By Tony Pullen
across canada
IS CANADIAN BIOTECH
COMING TO LIFE?
A
fter a long, lonely vigil beginning in mid-2007, not long after I joined Paradigm Capital to be its healthcare banker, I am finally seeing some stirrings in the Canadian “biotech” space. The Paradigm assignment provided me with a ringside seat as well over half of the roughly 150 public entities that populated the Canadian health care space in 2007 were either taken over, marginalized to the point of extinction by clinical failures, repurposed into mining companies, or just disappeared. Only 60 of those companies survived. Given that approximately one quarter of the 2007 population were already of marginal value (market capitalizations well below $10 million), my estimates of the damage are approximate but still revelatory. The number of public healthcare entities in Canada today is actually closer to half the original total, as roughly 20 new companies have emerged in spite of the blight. Nature abhors a vacuum. I don’t want to get too carried away by what I’ve detected in recent weeks, but there does seem to be a trend developing beyond just company or news specific reactions. Even Lorus Therapeutics, which for many years seemed to serve as a leading indicator for biotech cycles in Canada (back when we used to have them), caught fire in the past few weeks due to a long overdue change in management and direction. Street technicians have been pointing to the charts of many surviving Canadian health care companies as “starting to look interesting.” However, one has only to turn to their longer-term charts to see the extent of the aforementioned problem. So much wealth destruction! Again, using Lorus as an example, while it more than tripled to almost $1 in the two weeks after the management change, it is still down 98% from its 10 year high. I have been wondering for months and months if (and maybe even when) the strong advances that have occurred since last fall in the U.S. biotech market might trigger a rally in their Canadian brethren. I had pretty much abandoned hope—until 22 BIOTECHNOLOGY FOCUS February/March 2014
