

Deleault’s paper “Formation of native prions from minimal components in vitro” reports two major advances: That infectious prions can be produced spontaneously; and can be formed outside of cells. This provides an explanation for the longstanding paradox that prion diseases can arise

sporadically in patients that were never exposed to infectious prions. Another finding was that infectious prions can be formed from a minimal cocktail of defined components. That finding demonstrates that infectious prions do not contain coding nucleic acids or accessory proteins. Cofactors are necessary in prion formation in vitro, and this finding suggests they may also play an important structural role in maintaining the infectious properties of prions.

There is prion and protein misfolding research being done around the world to help find solutions around diseases such as bovine spongiform encephalopathy (BSE, also known as mad cow disease). More than 130 Alberta student and young professionals have been supported, in the last five years, by the Alberta Prion Research Institute. Forty-five research projects have been funded, worth more than $30 million, to help find solutions to the serious scientific and socioeconomic challenges associated with prion and protein misfolding diseases.

The International Young Researcher prize is a celebration of the work of hundreds of up-and-coming researchers who are contributing to the collective knowledge in this field of science, those working towards creating the next generation of solutions.

Our work gives hope – Hope to millions suffering from chronic disease — prolonging life, easing pain. Our work delivers better health care and faster recoveries, through prevention as well as cure. Our work in Canada helps save lives here at home and around the world through innovative research into medicines and vaccines.

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BUSINESS CORNER New Western Canada innovation agreement creates jointly managed fund to enable commercialization of new therapeutics The Centre for Drug Research and Development (CDRD) announces the “Western Canada Innovation Agreement” which brings together CDRD, the Province of British Columbia, the Province of Alberta, and Johnson &Johnson Corporate Office of Science and Technology (COSAT) to jointly develop and manage a fund to support innovative health research programs in the life sciences sector.

The Western Canada Innovation Agreement provides for a joint steering committee that will oversee a co-managed seed fund to enable early-stage, smart discoveries within the health sciences so that they may advance along a pathway to commercialization. Representatives from Alberta, British Columbia/CDRD and COSAT will jointly assess opportunities for the collaboration, funding, management, and commercialization of innovative health research projects.

“CDRD is pleased to have the support of the Province of British Columbia as we en-

ter into this partnership. By developing an integrated, collaborative and strategic approach to research and innovation, we can further leverage the world-class research within Western Canada and CDRD’s drug development expertise in order to commercialize new medical technologies and therapeutics,” said Karimah Es Sabar, senior vice president, business and strategic affairs for CDRD. “British Columbia is a strong supporter of these collaborative efforts to further advance early-stage drug development and the commercialization of scientific research in human health from our universities,” said Ida Chong, B.C.’s Minister of Science and Universities. “The signing of this new agreement is an important step forward in furthering these goals.”

“Alberta is focused on increasing its research capacity and on ensuring that new discoveries make it from the lab to the patient,” said Alberta’s Minister of Advanced Education and Technology, Doug Horner.

Garry Neil “Partnerships like this one – that give us access to new expertise, new facilities, and new markets – will be important to our future success.”

“Collaborations like these are part of our strategy to establish our research presence around the globe,” said Dr. Garry Neil, Corporate vice president, COSAT, Johnson & Johnson. “Ventures like these will create an opportunity for advancements in innovative research within a talent-rich environment.”

Dealmakers n Isotechnika Pharma Inc. (Edmonton, AB) has entered into a development, distribution and license (DDL) agreement with ILJIN Life Science Co., Ltd., for the further clinical and commercial development of voclosporin for use in transplant indications applicable to voclosporin. Under the DDL in exchange for ILJIN funding Isotechnika to perform a single Phase 3 clinical trial in kidney transplantation through a combination of a license fee of U.S. $5 million and the purchase, in three tranches, of common shares from treasury, Isotechnika has granted to ILJIN an exclusive license to voclosporin for transplant and autoimmune indications for the U.S. and other regions outside of Canada, Israel, South Africa, Europe, China, Taiwan and Hong Kong. Isotechnika retains the rights over voclosporin in Europe for future development and commercialization. n Bioniche Life Sciences Inc. (Belleville, ON), has signed an agreement with Thorn BioScience LLC, a subsidiary of CreoSalus, Inc. The agreement provides exclusive rights to Bioniche to market and distribute CreoSalus’ SucroMateTM Equine product in the U.S., with a first right of negotiation to expand the territory. SucroMateTM Equine was just registered in the U.S. by

the U.S. Food and Drug Administration (FDA), one of only 8 new FDA-approved animal health drugs in 2010. It is a controlled release injectable of deslorelin acetate, used to time ovulation in horses and increasing the likelihood of conception during breeding. This is particularly valuable for thoroughbred horses where natural breeding is utilized, and it is also used in mares inseminated with fresh, cooled, and frozen semen. n Angiotech Pharmaceuticals, Inc. (Vancouver, BC) has entered into a private label product supply agreement with Hologic, Inc. for soft tissue biopsy instruments manufactured by Angiotech. The initial term of the supply agreement is for three years with automatic renewals (subject to certain conditions) for additional periods of three years each. The agreement is specific to products sold in the U.S. for use in breast biopsies. Hologic, a leading developer, manufacturer and supplier of premium diagnostic products, medical imaging systems, and surgical products specific to women’s healthcare, sells a variety of products related to breast biopsy. To expand its product offering and complement its vacuum-assisted breast biopsy systems, Hologic will now offer a 14g single-

8 BIOTECHNOLOGY FOCUS DECEMBER 2010/JANUARY 2011

use, fully automatic biopsy instrument with a number of features including a spring-loaded stylet and cannula, one-handed operation, and an echogenic needle tip. The product will be available with a matching co-axial introducer. n Warnex Inc. (Laval, QC) has signed a Contribution Agreement with the National Research Council of Canada’s Industrial Research Assistance Program (NRC-IRAP), for forensic DNA analysis of “Touch DNA” samples from expended firearm cartridges. The research will be performed by Warnex’s PRO-DNA Services division located in Thunder Bay, ON. Touch DNA testing refers to the DNA analysis of skin cells left on an object, such as firearm cartridges or bullets, after a person has touched it. Analysis of Touch DNA poses many challenges. Touch DNA samples are not visible and since they contain smaller amounts of DNA than found in other types of evidence, it is more difficult to obtain DNA profiles from these samples. Warnex will use nuclear and mitochondrial DNA techniques to improve the analysis of Touch DNA samples.

In addition to technical and business advisory services, NRC-IRAP will contribute up to $47,300 for the research and development work performed by Warnex.

BUSINESS CORNER Executive Changes at Stem Cell Therapeutics Corp.

Stem Cell Therapeutics Corp. announces that, the consulting agreements with Alan Moore (president & CEO) and Allen Davidoff (vice president of Product Development) will expire on December 31, 2010.

Davidoff has accepted an offer from the Board of directors and will become the company’s chief scientific officer. The Board of directors will immediately begin a search for a new president and temporarily assume a more active role in managing the company including the possibility of naming an interim CEO. Dean Peterson, chairman of SCT stated, “We wish to thank Alan Moore for his past contributions and wish him all the best in his future endeavors. We will take our time in selecting the right leader for the company. We are committed and determined to build a solid base for SCT and have some great opportunities ahead of us.”

Microbix creates Influenza vaccine subsidiary and announces over-subscribed financing to support the start-up of its China joint venture Microbix Biosystems Inc., a biotechnology company focused on virology and biological technologies, announces it has formed Crucible International Biotechnologies Corp., a wholly owned subsidiary, to facilitate the start-up and operation of its joint venture in China, to advance the commercialization of its VIRUSMAX™ technology and to increase shareholder value.

Microbix is transferring all of its influenza vaccine assets into Crucible, including an exclusive worldwide license to its VIRUSMAX technology and the company’s 50 per cent ownership interest in the Hunan joint venture in China. VIRUSMAX is designed to increase influenza vaccine yields and has demonstrated an average yield increase of at least two-fold over current vaccine production methods.

Microbix also announced the private placement financing of Crucible, to provide start-up capital for the joint venture in China, is over-subscribed. On closing Microbix will hold approximately 80 per cent subject to final subscription settlement.

The financing gives Crucible a post-money valuation of $14 million. Crucible will invest these funds in the influenza vaccine manufacturing joint venture in Hunan Province.

Microbix’ Hunan partner will match this investment and extend a loan to the joint venture providing combined start-up capital of more than $7 million to begin the first phase of the three-phase development of the 120 million dose vaccine facility.

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Compiled by: Shawn Lawrence

FEATURE

An action plan

for Innovation Coalition for Action on Innovation releases its action plan for prosperity

There has been a lot of discussion lately about Canada‘s track record for innovation and productivity. Most have heard by now about the Conference Board of Canada‘s latest report which gave Canada a failing grade on innovation, placing us 14th among 17 peer countries in the OECD. Likewise, it has been reported by many other outlets that productivity in Canada is down, especially in the life sciences. In fact, over the last decade, Canada’s annual productivity pace has slowed to crawl of just 0.7 percent or half the pace we set in the previous two decades and dramatically short of the nearly 10 per cent growth rate in productivity racked up by the United States over the same time period.

To address this shortfall, a national roundtable featuring a diverse group of innovation leaders in the private sector and academia was brought together in October 2009. Discussions continued and before long, the Coalition for Action on Innovation in Canada (CAIC), a think tank co-chaired by GlaxoSmithKline Inc. (GSK) CEO Paul Lucas and former Liberal Deputy Prime Minister John Manley, which included more than 50 leaders from business, academia and supporting organizations was formed. Through further discussion, this group identified seven key themes to take action on innovation including improving tax policy; nurturing start-ups; strengthening business-academic links; building the innovation talent pool; reshaping framework policies; developing innovation clusters; and ensuring effective ongoing advocacy for innovation. In October of this year, the CAIC took this plan and released a nine-page report, 10-Point Action Plan.

According to Paul Lucas, this action plan is focused on correcting the discrepancy between the more than $7 billion the Government of Canada invests annually to encourage business R&D and the amount business spends less per capita on research and development, innovation and commercialization than most other industrialized countries. For Lucas and other members of the coalition, it’s abundantly

10 BIOTECHNOLOGY FOCUS DECEMBER 2010/JANUARY 2011

FEATURE

clear that Canada is not globally competitive on a number of fronts in relation to innovation, which explains the urgency to take action.

“This plan is more than just a blue-print, the steps are laid out with a plan of action in mind,” states Lucas. “Our industry has several R&D issues that go beyond just a simple capital shortage in Canada. For example, we’ve also seen significant losses of clinical research and clinical trials to other jurisdictions. With the help of academia and government, we have to drive a partnership here that’s going to help us maintain and build on clinical trial investment and on the broader research investment in Canada,” states Lucas.

The coalition has already rolled out its recommendations to different industry sectors as well as academia asking stakeholders through their own strategic and advocacy plans- to take the innovation discussion to their own board rooms to discuss what they’re going to do to move the recommendations forward.

Beyond these priorities, the report also offers a series of measures that will require government to act but not in the traditional sense of government spending. Rather the report calls for tax relief for investors aimed at increasing the flow of capital to innovative companies; tax relief for individuals aimed at increasing the supply of talent; and increased financial support for research institutions targeted at greater commercialization of discoveries. Essentially, the report recognizes that government can’t just close the innovation gap simply by throwing more money at the problem.

“I know that when a business leader talks about the need for innovation, the next thing you often hear is a call for government to lead the charge, but government is demonstrating its leadership. You only have to look Canada’s first place position in the G-7 for supporting science and research at our universities and colleges.

The fact is, our governments have shown a clear commitment to foster innovation,” Lucas explains.

But again, while Lucas stresses that he doesn’t expect government to contribute more cash into the research pot, the need from government is to ensure the right policy framework is in place, impediments removed and incentives aligned.

“Most of our recommendations for government action focuses on removing obstacles to innovation, or on realigning existing resources to get a bigger bang for the same buck,” explains Lucas. “This means creating a policy framework that is supportive to industry. Take intellectual property for example, you just have

to look at a simple chart to realize that Canada lags behind in terms of its intellectual property protection framework for pharmaceuticals compared to other countries. If we’re going to be major players in the innovation game, we need to create a friendlier operating environment.”

Also of concern says Lucas is the fact that Canada’s reputation as a world leader in clinical trials throughout the last two decades has suffered with a continued year over year decline in these types of investments. Another concern is Canada places 20th out of 25 countries in OECD rankings, in terms of the percentage of pharmaceutical products that receive reimbursement from provincial government drug programs.

“I guess it comes down to two things here, the pharmaceutical policy framework is not supportive enough of innovation in the sector and it does not support us competing on the global stage. The health care system also looks at pharmaceuticals as a cost, and not as innovation tools to drive better patient outcomes and reduce costs in other parts of the health care system. It is important to recognize that brand name pharmaceuticals represent only 7 per cent of the total health care bill. So despite the fact that pharma is a major investor in R&D and an incubator of high-value, high-paying jobs, Canada‘s research-based pharmaceutical companies are not seen in that light by our biggest customers, the health care systems of Canada.”

Lucas goes further explaining that on the one hand, Canadian governments and citizens are investing in health sciences research capacity, but on the other hand provincial procurement policies, through the drug programs, are discouraging the commercialization of new medicines and capturing the potential fruits of this research.

“We’re not buying or nurturing the fruits of pharmaceutical innovation in Canada the way other countries are. We rank 23rd out of 29 countries in terms of country’s actually buying our products when we bring them to market.

We rank 26th out of 29 countries for first in class products. Again, if you’re a major pharmaceutical company working on a global scale, or a start-up trying to operate in Canada, you can do all this good work, you can innovate, you create products, but the reality is that Canada’s probably not going to buy your product. This is a fundamental element of supporting innovation is that local jurisdictions, countries and provinces need to buy innovation because of their massive procurement capabilities, to support innovation in general. And so there is a dichotomy. The major consumer in Canada for pharmaceuticals is the government drug plan,

Recommendations made in the report include:

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To make R&D tax credits open to public companies and businesses that lose money.

To create governmentsponsored “co-investment funds” with private investors to finance emerging companies.

To adopt the world’s strongest intellectual property regime.

To launch pilot partnerships between retired entrepreneur coaches and start-ups.

To enlist more retired executives to help the government dole out R&D funds.

To use the federal government’s buying power to spur adoption of new products and services.

To set a national target of a 90-per-cent high-school graduation rate and boost master’s and doctoral graduates.

To help foreign graduate students gain permanent immigration status.

To form a national network to share know-how among existing clusters of innovative companies and industries.

To create an independent advocacy group to push innovation by Canadian companies.

DECEMBER 2010/JANUARY 2011 BIOTECHNOLOGY FOCUS 11

BioTal

FEATURE

“I know that when a business leader talks about the need for innovation, the next thing you often hear is a call for government to lead the charge, but government is demonstrating its leadership.

You only have to look Canada’s first place position in the G-7 for supporting science and research at our universities and colleges.

The fact is, our governments have shown a clear commitment to foster innovation.”

– Paul Lucas

but if they don’t buy your product, you’re not going to be successful from a financial point of view as a business. Put simply, if the government of Ontario told Ford they weren’t allowed to sell their cars in Ontario, do you think Ford would invest in Ontario? It’s the same in the life sciences/ pharmaceutical business, and that’s the dilemma, that if you’re a pharma company, why would you actually invest here if you know that the jurisdiction probably isn’t going to buy your product.”

Another area that Lucas feels needs improvement with the help of government policy makers is Intellectual Property and Patent protection.

“If I’m a small start-up company or if I’m a major pharma company on the global stage, when I bring something to market, the patent protection that I get here in Canada is not equivalent to what I would get in other western nations. So I ask where is the incentive for me to actually innovate in Canada, as a start-up why don’t I move to some other jurisdiction that provides me with better protection for my intellectual property.”

While a major part of the Coalition’s recommendations are about creating a more favourable environment for investing and innovating, the responsibility of the business community and academia is to drive these recommendations and to actually implement them.

“That’s who they’re designed primarily for. Obvi-

12 BIOTECHNOLOGY FOCUS DECEMBER 2010/JANUARY 2011

ously public policy does matter in all that, but industry needs to lead this because it’s industry that’s not innovating the way it needs to in Canada. If you step back for a minute and look at all the money that’s being invested by government’s in research in our universities both federal and provincial, they’re investing billions of dollars. The intent of that investment is to create innovation, ideally to create start-up companies that will then be successful in creating jobs and wealth. What we’re asking is that the private sector and the people who are in this field to get together and to figure out how we are going to fix this problem. In the name of innovation in Canada, they need to find a way to help these companies emerge,” he said.

In addition to his role as CEO of GSK and cochair of the Coalition for Action on Innovation, Lucas is also the chair of RX&D, an organization that represents Canada‘s research-based pharmaceutical companies. Not surprisingly as one of the key R&D sectors in Canada and the second biggest industry investor in R&D, Lucas in his position with both GSK and RX&D recognizes the role pharma can play in this process and that it is in their best interest to do so.

“I think the biggest challenge will be overcoming the lack of focus on business’s part to address the issues. This is bigger than just the life sciences.

If the industries and companies in Canada don’t embrace the need to innovate, than they won’t innovate which is a serious potential problem because if we don’t innovate, we will become poorer both as a country and as individuals. We won’t pay as much tax, and therefore we won’t be able to fund our healthcare and education systems. This is bigger than most people think.”

The timing of the report’s release could not be any better. Frustrated that Canada doesn’t seem to be getting enough results from the roughly $7-billion it spends every year on R&D, directly and through tax breaks, the Government of Canada launched its own think tank panel to conduct a comprehensive review of all existing federal support for business R&D and to see how this support could be enhanced to make sure federal investments are effective and delivering maximum results for Canadians. It is the Coalition’s hope that this expert panel will take their suggestions to heart and aid in the implementation of the Action Plan for Prosperity.

For more information on the Coalition for Action on Innovation and the Action Plan for Prosperity please visit www.actiononinnovation.ca.

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Reply Card #4817

By Shawn Lawrence

COMMERCIALIZATION

An innovative financing tool at your fingertips

The Canadian biotech landscape has been hit hard by one of the most severe market downturns in recent decades. Those that have survived have needed to turn to non-traditional mechanisms to raise additional funds and to be on the lookout for new methods to complement their financing strategies.

O

ne such instrument gaining popularity is the Standby Equity Distribution Agreements or “SEDA.” SEDA’s are a vehicle that was pioneered in 2001 by Yorkville Advisors LLC, an investment manager to a family of funds headquartered in the U.S. The SEDA enables a company to raise cash by selling newly issued equity, but allows it to do so in tranches so that the company can draw down funds as and when needed.

Dr. Michael J. Nowak, managing director at Yorkville Advisors explains that SEDA’s are akin to having another tool in the armoury of a biotech company’s CFO and senior management.

There are many reasons a company may consider the SEDA equity line as a complement to their financing strategy, including its flexible and simple nature. He adds they are a cost-effective way for publicly traded companies to optimize their capital structure to pursue their growth strategies.

“It’s a very simple mechanism, all a company has to do once they’ve established a SEDA with us is call or email us with an advance noticeup to a certain tranche limit or maximum weekly allotment, whether it’s $500,000 or $1,000,000, depending on the agreement, then they can sells us those shares at a price determined by the marketplace over a period of the next five or ten days.”

Moreover, companies that take out a SEDA have the right or option to sell Yorkville shares throughout the duration of the instrument without obligation. In fact, the only obligation is for Yorkville to buy the shares, in good times as well as bad on the insistence of the company doing the selling.

“The companies are not obligated to sell shares to Yorkville at any time, so the control is completely in their hands. Especially during times when the share price is unattractive or the company doesn’t need cash, the instrument can lie dormant,” Novak said.

If a company wishes to extend the SEDA beyond the three years, that option is also available. And if a company wishes to cancel the SEDA option, they can do so at any time and at no cost.

In addition to flexibility, SEDA’s also recognize urgency and can provide certainty to companies making use of the vehicle.

14 BIOTECHNOLOGY FOCUS DECEMBER 2010/JANUARY 2011

Nowak stated there are four pillars to the SEDA tool, the first of which is opportunistic fund raising on good news reporting. The SEDA also gives companies a real competitive edge in raising capital both quickly and on a company’s own terms.

COMMERCIALIZATION “It’s a very simple mechanism, all a company has to do once they’ve established a SEDA with us is call or email us, and up to a certain tranche limit or maximum weekly allotment whether it’s $500,000 or $1,000,000, depending on the agreement, they can sells us shares at a pricing period for that next five days or 10 days.”

— Michael Novak

“It’s useful for companies experiencing increased market volatility and trading volumes.

In the right hands it can be effective in other ways as well. Say a company has reached a significant milestone, or had some other significant news, the SEDA allows the company to take advantage of an increase in share price or trading volume, essentially it allows the company to react quickly to favourable circumstances, such as a rising share price or potential acquisition,” he said.

The SEDA can also enhance the liquidity of stock in a controlled and measured way; while at the same time, broaden a company’s investor base. Additionally, the flexibility to raise funds in incremental amounts provides a mechanism for the company to effectively cost –average down its cost of capital, minimizing dilution to its shareholders.

The third pillar of a SEDA is that it provides additional leverage in strategic negotiations with pharma companies or other partners.

“The key here is having the additional funding of the SEDA at your disposal, by having it there in your back pocket, you can improve you’re bargaining position in talks.”

Perhaps the most important bonus of having a SEDA is that it can provide companies with a safety net in downturn scenarios.

“It’s hard to go out and do a private placement and difficult to execute some equity based financing on the heels of negative news for obvious reasons. So as long as there’s liquidity in your stock, you could raise money via a SEDA. The key here though is to still use the product strategically, like any equity based financing, dilution is something that investors are concerned about so its best to make sure in such instances to explore all options,” states Nowak.

Already, five Canadian biotech companies have established SEDA agreements with Yorkville Advisors including: Labopharm Inc. ($25,000,000), Allon Therapeutics ($10,000,000), Resverlogix Corporation ($25,000,000), Medicago ($10,000,000) and Patient Home Monitoring Corp. ($5,000,000) on the Venture Exchange.

Numerous other biotech’s from both Europe and the U.S. have also used the vehicle.

According to Nowak, some companies have used it to fund additional trials; others have used it to retire financial debts that they might have. Companies have even used it to hire additional sales people to drive revenue.

However a company chooses to use a SEDA, the key he says is that they have the option to use the instrument at any time they want.

“So, they don’t need to do a road show, they don’t need to do anything else to raise capital. All they need to do is call us up and say look I’m going to be doing this and they have that right for three years,” said Nowak.

Count Labopharm Inc., a specialty pharmaceutical company focused in the pain and depression marketplace, as one of the organizations that sees the benefits in the SEDA vehicle.

Labopharm has had the facility in place since late 2009, at a dollar amount of $25,000,000.

“I think it definitely served its purpose,” says Labopharm Global head of corporate development Jason Hogan.

“I think at the time that we put it in, it was a good tool for us to provide some financial flexibility, some additional liquidity at a time when we weren’t prepared to undertake a large equity offering.”

He adds that about a month after the company put the vehicle in place, Labopharm drew down a million dollars to take the facility for what he called “a bit of a test drive.”

The funding worked much better than he had anticipated.

“We wanted to see how it worked and when we did our first draw down, our stock performed well during the pricing period. We then did an equity offering in early 2010, and just based on those events we haven’t needed to use it again.

But just knowing that we have this facility and ready access to capital should we need to utilize it is great. I would say our experiences with the SEDA have been positive and it’s a very cost-effective vehicle to put in place, relative to other financings and certainly compared to debt, the cost of actually putting the facility in place was very reasonable on a relative basis.”

When asked if it has fulfilled its four promises, Hogan believes SEDA has. However he stresses not to put too much dependence on it, but rather to use the vehicle strategically.

DECEMBER 2010/JANUARY 2011 BIOTECHNOLOGY FOCUS 15

COMMERCIALIZATION “We can actually self finance using the SEDA, so it’s definitely plus and it also saves time in that we don’t have to go out looking for cash.

It’s a good fund to have in your back pocket in both good and bad times. We would draw on it in either situation, but selectively.”

— Don McCaffery

“For example, I don’t know if I’d use the term safety net in association with a SEDA. You don’t want there to be the perception that there’s never ending dilution for your shareholders. I think we look at it a little more strategically than that, and again I think that’s another really good reason to have it in place, perhaps when you don’t need it, because you can then use the facility more strategically then putting something like this in place when your funds are completely depleted. Other than that, for sure it fulfills those four promises. For us it didn’t increase our liquidity as we were a very liquid stock prior to having the vehicle and I wouldn’t say it did much to broaden our investor base, but certainly it has given us leverage in partnership discussions,” he said.

Like Labopharm, Calgary based Resverlogix set up a $25,000,000 SEDA. They did so according to Resverlogix president and CEO Don McCaffery based on the fluctuating economy and talks of double dips permeating throughout the industry.

“So far, we’ve only drawn $200,000 just to initiate it. We may not use any, but the option to draw from it is there, depending on what market conditions are. It gives us a safety valve in case of equity markets drying up or anything else, we have a way of self funding going forward,” he said.

McCaffery believes it is an important vehicle for any non-cash flowing research company to actually put in place for many of the same reasons that Hogan described. But McCaffery also subscribes to the theory that one can never be too safe in this industry where funding is concerned.

“We can actually self-finance using the SEDA, so it’s definitely a plus and it also saves time in that we don’t have to go out looking for cash. It’s a good fund to have in your back pocket in both good and bad times. We would draw on it in either situation, but selectively. During good times you’d be drawing on it based on liquidity and you can take larger amounts. In bad times, if you need

to draw on it because there is no other equity available, such as when the equity market dried up in 2008 and companies had no place to get cash, its probably one of your better options.”

As for what Yorkville does with the shares they purchase, Michael Nowak explains that Yorkville can hold onto them and try to capture equity upside, or they can sell them into the market and other investors. And if the company wants Yorkville to sell the shares back, they will.

“It’s really whatever the company wants from the SEDA, we’re still a shareholder like every other shareholder, but we’re probably a bit more passive.”

The question one might ask then is what’s in it for Yorkville?

“Before fall 2008 it was a different world,” says Nowak. “Our fund was doing equity investments or convertible debt, when the financial crisis started two years ago, we found the SEDA an instrument that a lot of companies were interested in, but it was also very interesting for us because it’s a more conservative way to buy equity in good companies.

In the old days as a fund we would write $5 million, $10 million checks, a large bet at one time at one place and at one price. The SEDA represents a way to not only buy significant amounts of equity but over a longer period of time. As the share price will jump around, we as the equity investor have got a much finer control of the risk that you’re buying.

And hopefully for the company, the equity price will go up over that time, and so the company is able to sell equity at a lower and lower cost of capital.”

Essentially, it’s a risk managed way to invest but most importantly it’s still a way to invest and buy equity in good companies.

“Obviously what we’re really interested in is the equity upside in these companies because the slight discount to market, the five per cent we get covers costs, covers trading costs and currency risks, but it’s not where you’re going to make a significant profit. So what we’re looking for is the equity upside,” he explains.

16 BIOTECHNOLOGY FOCUS DECEMBER 2010/JANUARY 2011

Nowak was himself once a general partner in a large venture fund, and not surprisingly he takes the same approach when assessing the opportunities to invest with good companies via the SEDA vehicle.

“We really want to find companies with good strong growth potential. Usually that means a good management team and a product or technology that addresses a large market. On top of that we have some financial metrics that we believe the SEDA works best for, so we do like to see companies with market caps of roughly $50 million or more, and with trading volumes of $50,000 a day or more. We’ve made some exceptions along the way when we think there’s a compelling case, for example, Medicago. We started SEDA discussions with them when they were much smaller, but we saw a lot of potential in that company.

The same goes with Allon Therapeutics. Liquidity is a challenge for Canadian biotech companies, but we think there are a lot of strong fundamentals there from a business perspective and that’s why we’re so active in Canada.”

His biggest success story to date with the fund is Achillion Pharmaceuticals, a New Haven based company focused on Hepatitas C that had positive proof of concept data last December.

“Their stock went up 80 per cent on that good news, and so we were able to capture the equity upside with the shares we owned in the company because the trial was successful. It’s pretty much what a traditional investment approach would be; our goal is to capture that reward or investment result.”

For more TO MARKET information visit our COMMERCIALIZATION Web Portal at www.bioscienceworld.ca

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Reply Card #4818

By: Douglas W. Loe, Ph.D, MBA

Oncology Chemotherapy—as any cancer patient will tell you—is not for the faint of heart, but it can kill many forms of cancer. Some form of chemotherapy, originally discovered as a cancer treatment almost 70 years ago, is still routinely prescribed for most types of the disease. The treatment works by targeting fast-growing cells, like those typically found in rapidly growing tumors. But while chemotherapy can shrink tumors, they often grow back and become resistant, or refractory to the treatment.

The Potential

of Oncolytic Viruses:

Are They The Future of Cancer Therapy?

T

o combat this resistance, chemotherapy is now often used in combination with other treatments that have different mechanisms for attacking and killing cancer cells. Doctors must be cautious when combining treatments to ensure that the regimen does not become too toxic for patients to tolerate.

The goal is to introduce drugs that can be used synergistically with chemotherapy to not only extend life, but to improve quality of life while undergoing treatment.

The Potential of Oncolytic Viruses One approach that has proven quite promising is known as oncolytic virotherapeutics. Here, viruses are harnessed to infect, multiply within and subsequently lyse cancer cells; the virus targets tumors without affecting normal tissue.

Several types of oncolytic viruses have been developed to date.

These include the adenovirus, which is a non-enveloped virus with a double-stranded, linear DNA genome that forms particles that are 70 to 90 nm in size. There are multiple engineered versions of this virus in clinical trials, including Onyx-015 and H101. The latter has been approved in China and is sold by Shanghai Sunway Biotech.

A second form of oncolytic virus is Newcastle-disease virus (NDV).

This is an enveloped virus with a single-stranded, negative-sense RNA genome that forms pleiomorphic particles ranging from 150 to 300 nm. Naturally attenuated versions, such as PV701, are in clinical development. Although still in Phase I testing, slow virus infusion rather than injection seems to mitigate side effects. The Marylandbased private firm Wellstate Biologics has two Phase I open-label PV701 cancer trials ongoing.

Poxviruses are a family of enveloped viruses that contain a double-

stranded, linear DNA genome and form particles that are 200 nm in diameter and 300 nm in length. Myxoma and vaccinia are family members that are under therapeutic development. Among several candidates, the most advanced is probably Jennerex’s JX-594, which is entering a Phase II liver cancer trial in partnership with Transgene (see below) and which could enter a Phase II colorectal cancer study imminently, testing JX-594 in patients refractory to Eli Lilly’s leading EGFr-targeted antibody drug Erbitux. Interim data are already available from nine patients in a small Phase I/II liver cancer study showing disease stabilization in at least five patients when JX-594 is administered with Bayer’s approved liver cancer drug sorafenib (branded as Nexavar). JX-594 performed just as well in a separate Phase I liver cancer study where it was tested as monotherapy and not in combination with Nexavar. Interim data from 24 patients in that trial showed disease stabilization at two months in most JX-594 -treated patients, providing solid evidence of JX-594 oncolytic virus potency at treating this cancer form.

It may come as a surprise to some that the herpes simplex virus is also under consideration as an oncolytic virus. This is an enveloped virus with a double-stranded, linear DNA genome that forms particles that are 150 to 200 nm. Many engineered versions are in clinical trials for the treatment of patients with cancer, such as OncoVEXGM-CSF, G207, HSV-1716 and NV1020. The most advanced of these is OncoVEXGM-CSF, a combination of the oncolytic virus OncoVEX plus granulocyte macrophage-colony stimulating factor (GM-CSF) developed by Massachusetts-based private firm BioVex; the combination is already well-advanced in a 360-patient Phase III advanced melanoma trial and a 528-patient Phase III head & neck cancer trial design has been endorsed by the U.S. FDA under a Special Protocol Assessment and could begin later this year, or perhaps early 2011. G207 continued on page 20

18 BIOTECHNOLOGY FOCUS DECEMBER 2010/JANUARY 2011

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Oncology continued from page 18 was developed by the German firm Medigene, which recently completed a Phase II brain cancer trial, and was also developing NV1020, which recently completed testing in a 27-patient Phase II liver metastasis from colon cancer trial. However, neither oncolytic virus formulation is identified in Medigene’s clinical pipeline at present. UK-based Crusade Laboratories tested HSV-1716 in a Phase I oral cancer trial; a Phase III GBM trial is being planned as are Phase I/II ovarian cancer and liver cancer trials. And lastly, BioSante Pharmaceuticals’ adenovirus CG0070 was recently sold to private biotech firm Cold Genesys; the virus performed well in a 35-patient Phase I bladder cancer trial conducted by innovator Cell Genesys, and based on those data, the virus could advance into Phase I/II bladder cancer testing at company discretion.

Picornaviruses are a family of non-enveloped viruses with singlestranded, positive-sense RNA genomes that form particles that range from 18 to 30 nm. Members of this family that are being tested as oncolytic therapeutics include coxsackieviruses and engineered versions of poliovirus. The latter is in development at a few locations, including research institutes at Duke University and Stony Brook University, and has shown some preclinical efficacy against GBM and neuroblastoma. The firm Viralytics is developing the coxsackievirus A21 in a Phase I advanced melanoma study.

Vesicular stomatitis virus (VSV) is an enveloped virus with a singlestranded, negative-sense RNA that forms 65 to 185 nm bullet-shaped particles. This virus is still in the research stage; two constructs have recently been tested at the Mt. Sinai School of Medicine in New York.

Reoviruses: The Most Promising Option?

Finally, we come to what some consider the most promising form of oncolytic virus: the reovirus. This is a non-enveloped virus with a double-stranded, segmented RNA genome that forms particles that are 60 to 90 nm. The reovirus preferentially replicates in cancer cells that feature a common mutation known as an “activated Ras pathway,” while sparing normal cells. This makes it intrinsically tumor selective without the need for any genetic manipulation.

Reovirus is a virus with no known associated disease. It replicates in the cytoplasm and therefore does not integrate into the cell’s DNA. Reovirus is found everywhere in nature and has been isolated from

untreated sewage, river and stagnant waters. Exposure to reovirus is common in humans, with half of all children by the age of 12 having been exposed and up to 100 per cent testing positive by adulthood.

Tumors bearing an activated Ras pathway cannot activate the anti-viral response mediated by the host cellular protein, PKR. Studies have shown that reovirus actively replicates in transformed cell lines with an active Ras signaling pathway, eventually killing the host cell and freeing the viral progeny that go on to infect and kill more Ras-activated tumor cells. When normal cells are infected with reovirus, the immune system can neutralize the virus. Approximately one-third of human cancers have activating mutations in the Ras gene itself, and it is possible that more than two-thirds of cancer cells have an activated Ras signaling pathway because of activating mutations in genes upstream or downstream of Ras.

How Reoviruses Might Help While it has been demonstrated in animal studies that reovirus is capable of treating metastatic cancer in immunocompetent mice, it has also been shown that reovirus used in conjunction with immunosuppressive drugs can effectively prolong animal survival. Combining IV reovirus therapy with Cyclosporine A, an immune suppressant, significantly inhibited tumor regrowth.

In a model of disseminated LLC metastatic lung cancer in C57BL mice, treatment with reovirus and either Cyclosporine A or T cell depleting antibodies (anti-CD4 and anti-CD8 Ab) led to an increase in survival compared to treatment with reovirus alone.

The above results supported the development of clinical protocols in which immune suppressive drugs could be combined with a systemically administered reovirus in the treatment of cancer. The combination of reovirus with various chemotherapies in human colorectal cancer cell lines demonstrated synergistic cytotoxic activity. In addition to modulating the immune response, the use of chemotherapies along with reovirus treatment may enhance intratumoral spread of the virus.

Calgary-based Oncolytics Biotech Inc. has developed a biologic agent, Reolysin, from naturallyoccurring reovirus. The virus has demonstrated impressive results in clinical trials on its own, but particularly in combination with certain chemotherapeutics. In preclinical studies in a wide variety of cancer cell lines, investigators found that when used together,

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Reply Card #4820 20 BIOTECHNOLOGY FOCUS DECEMBER 2010/JANUARY 2011

OncOlOgy reovirus and chemotherapy resulted in more efficient and synergistic anti-cancer activity than when each agent was used on its own.

These combinations are showing extremely good results in human trials, particularly in refractory head and neck cancer patients. Many head and neck cancer patients treated with a combination of Reolysin and chemotherapy to date have experienced dramatic and prolonged tumor shrinkage, without increasing adverse side effects. A pivotal 180 to 480 patient Phase III head and neck cancer study commenced this year and could generate survival data in a few years. Non-small cell lung cancer (NSCLC) is another potential target for this treatment combination. The Cancer Therapy & Research Center at the University of Texas Health Science Center—a big proponent of oncolytic viruses—has committed to funding up to five Phase II clinical trials using Reolysin in combination with chemotherapy against a variety of advanced cancers.

And based on solid evidence that Reolysin could be effective as an anticancer agent targeting tumor types with activated Ras pathway, Oncolytics Biotech and clinical collaborators are actively testing Reolysin in ovarian cancer, colorectal cancer (though only in patients harboring mutated Kras gene), melanoma, sarcoma, and pancreatic cancer, for which tumor response data could be available in a year or two.

It is difficult to provide a crystal-clear economic forecast for oncolytic viruses as a whole, but an indicator of their potential future sales earnings can be derived from examining four recently-launched anticancer therapies already on the market.

One of these is erlotinib, branded as Tarceva, developed by OSI Pharmaceuticals and launched in 2004 by Roche/Genentech and OSI. An oral small molecule tyrosine kinase inhibitor drug that is prescribed for patients with advanced-stage non-small cell lung cancer, it earned $20 million in 2004, $387 million in 2005, and $813 million in 2006. Sales reached $1.2 billion in 2009. Another is the immunomodulatory and anti-angiogenic drug thalidomide (branded as Thalomid), developed

by Celgene and launched in 2003 for treating multiple myeloma, which enjoyed sales of $224 million that first year and reached $505 million by 2008. A third is lenalidomide (branded as Revlimid and also developed

by Celgene), a drug structurally related to Thalomid that generated even more robust sales growth after its launch in 2006, achieving blockbuster sales in 2008 of $1.3 billion that grew to $1.7 billion last year. And a fourth is the oral alkylating agent temozolamide, branded as Temodar

by Schering-Plough (now part of Merck) and approved as a glioblastoma (brain cancer) drug; Temodar generated $180 million in sales in 2001 that grew to $703 million in 2006 (its first full-year of sales in the U.S.) and exceeded US$1 billion in 2009. Though survival benefit of 11 weeks is modest, the drug (along with Roche’s Avastin) is still standardof-care for patients with advanced brain cancer.

Partners and capital markets are now recognizing value in oncolytic viruses The year-over-year, steadily increasing demand for the four drugs described above provides supporting evidence that demand for new and effective agents in oncology remains strong, giving us confidence that Reolysin could be similarly embraced if it performs well in Phase III testing. We are optimistic that global oncology-focused pharmaceutical firms will be keen to partner with Oncolytics once Reolysin Phase III head and neck cancer data are available, if not before, and capital markets are exhibiting optimism in Reolysin’s medical prospects through the company’s share price strength this year and through well-subscribed equity offerings in 2009/10.

And in other commercial advances in oncolytic virus development, Jennerex’s JX-594 is now partnered with the French biotechnology firm Transgene in a $116 million alliance that could pay Jennerex a double-digit royalty on future JX-594 sales if the drug performs well in pivotal liver cancer or colorectal cancer trials, or in other cancer

indications contemplated in the alliance. The Transgene alliance seems to be focused on European and Middle East marketing rights and thus provides an opportunity for U.S. or Japan-based firms to partner with Jennerex in those regions.

As we have seen above, there are a number of oncolytic viruses that have shown potential use in cancer treatment and demand for more effective agents is strong. Future research studies will give us an even clearer perspective on which, if any, of these viruses offer the most effective route toward a reliable and commercially viable complement to chemotherapy for oncologists and their patients.

Douglas W. Loe, Ph.D, MBA, is a consistently topped ranked healthcare and biotechnology analyst. He has covered Canadian biotech since 2000, initially as part of the research team at Yorkton Securities (now Macquarie Capital Markets), and has been with Versant since Fall 2002 where he covers a broad spectrum of drug development, medical technology, and healthcare services firms. Doug holds a MBA from Queen’s University and a Ph.D in biochemistry from the University of Guelph, working in the area of cancer chemotherapy and multidrug resistance, followed by post-doctoral training at the Queen’s University Cancer Research Institute. During his scientific career, he published multiple abstracts, peer-reviewed manuscripts and reviews related to P-glycoprotein and MRP-mediated multidrug resistance. He can be reached at DLoe@versantpartners.com. Versant Partners is a member of the Canadian Investor Protection Fund (CIPF).

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Reply Card #4821 DECEMBER 2010/JANUARY 2011 BIOTECHNOLOGY FOCUS 21

By Christopher Rogers

Across Canada

The best laid

plans

How OBIO is looking to overcome the past, change the course of the bioscience industry in Ontario and steer the ship out of the storm

Innovation and Bioscience go hand and hand. It is a symbiotic relationship - both depend on one another. Yet, for Ontario, a province teeming with groundbreaking initiatives in the bioscience field, there is something missing. A broken link between this would-be flourishing industry and reality. True, the recession of 2008 to 2009 hit the industry hard, but the seeds of insufficiency were planted far earlier.

F

or most of the past decade, the rallying cry of the Ontario life science industry has been “commercialization is key.” Now, more than ever, that message rings true, but it has also evolved, and as it stands, the Ontario bioscience industry is looking for investment, incentives and the capital it needs to be the juggernaut most believe it can be. The plan to get the province to that point is what OBEST, the Ontario Bioscience Economic Strategy Team hopes to bestow upon the industry.

Created by OBIO (Ontario Bioscience Industry Organization), in response to a call to action from OBIO’s CEO’s to develop and implement a strategic plan for building a competitive bioscience industry, OBEST takes a grass roots approach to fashioning a plan for a commercially viable, competitive, bioscience community in Ontario.

Since it’s initial launch in late September 2010, OBEST has already seen good participation from the community, and as the program wraps in February 2011, that participation is quickly being turned into an action plan.

Gail Garland, CEO, Ontario Bioscience Industry Organization, explained that in the larger scheme of things, OBEST is really about facilitating innovation and delivering economic prosperity and health to Ontarians.

“OBEST engages the Ontario bioscience ecosystem in a collaborative, iterative process, aimed at bringing the best ideas forward with which to support the growth of an innovative bioscience industry,” she said.

The backbone of that ecosystem is already

to compete in a knowledge based industry.

The critical need for affordable and better healthcare - the opportunity to deploy our highly educated workforce and exploit our world-class based research. Ontario can be a natural home for a vibrant, innovative, bioscience industry that creates wealth and innovative healthcare solutions.”

OBEST is built around three strategic pillars: an advisory board, a task force and seven regional clusters of bioscience industry professionals. Each of the regional clusters meets three times and the results of these assemblies is presented to the advisory board,

in place and OBEST looks to take advantage of all the pieces, including: Ontario’s well educated populace, productive educational institutions, and significant levels of direct- and indirect- government support for research and development. Certainly, these are the foundations upon which a thriving industry could be built. These pieces form an opportunity, while OBEST looks to overcome the current crisis.

Garland outlined both sides of the story, saying on one side there is opportunity in, “the gap created by the decline in Ontario’s manufacturing, plus the opportunity

Regional Ecosystem Clusters Eastern Ontario

Stakeholder engagement: Industry

•

Suppliers

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Universities/ Colleges

•

Research Institutes

•

Hospitals

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Government

•

Financial and Capital Markets

22 BIOTECHNOLOGY FOCUS DECEMBER 2010/JANUARY 2011

Mississauga

Northern Ontario

•

Western Ontario

Advisory Committee Special Advisors South Central Ontario

GTA Central

GTA North

Across Canada “To me, this process is industry’s reaction to being responsible for it’s own destiny, and I think it starts The Parts to overcome some of that cultural inertia where we think government has the primary role,” he said. “I OBESTTM Stakeholder think in this case, what we’re seeInteraction ing is that each of the stakeholders have a responsibility for creating an environment for success and Advisory Task creating that broad based changed.

Committee Force I think that perhaps the most important point here is that government is an important partner, but you need everyone working off of the same play-book, and I think that might be the first instance of that Consultants in Ontario.”

Special Clusters Sean Thompson, head of the Advisors OBEST task force, sees the goals of OBEST as noble.

“I think one of the things that unites us here together is that we’re here for a greater cause - and I think industry sectors - from quasi-government that cause is the reason why a lot of us are working in the area of human health scienc- agencies to private companies, “just a group es,” Thompson said. “This is a noble cause of hard working volunteers who wanted to and, we as beneficiaries of this tremendous be part of building significant change in the province.” province have an obligation to create a much The task force has the most arduous better province at the end of our lifetimes.”

Thompson joined the task force in Sep- schedule - meeting weekly to make sure tember of 2010. He said the first meeting the entire OBEST process stays on the rails. was small, with only four or five participants Each of the task force members is responbut by the second week, that number had sible for one of the seven regional clusters more than doubled. Thompson said the task - with clusters big enough to warrant two force is made up of members from various task force members. The task force spends much of their time simply getting the word out and drumming up support for the regional meetings.

Already over 120 stakeholders have participated in the OBEST process. And, the task force has also prepared a number of case studies based on other worldwide jurisdictions with similar and requirements to Ontario.

The research is made available to the OBEST community through an electronic Economic impact forecast and final report portal, which has been set-up to also facilitate discussion during the off-periods between meetings. Young also said that it creates transparency in the process.

AC – Cluster cycle 2 AC – Cluster cycle 3 “This way there is an open democratic integrity to the process so that you don’t see any one group potentially hijacking the OBEST process - and essentially I think the process can have a lot of weight behind it because of the board constituency behind it. One of the potential flaws here is that one group would be advocating for their own interests instead of the interests of the province and the sector as a whole, so that

which meets four times. The OBEST task force, act as the go-betweens, champions and facilitators of the process.

“The OBEST task force are the real heros of the OBEST process,” Garland said. “This dedicated group has met weekly since September to plan next steps, work with the regional leadership, to organize the regional cluster meetings, to develop and populate an e-room, to support all of our efforts and provide a forum for us to have an ongoing dialogue - the OBEST task force is the glue that holds everything together.”

OBEST is more of a process than a organization. The outcome of the process will be a final plan in the form of a report which will lay the a five-year path for Ontario to follow down the road to bioscience stardom. The report is due from the advisory board after their final meeting in February 2011.

“The overall picture is a five-year time frame but we were very conscious of the fact that we would not have something that is only metrics,” Daneil Billen, chair of the OBEST Advisory Board, said. “Our recommendations will be structured in such a way that it’s an overall five-year umbrella with metrics along the way with what do we want to accomplish by year one, two, three etc.”

It is an innovative process but how does OBEST plan to succeed where other’s have failed?

David Young, chair of the OBIO board of directors said that processes such as this have been implemented by government but there was never a clear strategy for implementation.

The Process

Ontario economic baseline

AC – Cluster cycle 1

Time

AC – Advisory Committee

DECEMBER 2010/JANUARY 2011 BIOTECHNOLOGY FOCUS 23

Across Canada of early stage IP and startup opportunities; and a good business-mind in Ontario.

“Weaknesses: no receptors; no large multi-national corporation to spin ideas and manpower; access to capital issues; a lack of industry ready talent; a lack of a mind-set for building a viable industry; challenges commercializing academic IP, and there is a regionally to that finding; limited mentoring and a negative perception on access to the local market.”

transparency is a great check,” he said.

When the regional clusters come together - they discuss the needs of their constituents and identify their strengths and where they need assistance. Garland highlighted some of the findings, “Among the strengths, we identified: strong academic research; clinical infrastructure, and diverse population base; focused research priorities with programs such as the Ontario Institute for Cancer Research; a strong pipeline

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Garland also said that the groups have identified threats to the process as well as opportunities for success.

“We talked about he healthcare budget - opportunities to partner with hospitals, creative financing solutions the strengths of the Canadian brand. That was a really interesting finding - how many discussed the strength of the Canadian brand,” she said.

Garland said threats include undervalued companies, the loss of ROI to the implicit investor, and that Ontario imports so many healthcare products, yet, develops and manufacturers so few of them.

The process has, so far, culminated in the creation of four goals that OBEST feels addresses the needs of the bioscience community: capital; capability and people; innovation, adoption and export; anchoring the industry. There are also two themes which permeate the findings: culture, and integration.

Billen reiterated that capabilities and people are very important to a successful outcome.

“The overall goal is how are we going to support, retain and attract entrepreneurs and skilled personnel to deliver innovation and achieve consistent growth of high value jobs in this sector,” he said.

Billen commented that sometimes we have the right research but that does not mean we have the right people for the job.

As far as determining the success of the project, Billen sees job creation as right metric.

“The success of the project is going to be employment in the sector - people are not going to employ or create high-value jobs in the business is not successful - if it’s not sustainable,” he said.

The next step for OBEST will be to go back to the regional clusters for discussion around these six key areas.

Thompson is very optimistic about the outcome of the OBEST process. “…I’m so incredibly heartened by the tremendous response from all the CEO’s who have got together to create OBIO and the subsequent engagement of the much larger network because at the end of the day - it’s only by working together that we are able to make change.”

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sPOTlIgHT

2010 GAIRDNER AWARD CELEBRATIONS filled with Ontario flavour

T

he 2010 Canada Gairdner Awards, considered among the most prestigious in biomedical science, took place in October culminating with the Gairdner Foundation Annual Awards Dinner at the Royal Ontario Museum in Toronto on October 28th.

The gala was an opportunity to recognize this years award winners for their achievements and celebrate science in Canada. Delivering the keynote address at the dinner was His Excellency, the Right Honourable David Johnston, Governor General of Canada.

Gairdner International Awards valued at CAN$100 000 each went to William Catterall of the University of Washington, WS, U.S., Pierre Chambon of the Institut de Génétique et de Biologie Moléculaire et Cellulaire near Strasbourg, France; William Kaelin of the Harvard Cancer Center; Peter Ratcliffe of Oxford University, UK; and Gregg Semenza at the Johns Hopkins Institute for Cell Engineering in Baltimore, MD, U.S.. Other winners were Nicholas White of the Mahidol Oxford Tropical Medicine Research Unit at Mahidol University in Bangkok, Thailand, who won the Canada Gairdner Global Health Award.

Highlighted among the recipients was Ontario’s own Dr. Calvin Stiller, winner of the Canada Gairdner Wightman Award for leadership in medicine in Canada. Dr. Stiller was recognized in the opinion of the Foundation, for “his pioneering work in transplantation and diabetes, and as a remarkable entrepreneur and builder of private and public institutions that have greatly enriched the research landscape of Canada.”

Among his impressive list of accomplishments, Dr. Stiller is a founder of MaRS, chair of the Ontario Institute for Cancer Research and Past Chair of Genome Canada. He has played an enormous role in building the Canadian life sciences industry, including raising four venture funds to invest in biotechnology and technology. This award for the Ontario native comes on the heels of his induction to the Canadian Medical Hall of Fame last year.

The Gairdners began in 1959, shortly after creator James Arthur Gairdner established the foundation in 1957 to recognize and reward achievements in medical research, and soon became one of Canada’s foremost international awards. They are considered one of the world’s most prestigious medical research awards.

The Gairdners are chosen using a two-part selection process involving a medical review panel, composed of leading mid-career scientists from across Canada, which reviews all nominations. Their recommendations are passed to a medical advisory board, composed of 20 senior scientists from across Canada and around the world. All adjudication is done on a voluntary basis. The awardees are chosen by secret ballot of the medical advisory board.

The gala culminated a month long national celebration of Gairdner events across the country. Additionally, each October, as part of the Gairdners’ mandate to communicate the work of medical researchers to others, the most recent Canada Gairdner awardees, along with awardees from years past, visit universities across Canada to provide academic lectures on their area of expertise. This included the Gairdner lecture series that kicked off in Ontario on October 27 with an afternoon of lectures focusing on the eradication of malaria. Also on October 27th, high school students were treated to

Dr. Calvin Stiller

a special presentation at York University’s Keele campus as part of the Gairdner Foundations Student Outreach lecture.

On October 28, the main event – the annual Minds that Matter symposium with lectures by the 2010 Gairdner Awards recipients took place. This was followed by a final day of the lectures on October 29, where the Gairdner Symposium was held, highlighting research in epigenetics and genome function.

Moreover, in September, MaRS Discovery District also hosted a symposium for biomedical scientists and innovators from across North America to discuss promoting innovation in life sciences and health care.

The focus of this event was genetics, but delved into other areas including science policy and how to translate basic science into innovation for public good. The keynote address was delivered by the honourable Kevin Lynch, vice-chair, BMO Financial.

Other speakers included Calvin Stiller (2010 Gairdner Wightman Award winner), Dr. Tom Hudson, Dr. Stephen Friend, Dr. Michael Hayden, Dr Leroy Hood and Robert Klein.

In all, this year’s lectures covered topics from molecular biology to epidemiology, highlighting the importance of medical research in all fields of biology and health care.

For more INNOVATORS information visit our PROFILES Web Portal at www.bioscienceworld.ca

DECEMBER 2010/JANUARY 2011 BIOTECHNOLOGY FOCUS 25

CALENDAR JANUARY 2011 January 10-12 Biotech Showcase 2011 Venue:San Francisco, CA Tel: (760) 930-0500 Email: jsimmerman@ebdgroup.com Web: http://www.ebdgroup.com/ bts/index.php

January 10-12 Pacific West BIOMASS Conference & Trade Show Venue: Seatle, WA Tel: (701) 746-8385 Email: service@bbiinternational.com Web: www.biomassconference.com/ pacificwest

January 24-25 The 8th Annual BIO Asia International Partnering Conference Grand Hyatt Tokyo, Tokyo, Japan Tel: 1-866-356-5155 Email: bioasia@bio.org.

Web: http://www.bio.org/bioasia/

FEBRUARY2011 February 14-16 Cold Chain Management & Temperature Control Summit Venue: Toronto, ON Tel: 1-800-882-8684 Email info@iqpc.com Web: www.coldchainpharm.com

February 27 – March 1

Venue: Atlanta, GA Tel: 1-800-825-3221 Fax: (412) 825-3224 Email: info@pittcon.org Web: www.pittcon.org

APRIL 2011 April 6-8 ACETECH Symposium Venue: Whistler, BC Tel: (604) 683-5852 Fax: (604) 683-3879 Web: www.acetech.org

Company & Advertiser Index COMPANY

Page RC

Alberta Prion Research Institute.............. 7..................................

Amgen.................................................... 23.................................

Angiotech Pharmaceuticals Inc................ 8..................................

Baumer................................................... 27........................ 4824 BDH VWR.......................................................19............................ 4819 Bioniche Life Sciences Inc........................ 8..................................

April 30-May 3

BioPartnering North America....................31............................4829

ACRP 2011 Conference & Expo Venue: Seattle, WA Web: www.acrp2011.com

BioTalent Canada.........................................13............................ 4817

MAY 2011 May 8-11 World Congress on Industrial Biotechnology and Bioprocessing Venue: Toronto, ON Tel: (202) 962-6630 Email: worldcongress@bio.org Web: www.bio.org/worldcongress

May 24-27 Canadian Society for Pharmaceutical Sciences Symposium Venue: Montreal, QC Tel: (780) 492-0950 Fax: (780) 492-0951 Email: bberekoff@cspscanada.org Web: www.cspscanada.org

Caledon Laboratories................................ 20............................4820 Carl Zeiss................................................. 27........................ 4827 CAS SciFinder................................................ 5............................. 4814 Centre for Drug Research............................................................ and Development.................................... 8..................................

CNA Insurance..............................................17............................ 4818 Cresset.................................................... 27........................ 4822 Eppendorf.................................................... 32............................4830 Fisher Scientific............................................ 2............................. 4813 Gairdner Foundation............................... 25.................................

Genome Prairie............................................21............................ 4821 GlaxoSmithKline.......................................... 9............................. 4816 Isotechnika Pharma Inc............................ 8..................................

Johnson & Johnson................................. 8..................................

9th Annual BioPartnering North America™ Venue: Vancouver Convention Centre, Vancouver, BC Tel: (831) 464-4230 Web: http://www.techvision.com/ bpn/

TBA

JUNE 2011

Resverlogix Corp...................................... 6..................................

February 28-March 1

June 19-23

RheoSense.............................................. 27........................ 4825

Growing the Margins Venue: London, ON Tel: (416) 426-7029 Fax: (416) 426-7280 Email: info@gtmconference.ca Web: www.gtmconference.ca

Drug Information Association 47th Annual Meeting Venue: Chicago, IL Web: www.diahome.org

RX&D.............................................................. 7............................. 4815

June 27-30

Stem Cell Therapeutics Corp................... 8..................................

BIO International Convention Venue: Washington, DC Tel: (202) 962-9200 Fax: (202) 488-6301 Email: info@bio.org Web: www.convention.bio.org

TanD....................................................... 27........................ 4823

MARCH 2011 March 13-18 PITTCON Conference & Expo

BioFinance *Check web for dates Web: www.biofinance.ca

26 BIOTECHNOLOGY FOCUS DECEMBER 2010/JANUARY 2011

McMaster University................................ 6..................................

Microbix Biosystems Inc.......................... 9..................................

OBIO........................................................ 22.................................

Sheldon Manufacturing.......................... 27........................ 4826 Simon Fraser University........................... 6..................................

Warnex Inc............................................... 8..................................

YM BioSciences........................................ 6..................................

Yorkville Advisors....................................... 29............................4828

NEW PRODUCTS Molecular Design and 3D SAR software Version 3.0 of Cresset’s FieldAlign package enables support for the cloud and native support for Mac. The software can be deployed as both a traditional desktop application or as a command-line application distributed onto large computing servers. FieldAlign is a molecular design and 3D Structure Activity Relationship (SAR) tool used to create biologically relevant molecular comparisons. The designs can be leveraged by chemists to find the rot causes of activity or inactivity. This ability allows chemists to gain a detailed understanding of SAR of their lead molecules and to use this to design the best next synthesis.

Version 3.0 includes new command line interface support for scripting and workflow systems and also the use of tables, which will allow filtering and sorting of lead molecules using imported data or standard physical properties. Version 3.0 also includes a new molecule editor and multi-processor support.

Reply Card #4822 Data Loggers The new TR-5i compact data logging system which includes new IrDA communications capability with an expanded handheld data shuttle, the TR-57DCi. The data shuttle has been updated with IrDA capability and the compatibility to act as a graphic data shuttle with all TandD TR-7U data loggers. The infrared communications function now

makes it possible to download recorded data from the loggers without ever having to physically gather them.

The loggers can measure temperatures from −60˚C to +155˚C. Other features include waterproofing, visible alarm indicators, and one or two point adjustment functions. Battery life can last up to four years.

Reply Card #4823 Sensors The IWFM 08 series of inductive sensors from Baumer offer resultions of <0.001 mm at sensing distances up to 2 mm. IWFM 08 Series sensors feature an integrated 0... 10 V output, which allows them to be directly connected to the analog outputs of a control system and eliminates the need for measuring boards or processing units. These IP67-rated sensors are contained in die-cast zinc/nickelplated housings that prevent damage during installation and operation.

The sensors are designed for use in a wide variety of applications including laboratory automation and medical equipment.

Reply Card #4824 Viscosity analysis The m-VROC analytical system for viscosity measurement from RheoSense has been updated to version 2.5. This is a complete measurement system, equipped with automatic chip recognition and closed-loop temperature control. There is an optional air purge unit and a Peltier chiller which can be added to the system. The mechanical and electronic interfaces have also been enhanced.

The system is portable for movement between laboratory to production line for important, critical measurements. With its wide measurement range (0.1 to 100k cP viscosity) and high shear rates, the m-VROC is capable of analyzing virtually any liquid viscosity value, Newtonian and non-Newtonian. The proprietary MEMS chip developed by RheoSense, to provide accurate measurement for a variety of liquid products, supports that need with a selection of VROC chips. An automated chip recognition system helps to ensure the system is always set for optimum measurement.

A VROC chip measures the viscosity of a liquid flowing through a fully contained microfluidic cell. This full containment eliminates air interface, a common problem with conventional cone and plate or plate and plate rheometers for protein solutions, surface active materials, and volatile liquids.

Reply Card #4825 Humidity test chamber The HC6 Environmental Humidity Chamber from Sheldon Manufacturing is designed for multiple industrial and biotechnology testing applications. The HC6 floor model has an air-jacket design that evenly disperses air within the walls to maintain uniformity and ensure proper insulation. The HC6 is ideal for running the common 80ºC and 80% humidity test. The HC6 includes microprocessor based PID controllers, a stainless steel chamber, a steam generator that adds heat while humidifying, dual display of temperature and humidity which allows instant access to set point and operating conditions, and a digital countdown timer that displays the time remaining in a test procedure.

Reply Card #4826 Microscope The Carl Zeiss Primo Vert Monitor is a new generation of compact tissue microscopes, replacing traditional eyepieces with an integrated digital camera and LCD display. The LCD monitor tilts from 45 to 80 degrees allowing for individual posture to be taken into consideration.

Documenting images becomes easy with a push-to-save camera and an SD memory card. There is a USB port on the microscopes stand which allows a computer to be connected and images to be processed via the Carl Zeiss AxioVision LE software that is included with the package.

Reply Card #4827

DECEMBER 2010/JANUARY 2011 BIOTECHNOLOGY FOCUS 27

THE LAST WORD

By Dr. K. Kellie Leitch

INNOVATION TAKES

LEADERSHIP

H Dr. K. Kellie Leitch Chair of the Ivey Centre for Health Innovation & Leadership at the Richard Ivey School of Business.

ealth care in Canada has a huge impact on the economy. It is a sector of the economy, however, that does not embrace innovation and change the way other industries do.

I believe there are two fundamental problems that are challenging the sustainability of our health care system.

First, there is a serious innovation adoption deficit. We are simply not turning new ideas to deliver health more effectively and efficiently into practice fast enough.

Second, there is a shortage of skilled leaders and change agents within the system who are able to drive innovation adoption and create the “culture of innovation” our system needs. The health sector now represents 11.3 per cent of Canadian GDP. Statistics Canada reports that over 2 million people are employed in Canada’s health care and social system. 630,000 of those are health care professionals – nurses, pharmacists, technicians, therapists, social workers and doctors, like me - delivering services on the front line. Health care spending in Canada, according to the Canadian Institute for Health Information, was estimated to be over $183 billion dollars in 2009. That’s more than the total GDP of Ukraine, a country of over 46 million people.

At the same time, our health care system has grown at a rate of 7.1 per cent every year since 2001 with some economists projecting that health care spending will consume 70 to 80 per cent of provincial government budgets by 2030, unless something is done to arrest these rates of growth. However, looking at health care as a sunk-cost, rather than as a strategic investment ignores the possibilities in front of us. Imagine how much better – in terms of patient outcomes, and overall productivity our health system could be if we got serious about fixing the efficiency problems that so clearly exist in our

28 BIOTECHNOLOGY FOCUS DECEMBER 2010/JANUARY 2011

system. As Canadians, we are all rightfully proud of our health care system, but there are inconvenient truths about that system, which simply cannot be ignored. The first of those truths is that there are few – if any – incentives for innovation within Canada’s health care system itself. And as a result, it is not delivering the results that it could. While Canada’s scientists and researchers are among the most prolific and capable in the world, we are aren’t translating world-class science and research into better results on the front lines of health care.

Canada ranks among the top five nations, per capita, when it comes to the development of scientific results and new knowledge, but our track record on innovation in the health sector is among the lowest among our comparator countries. Clearly, we have the capability to do better. We must do better. The second hard truth is that managing Canada’s health care system is going to get a lot harder before it gets easier.

Michael Nowak, Ph.D., Managing Director mnowak@yorkvilleadvisors.com Saad Gilani, Vice President sgilani@yorkvilleadvisors.com (201) 985-8300

Standby Equity Distribution Agreement (SEDASM)

Providing growth capital

For making Canadian investments Yorkville Advisors proudly works with Ogilvy Renault and Bloom Burton & Co both based in Toronto.

Yorkville Advisors, LLC. 101 Hudson Street, Suite 3700 Jersey City, NJ 07302 USA Reply Card #4828

THE lAsT WOrd Think about the “perfect storm” created by just some of the pressures affecting our health care system: An aging population; increasing rates of chronic disease; growing public demand for timely, accessible health care services; the threat of new pandemics; and – to top it all off – a growing shortage of health human resources to meet the demand.

None of this is new. We’ve known about many of these challenges for a long time. Yet, the system just can’t seem to get unstuck. It’s time for a new approach. If we want to fundamentally improve Canada’s health care system, we need to do things differently. My colleagues and I at the Ivey Centre for Health Innovation & Leadership have come to conclusions leading to three recommendations we believe Canada’s health system needs to embrace to be sustainable: First, we must grow the leadership capacity for innovation in Canada’s health care system to help change the culture of the system. We need leaders who embrace and

The promise of high-quality and accessible health care is one of the things that makes Canada great – and it is a source of competitive advantage for our country. drive change. We need leaders who have specific responsibility in their job descriptions for innovation adoption.

The culture of our health care system is change averse, and these leaders need to have the skills – and mandate - to overcome that aversion.

Second, we need to build momentum for innovation across the system through small strategic projects and investments that have potential. We must “learn early and fail cheap”.

Jim Collins, in the book “Good to Great” says the process of achieving transformational change is like relentlessly pushing in the same direction on a giant, heavy flywheel. It takes a lot of heavy pushing – especially at the beginning. But bit by bit, turn after turn, the momentum builds to the point of breakthrough, and beyond. Once we get momentum started, it can take on a life of its own.

That’s why momentum is so powerful, and so essential to health system transformation.

Third, we need to promote the adoption and commercialization of ideas and innovations, not just the creation of new knowledge. Banting and Best didn’t just discover insulin – they made sure that it made it into the marketplace.

Not only for economic gain. But because that was the only way their breakthrough – like any breakthrough – could have the maximum impact in helping people’s lives.

The promise of high-quality and accessible health care is one of the things that makes Canada great – and it is a source of competitive advantage for our country. Health care is not a cost, but an investment - an investment that provides Canada with a competitive advantage on the world stage.

It is precisely because our health system is such an im-

portant part of the fabric of our society, that we cannot take it for granted. We need to embed innovative thinking and continuous improvement into the culture of our health care system. We need to reward those who bring innovative technologies, processes and systems forward to improve health care delivery.

Canada’s science and technology strategy has it right: it describes the need for Canada to build a Knowledge Advantage, an Entrepreneurial Advantage, and a People Advantage – especially in next generation economy sectors like health care and related life sciences and technologies.

We must move beyond studying what needs to be done, to doing what needs to be done.

And make no mistake, what we’re calling for is a major change. We need to harness the incredible insights that can come from observing how we work, and welcoming recommendations from different sectors about how health practitioners can do what they do, but even better.

Improving health system productivity will have many multiplier effect benefits. Improving productivity allows us to treat more patients, and treat them with higher standards of care. It allows us to get people healthy again – and get them out into the workforce, and into a higher quality of life. And it allows us to develop and export out world-class ideas elsewhere – putting ideas into the marketplace, while creating jobs here in Canada.

This is ambitious, but our health care system needs ambitious thinking.

If we can train just one student whose vision helps to transform our health care system then we will have done our job. If we can incubate one small project that has a quantum impact across our entire health system – in every province and territory – then we will have done our job. If we can inspire one young scientific entrepreneur to become the Banting or Best of tomorrow’s health sector, then we will have done our job.

Banting and Best took their invention from the bench to the bedside – and saved the lives of millions of diabetics around the world.

Saving and improving people’s lives. Ultimately, that’s what all this is about.

The famous sociologist Margaret Mead once said: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed – it is the only thing that ever has.”

Dr. K. Kellie Leitch is Chair of the Ivey Centre for Health Innovation & Leadership at the Richard Ivey School of Business and a paediatric orthopaedic surgeon at Toronto’s Hospital for Sick Children/University of Toronto. This text is adapted from a speech Dr. Leitch delivered to the Economic Club of Canada on Friday, Sept. 17 in Toronto, Ontario

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30 BIOTECHNOLOGY FOCUS DECEMBER 2010/JANUARY 2011

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Make 2011 Your Year of Global Partnering BioPartnering North America™ (BPN) is the largest stand-alone partnering meeting in the USA and Canada. BPN is your first opportunity in 2011 to find the right partners, grow your pipeline and expand your global presence.

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Sample safety with reliable performance epMotion® 5075 TMX – Automated pipetting system with integrated Thermomixer ® The epMotion 5075 TMX combines automated pipetting with Eppendorf’s superior 2DMix-Control technology. Orbital shaking, with the optimal balance of speed and mixing radius plus full temperature control from 4 °C to 95 °C deliver best results when resuspending pellets or mixing fluids.

Build on the unrivalled liquid handling technology with typically less than 2CV% pipetting error at 1 µL* the epMotion 5075 TMX delivers pure performance to all routine pipetting applications.

epMotion 5075 TMX � Automate protocols for gDNA, RNA, Plasmid (including BAC) and viral nucleic acids � Save time and obtain up to 20% higher yields in your nucleic acid purification protocols � Save up to 50% in tip costs when working with bead-based assays � 2-D mixing control creates vortex-like action and allows mixing of single tubes, or plates as dense as 384-well Request a demo today at www.epMotion.com/TMX

*Eppendorf application note #168

www.eppendorf.com Þ Email: info@eppendorf.com In the U.S.: Eppendorf North America, Inc. 800-645-3050 Þ In Canada: Eppendorf Canada Ltd. 800-263-8715

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Full page journal ad Biotechnology Focus – BFO

10/21/10 11:13 AM