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New report confirms $1 billion plus invested in 2010 by Canada’s Pharmaceutical Sector

Rx&D member companies invested $1.1 billion in research and development (R&D) in Canada last year despite an economic recession, a global industry restructuring and patient access gaps for new medicines and vaccines according to a PMPRB report.

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“The commitment of our member companies to do research and development for the benefit of Canadians remains strong,” said Russell Williams, president of Canada’s Research-Based Pharmaceutical Companies (Rx&D). “Since 1993, Rx&D member companies’ total investment in R&D in Canada has averaged over 10 per cent of sales. The commitment made in 1987 was based on a favourable environment of access and reimbursement. That environment has significantly deteriorated and the commitment may no longer be sustainable unless Canada becomes more internationally competitive.”

Mr. Williams noted that Canada is losing its competitive edge in attracting clinical trials as indicated in the Sciences and Technology Innovation Council Report on clinical research commissioned by the federal government. In fact, due to deficiencies in the research infrastructure, it is estimated that almost 20 per cent of the committed investments from industry are not used and thus not reported by PMPRB.

“Governments, research institutions and industry need to work cooperatively to reduce duplication and coordinate efforts to make our country a global destination for clinical trials research. Clinical trials account for more than 75 per cent of applied research investments in Canada,” added Mr. Williams.

In addition, Rx&D calls for improvements to intellectual property protection.

“We need a comprehensive approach where innovators can rely on an improved and more stable data protection regime. Our IP protections should be consistent with or better than those of our major trading partners. For example, Canada does not have an effective right of appeal for innovators in patent invalidity proceedings, but does offer an appeal for generics in the same proceedings, creating a one-sided and inequitable system,” indicated Mr. Williams.

Reducing the access gap to provide Canadians in all provinces more timely access to new treatments should also be a priority to all governments. A recent Rx&D international study found that Canada ranked 20th out of 25 countries in providing access to new medicines under public drug plans.

“We have the talented people to make Canada a research and innovation powerhouse,” Mr. Williams added. “We need a strategy to compete globally competition and capture a greater share of investment. The time to do it is now.”

The PMPRB Report also shows Canadian patients also receive excellent value for their brand name prescription medicine. Price increases were within the rate of inflation which was 0.3 per cent in 2009. Over the past decade, prices for innovative medicines were below the international median.

In contrast, several studies have shown that Canadian generic drug prices are among the highest in the world. For example, the federal Competition Bureau found that Canadians and our health care system could save up to $800 million a year “if generic drugs were sold in a more competitive market.”

Concerned with high generic drug prices in Canada, the Health Council of Canada released last week a discussion paper to highlight “the complex reasons as to why generic drug prices are so high and the longstanding lack of transparency about how prices are set.”

“Working collaboratively, we can develop policies that will create more jobs and investment in the knowledge economy while giving patients choice and improved access to the new medicines and vaccines that improve and save lives,” concluded Mr. Williams.

n Canadian pharmaceutical services company Dalton Pharma Services (Toronto, ON) has entered into a manufacturing services agreement with Cambridge, MA specialty pharma company Zafgen Inc. Dalton Pharma Services will provide aseptic fill/finish services and analytical support under cGMP for Zafgen’s lead obesity treatment. “Dalton’s expert capabilities in the sterile manufacture of API’s and analysis combined with its strength in aseptic filling solidified the manufacturing agreement,” said James Vath, head of Drug Discovery and Development for Zafgen. “Adding Zafgen to our growing list of strategic relationships with innovative pharmaceutical clients is an important milestone for Dalton”, said Peter Pekos, president and CEO.

n Medicure Inc. (Winnipeg, MN) announces its subsidiary, Medicure International, Inc. (Barbados) and Iroko Cardio, LLC (Philadelphia, PA) have entered into an agreement to advance

Dealmakers

AGGRASTAT® (tirofiban HCl) in each of their respective territories. Under the terms of the agreement, Medicure International will transfer to Iroko Cardio tirofiban drug substance and the rights to purchase additional quantities from a third party, and Iroko Cardio will make available to Medicure International certain analytical methods for testing tirofiban and, if requested by Medicure International, certain data related to high dose bolus use of AGGRASTAT®. As consideration for the agreement, Iroko Cardio will make payment to Medicure International of US$1.91 million within six months from the date of the agreement. If Medicure International uses the Iroko Cardio data to obtain approval in the U.S. for high dose bolus use of AGGRASTAT®, Iroko Cardio may earn royalties of up to US$3.5 million on future U.S. sales of AGGRASTAT®.

n Advitech Inc. (Quebec, QC) and Natunola Health Biosciences Inc. (Winchester, ON) have entered into a merger agreement to combine the business of both companies with the intent of creating a leading company in personal care and health food ingredients. Pursuant to the merger, Advitech will acquire all of the issued and outstanding shares of Natunola by way of an amalgamation between Natunola and 7894716 Canada Inc., a wholly-owned subsidiary of Advitech. The Natunola shareholders will receive common shares of Advitech based on a ratio of 4.75 common shares of Advitech (or 1.1875 common shares following a proposed 4 to 1 consolidation of Advitech shares for each common share of Natunola. All outstanding options to acquire Natunola common shares which are not exercised prior to the closing of the transaction will, subject to TSX Venture Exchange policies, be exchanged for Advitech options on the same terms. Following the Amalgamation, the Natunola shares will be delisted from the TSX-V and Natunola will continue its activities as a wholly-owned subsidiary of Advitech.

Canadian biotech losing ground — and capital — fast: Ernst & Young report

Intellipharmaceutics Announces Settlement for Its Generic Version of Effexor XR®

With Canadian biotech companies capturing just two percent of all global capital raised in 2010, it’s clear the industry is losing ground on the global stage, Ernst & Young says. This fi nding marks a fi ve per cent drop since 2006. Beyond borders, Ernst & Young’s annual global biotech industry report, shows public fi nancing is going to only a select few companies, and private fi nancing in Canada is at its lowest in ten years. Research and development in the sector is still decreasing and the industry hasn’t seen an initial public offering here since 2007.

“Band-aid solutions are not going to push this industry forward,” explains Paul Karamanoukian, Ernst & Young’s Canadian life sciences industry leader. “The Canadian biotech industry must look inward, get their businesses into fi ghting form, and reinvent themselves to capitalize on the opportunities born of the changing healthcare ecosystem.”

Karamanoukian says that means stretching dollars further to become as effi cient and effective as possible.

“Healthcare is evolving into an outcomes-driven system, and there is huge potential for Canadian biotech,” he notes. “If you’re going to fail in this new business environment, you’ve got to fail fast, cut your losses, move on and start again. That’s the only way to compete.”

In actual dollars, the report found Canadian biotech raised more than US$482 million in 2010, a decrease of US$251 million compared to 2009. After removing the fi nancing of US$325 million from one company, the sector actually raised 18 per cent more in 2010. But this is still the second lowest level in a decade.

Karamanoukian worries about what that means to Canadian companies fi ghting for a piece of the global pie.

“We’re at our lowest point in 10 years. But by focusing on business fundamentals and emerging opportunities, that could change.”

The report identifi es four complementary approaches for biotech companies to sustain innovation in this increasingly challenging environment: 1. Prove it or lose it. In an outcomes-driven ecosystem, companies are under more pressure to prove that their products are differentiated. 2. Do more with less. Companies will need to fi nd new ways to conduct capital raising/deployment and R&D more effi ciently. That means being creative in raising, optimizing, preserving and investing scarce capital. For research and development, this could mean targeting products to smaller populations to increase effi ciency at all stages of the process. 3. Build new competencies. To support the fi rst two imperatives, managers will need different competencies like awareness of changing market dynamics, management discipline, performance measurements, the ability to measure value, and more. 4. Collaborate for co-ordinated action. Sustaining innovation will also take changes that biotech companies cannot make alone, requiring co-ordinated action with other stakeholders. Intellipharmaceutics and Wyeth LLC, a wholly owned subsidiary of Pfi zer Inc., have settled the patent infringement litigation in the United States District Court for the Southern District of New York, relating to Intellipharmaceutics’ generic version of Effexor XR® (venlafaxine hydrochloride extended release) capsules.

Under the terms and conditions of the settlement agreement, Intellipharmaceutics has been granted a non-exclusive license to the patents in suit that will permit Intellipharmaceutics to launch a generic of Effexor XR® in the U.S. following U.S. Food and Drug Administration approval of this product. There can be no assurance of such approval of any product of Intellipharmaceutics.

“We are very pleased with the settlement of the litigation relating to our generic version of Effexor XR®, as this removes a signifi cant barrier to the commercial launch of our generic product upon FDA approval,” commented Dr. Isa Odidi, CEO of Intellipharmaceutics. “With fi ve products awaiting FDA approval, we continue to work aggressively to both advance and expand the number of products in our portfolio.”

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CanCer

TherapeuTiCs

and High Potency API Development

Encouragingly, the rates of cancer deaths have been declining over the last two decades, despite its continued prevalence. From 1991 to 2006 cancer death rates declined by 21 per cent for men and 12 per cent for women, according to the American Cancer Society (ACS) annual report, “Cancer Statistics 2010.”

Specifically, lung, prostrate, breast and colorectal forms of cancer have accounted for the majority of the decrease, which is attributed to early detection, better treatments and improved lifestyles (decrease in smoking for example). This is a major improvement for a challenging disease that has affected most families in some manner. However, cancer is still responsible for approximately 25 per cent of all deaths in per cent of new drug development projects target cancer indications.

The first class of cancer therapies utilized cytotoxic compounds. A key drug in this category was Taxol (Paclitaxel), which went on to achieve sales of $1.6 billon. This first class compounds are toxic to all cells within the body, but particularly to cancer cells. Thereby, at the expense of the patient’s general health, the cancer cells are reduced through sustained treatment. The next class of compounds focuses on cancer mechanisms; disrupting cell replication pathways and limiting the proliferation of cancer cells. These compounds are often considered to be “cytostatic”.

By the shear biological nature of chemotherapeutics and the resulting mechanism of action, whether cytostatic or cytotoxic, these compounds are typically considered to be highly potent and can carry serious health consequences to the personnel that research and handle these materials. A high potency active pharmaceutical ingredient (HPAPI) is a molecule with an occupational exposure limit (OEL) of 10 µg/m3 or lower, which requires greater control of handling to minimize exposure and ultimately protect the people who work directly with these compounds. This includes thorough Environmental Health and Safety (EH&S) procedures/training for personnel and complex equipment designed for a highlevel of containment. Personal protective equipment (PPE) is used as a secondary precaution for handling such materials and cannot be solely relied on as a first line of defense. Safety is paramount for any organization carrying out chemical R&D, but even more important for handling HPAPI’s.

Constructing and operating a facility to

North America and remains a major health problem.

Further improvements can be expected from applying existing cancer knowledge and from continued research in prevention, early detection and new treatments. This article will focus on the latter and specifically for the development of new oncology therapeutics, which is a key focus area for Pharmaceutical/Biotechnology companies and research institutions worldwide. Currently, oncology therapeutics total approximately $48 billion in global sales, which represents 5 per cent of the pharmaceutical market. This figure is estimated to grow at rates between 12 to 15 per cent per year and beyond $75 billion by 2012, according to IMS Health. A review of all drug discovery pipelines reveals that approximately 30

handle chemotherapeutics and cytotoxic variations requires considerable capital. Facilities often include dedicated suites, which are separated by positive flow airlocks. Isolation units are also used within these spaces to contain processing equipment and material transfers. The isolation units are equipped with specialized seals at all closures and have permanently attached gloves for manipulation of the equipment. Continual air sampling and monitoring may also be performed to ensure the systems are working correctly over time. Personnel are routinely trained on EH&S procedures, which is beyond what is required for carrying out chemistry development and

manufacturing for traditional non-HPAPI programs.

Founded in 2003 by Dr. Jan Oudenes, Alphora Research is a Mississauga, ON based CRO that provides active pharmaceutical ingredient (API) Technology Development and pilot scale cGMP synthesis of small molecules. Alphora’s FDA inspected operations total 45,000 sq. ft. and include synthetic laboratories, analytical laboratories, cGMP stability studies, cGMP kilo laboratories and a cGMP Pilot Plant. Alphora provides all the necessary process chemistry and analytical services to support CMC activities for pre-clinical studies through Phase 3. The company has grown considerably and is currently staffed by 95 highly trained personnel. Alphora continues to expand with its clients and has recently announced a $4 million capital project, which included the addition of new facilities and isolation systems to handle cytotoxic compounds. Already having systems and considerable experience handling high potency API’s, this expansion was a logical progression technically. As well it represents a strong business opportunity as pipelines are ever expanding in oncology. This expansion makes Alphora one of a few Canadian, and

among a select group of North American based CRO’s that can work with cytotoxic API’s.

Rigorous cleaning procedures for processing equipment is important for all therapeutics, but due to the typically low therapeutic dose and mechanism of action of HPAPI’s, it is more important. Proper cleaning procedures with validated analytical methods ensure public safety from possible cross contamination. This is even more important for multiple product facilities such as CRO’s, which are used more frequently by pharmaceutical and emerging biotechnology companies. Even if companies have chemistry and manufacturing capabilities in-house, they often choose to outsource HPAPI projects due to the specialized technology and regulatory requirements. Alphora has a separate QC/ QA department that tests and verifies the cleanliness of all product contact equipment before it can be used.

In summary, it is exciting to observe the strides being made against cancer over a relatively short interval. However, this devastating disease remains a major health issue and is driving a considerable amount of research across all healthcare disciplines and specifically for new therapeutics. Due to the inherent safety concerns of these HPAPI’s and cytotoxic nature of oncology compounds, they require specialized equipment, safety procedures for personnel and cleaning procedures for patient safety.

Computer graphic of a molecule of taxol

Founded in 2003 by Dr. Jan Oudenes, Alphora Research is a Mississauga Ontario based CRO that provides active pharmaceutical ingredient (API) Technology Development and pilot scale cGMP synthesis of small molecules.

References:

1.CA Cancer J Clin 2010, A. Jemal et al.,

“Cancer Statistics, 2010“ 2.Cancer Society’s Steering Committee on

Cancer Statistics. Canadian Cancer Statistics 2011. Toronto, ON: Canadian Cancer

Society; 2011. May 2011 3.IMS Health Press Release May 15, 2008 (http://www.imshealth.com/portal/site/ imshealth/menuitem.0103f29c72c419cd8 8f611019418c22a/?vgnextoid=41a67900b 55a5110VgnVCM10000071812ca2RCRD) 4.Chemical & Engineering News, “Contained Chemistry” June 16, 2008, Vol 86,

Number 24, pp. 17-27

Mr. Frizzle is an Account manager at Alphora Research Inc., in the Business Development group. He obtained a MSc degree in organic chemistry from the University of Western Ontario and has drug development experience in process chemistry, project management and business operations. Prior to joining Alphora in 2007 he held positions with Patheon and Amgen.

For more ONCOLOGy information visit our DRUG DISCOVERY Web Portal at

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CANADA

PUTS ITS BEST FOOT FORWARD

at Biotechnology’s annual jamboree

The 2011 BIO International Convention, the world’s largest biotechnology conference and trade show, took place from June 27 to 30 in Washington DC.

In all, BIO drew more than 15,000 industry leaders from 48 states and 65 countries. Organizers stated that these numbers refl ected increased international attendance and participation at the event and that there were also a record number of partnering meetings (21,183 in total between 2,410 companies).

On the fl oor, the BIO Exhibition featured more than 1,800 exhibitors and covered 180,000 square feet with 61 state and international pavilions.

Taking centre stage was Canadian delegation of 800 strong, which was once again the largest international delegation at the event. The delegation included leaders from industry and academia and they were joined by two Premiers (Alberta’s Ed Stelmach and Nova Scotia’s Darrell Dexter), Ministers and even Mayors.

The Canadian Pavilion opened in true Canadian fashion with an offi cial puck drop ceremony. Minister of State (Science and Technology) Gary Goodyear led the delegation of biotechnology and pharmaceutical executives and scientifi c leaders to promote Canadian biotechnology while the kick off itself offered the chance to shine the spotlight on the best and brightest, and to tell the world about what’s happening in our own backyard.

“Having representatives from all three levels of government including two Premiers and fi ve Ministers highlights the importance of our industry to the Canadian economy,” commented BIOTECanada president and CEO Peter Brenders. “With more than seven per cent of our national GDP being generated every year as a result of biotechnology development and use, all regions of Canada are realizing the benefi ts of this growth.”

In the spirit of working together to strengthen the industry across the country, BIOTECanada hosted a bio-economy roundtable meeting to discuss the next opportunities for success as Canada grows its bio-economy. The roundtable included an in-depth analysis of where Canada was punching above its weight, and where it was lagging behind the competition.

Moreover several deals were signed among the provincial organizations including an agreement between Saskatchewan and Manitoba, and another between Ontario and Quebec.

Internationally, BIOTECanada announced a new agreement (memorandum of understanding) with the BioIndustry Association (BIA-United Kingdom) to encourage and foster cross-Atlantic collaborations within the industry in both the UK and Canada.

BIO concluded with BIOTECanada handing out its Gold Leaf Awards. Taking top honours for company of the year was Cadiome Pharma Corp., while Allon Therapeutics was the winner for Early Stage Health Company of the year. Other winners included EnWave Corporation for Early Stage Industrial and Agriculture Company of the Year, Sanofi Pasteur Limited for Contribution to Canadian Communities, Yves Rosconi won an individual award for Industry Leadership and Gordon Jans of Price Waterhouse Coopers was honoured for his contribution to the association.

The 2012 BIO International Convention will take place June 18-21 at the Boston Convention and Exhibition Center in Boston, Mass. For more information, please visit http://convention.bio.org/2012.aspx. For more INNOVATORS information visit our PROFILES Web Portal at

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Green Crude FrOM pYrOLYsis

Converting raw biomass through pyrolysis into valuable bio-oil products is a modern way to spin straw into gold. London, ON based Agri-therm Inc. is on track to harvest the yield from this green crude oil.

Agri-therm is set to launch a commercial-grade mobile pyrolysis unit. “We will start to manufacture the MPS200 unit by June 1 and build it out over eight weeks,” says Jennifer MacDonald, the chief operating offi cer of Agri-therm.

This patented, portable unit can be hauled from farm fi eld to vineyard to lumber mill to process a wide range of biomass waste such as corn stover, grape peels and wood chips. “There are millions of tons of biomass worldwide and we only use non-food waste” says MacDonald. “Mobility is our market niche – biomass can be seasonal and expensive to remove.”

In pyrolysis, biomass is broken-down at high heat in the absence of oxygen. The resulting condensation becomes bio-oil and the biochar - a charcoal-like substance - is the solid residue. Bio-oil can then be upgraded into value-added fuels, pharmaceuticals and chemicals, including environmentally friendly insecticides and pesticides. Char becomes an ecologic additive to fertilizer.

What gives pyrolysis lustre is that it is a closed-loop system. Offgases such as hydrogen, carbon monoxide and carbon dioxide are captured to fuel the combustion process.

Paul Paolatto is CEO of Agri-therm and executive director of WORLDiscoveries, the Business Development Offi ce for the University of Western Ontario. “What makes this solution so compelling is that it can fi nally deliver on the world’s increasing demand for fuel from renewable sources in a cost effective and environmentally effi cient manner,” says Paolatto.

Agri-therm can tap into the expertise of a highly-skilled biofuels research and development team located at The University of Western Ontario’s Institute of Chemicals from Alternative Resources (ICFAR) led by engineering professors Franco Berruti and Cedric Briens – global experts in pyrolysis. “Our location at ICFAR gives Agri-therm a close link to a teaching university,” says MacDonald. “We are a small start-up with access to a huge research facility that pioneered this R&D.”

MacDonald braved the dragon’s den on CBC to raise funds for Cenabal Gourmet Organics - her start-up company that made healthy salad dressings - and was awarded $200,000. The Dragons were tame compared to the jungle for private equity. Agri-therm’s ask is $2-3 million. “We may need to go outside of Canada for funding but that is not our goal,” she says.

“Canada can be a tough place to raise capital particularly for early stage technology,” says Paolatto. “However, I am hoping that Agri-Therm’s value proposition is so persuasive that we fund the resources to realize its promise and keep the resulting manufacturing jobs at home.”

Agri-therm’s advanced prototype mobile pyrolysis unit, built by Abuma Manufacturing of London, is hardened for a wide-range of fi eld conditions. “We had lots of run time and all kind of experiments in the past year to build the second generation system,” says MacDonald. “And we did extensive testing on the feeder, condensation train and fl uidized bed reactor.” The Agri-Therm team

“We had lots of run time and all kind of experiments in the past year to build the second generation system, and we did extensive testing on the feeder, condensation train and fl uidized bed reactor.”

– Jennifer MacDonald

As a result Agri-therm expects the MPS200 series will be ready this summer and can process six tons of biomass per day. “The University of Veracruz in Mexico will get the fi rst MPS200 because they need higher capacity,” says MacDonald. “After 12 months of run time in the fi eld we’ll start the design-build for the third generation - the commercial model – with a ten ton per day capacity.”

The biomass market potential is huge. “There is 1.4 billion tons of forestry waste alone per year globally and forestry products have the best heating value,” says MacDonald. “We just need a small fraction of that – just 1 per cent of this forestry waste would keep 5,400 mobile pyrolysis units working full time.”

Another benefi t is that all pyrolysis by-products have value. Agritherm has just hired a post-doctoral expert in bio-char to focus on this promising application. “Lesser quality bio-oils can also be tweaked to produce higher quality bio-char that can be sold as a fertilizer additive and for carbon capture,” says MacDonald. “There is much interest in char because carbon is no longer bio-available - it’s a carbon sink. And when it is applied to substandard crop land, char helps retain water and greatly improves yield.”

Other vast market segments are also a target. “Animal renderings are promising but still need research,” she says.

These are the challenges that inspire Federico Berruti, an Ivey graduate and PhD candidate in engineering. Berruti is also a vice president at Agri-therm - the bridge between the technical and business people. His PhD research is focused specifi cally on feeder and demisting technologies – two critical aspects to make the pyrolysis unit cost-effective and energy effi cient. “I love small business. I have a vision of being an entrepreneur and an academic,” says Berruti who holds a Vanier scholarship – a prestigious award that pays $50,000 per year to Canada’s top doctoral candidates.

His Agri-therm team is trying to develop a new industrial process. “We are working to separate and capture the very fi ne particles of bio-oils – they are essentially like a mist or an aerosol and a special device is required,” he says. “With fi lters you can get a pressure and fl ow problem. With the demisting device we use centrifugal force and throw droplets against a surface and collect them once they coalesce. This way you never build up pressure and it’s self-cleaning. We are trying to reach the 98 per cent effi ciency in our second generation unit.”

Agri-therm’s feeder technology has been designed for sticky biomass or residues - in addition to conventional feedstocks. Sticky biomass can plug the feeder and spike energy use. “We have designed an intermittent, high-velocity slug system that shoots biomass slugs into the reactor,” says Berruti. “This helps fl ow and there is no particle size issue. We can handle cohesive or sticky and temperature sensitive biomass like chicken litter, lignins and meat residues. You don’t want meat residues in the system long because it can melt, get sticky and plug the feeder.”

The ICFAR feeder technology is a core area of R&D for Berruti’s team with many potential applications. “We may commercialize the feeder technology alone, as well as adding it to our MPS200 units,” he says. “We are manufacturing and testing them both at the laboratory and commercial scale.”

Berruti is excited about their renewable energy portfolio and says the market opportunity is huge with room for many players. “We can see working in the future with conventional oil companies,” he says. “Our core competencies are with reactor design and R&D. We are not into refi ning, mass-manufacturing, or transmission - we want our pyrolysis units in the fi eld.”

On the horizon there are North American companies building large fi xed pyrolysis plants with a strategy to use the existing infrastructure of conventional oil refi neries and pipelines to process, upgrade and transport bio-oil. “Bio-oil is acidic with a high water and oxygen content and needs to be upgraded,” MacDonald explains. “Upgrading is not part of our business plan. But this is where our clients can send their bio-oil. And we can act as broker.”

The challenge with a fi xed plant is that beyond 100 kilometers transporting biomass to the plant become unprofi table. “Our product will condense the biomass down into a low-volume, high value product that can then be shipped to a centralized upgrading facility,” says MacDonald. “By the time we are fi nished with our generation three prototype in 18 months we are confi dent there will be a growing market for bio-oil. And yes, we can see bio-oil going into our vehicles.”

Cost-effective, renewable crude from biomass waste, refi ned for our gas tanks – now there is a pot of gold.

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the BuildinG Blocks of a Genomics industry

Eleven years ago, policy makers in Ontario recognized the enormous impact genomics could have on biology, on medicine and on our understanding of life itself. As such, they recognized the need to develop a strategic and proactive approach to supporting genomics research in Ontario by creating an organization to oversee efforts in this emerging science field. The Ontario Genomics Institute (OGI) has since spent the better part of its ten plus years as an advocate for and supporter of research development in genomics. In our June 2011 issue of Biotechnology Focus, OGI president Dr. Mark Poznansky discussed some of the ways OGI was supporting research development and also explained how genomics is changing the world and why supporting research in this exciting field is so very necessary.

“Quite frankly, the genomics sector is driving the entire biotechnology industry and not only in health but also in food, agriculture and the environment. Genomics to us is the major driver of the life science economy, which is much larger than health so the bottom line is we need to do everything we can to stimulate this sector,” he said.

But supporting research is only part of the equation he explains. There is also a need he says to find new ways of translating the fruits of this research into commercialized products. It’s a philosophy that is gaining momentum at OGI.

“We always knew that the next logical step at OGI was finding innovative ways to spark business development in the sector, so we have to go back a couple of month’s to when OGI set about on its new mission or objective, and that is to be a catalyst or a driver for the life sciences industry in Ontario,” states Dr. Poznansky.

This, he says is quite an important diversion from when supporting genomics research was OGI’s prime objective.

“Right now, OGI relies on two primary programs to fulfill its new mandate. The first is its Pre-Commercialization Business Development Fund or PBDF program and the second, which was just initiated six weeks ago, is the SPARK technology development program.”

Poznansky explains that OGI’s PBDF program invests in genomics, proteomics, and other ‘omics’ technologies that are in the proof-of-principle phase of research.

“The PBDF funds business (early stage business albeit) and entrepreneur scientists within academia. Our conditions are very simple, we take a little equity but it’s not a big deal for us, our major thing is not to make money on these things, it’s to help drive these commercial ideas and companies.”

Additionally, chosen projects must have potential to reach the marketplace.

Likewise, the idea behind the latter program (SPARK) is to ‘spark’ technology development and business creation.

“Primarily it is an approach that gives researchers the ability to obtain research funding. But the end goal of these unique investment and funding strategies is to spark company creation. It’s early stage funding for technology development and also for fasttracking a product from either an academic or private lab,” he said.

“This is a new initiative for OGI, similar to the type of grants given out at the Broad Institute in Boston. It’s geared to an academic who has a real bright idea for a product and there are instances he or she needs maybe $50,000 to do a couple of experiments over the course of six months. There’s just no funding mechanism for that currently. So, we saw that niche and that is why we created this program.”

The SPARK program was officially announced April 15, 2011 and proposals were due on June 15, 2011. Dr. Poznansky expects that funds will flow by mid-October.

“If the winning proposals just result in a nice publication then we will be disappointed, but if they result in products and big applications for commercialization of something then we will have succeeded. It’s a model American companies like Apple and Microsoft have

used to let its really bright people stimulate, to think, to make things happen outside of the box. We want to see if we can capture that with the universities in Ontario limited to the genomics area. Like the PBDF, we want to see what the product is, and we want to see what it is within the year, so it’s very aggressive on the innovation side and the to market side. Just as an example, we just declared six of the applications ineligible because while they were great science, we didn’t see a market for the product, they weren’t commercially interesting opportunities.”

Dr. Poznansky is adamant that this is more than just about funding research for the sake of funding research. The goal he says is to fund technology that has the potential to be commercialized.

ArcticDx and DVS Sciences; two examples of Canadian genomics success stories

Molecular diagnostics company ArcticDx is one such company that has grown out of applied research funding doled out by Genome Canada through OGI. It is also an example of how OGI’s funds can lead to company creation. Dr. Tom Hudson, OICR’s president and Scientific director, and Dr. Brent Zanke, then vice-president OICR and director of the Ontario Tumour Bank, were co-leaders of the Assessment of Risk for Colorectal Tumours in Canada (ARCTIC) project that included a project team of co-investigators from the U.S., France, England and Scotland.

The project was focused on the discovery of a genetic marker set that could predict future colorectal cancer risk.

“The decision to create a company was pretty straight forward,” says Dr. Zanke, founder, chairman and chief medical officer of ArcticDX. “It was originally perceived to be an opportunity to do large-scale genomics projects, but it is integral to the Genome Canada application process that a detailed description of how the discoveries are going to be commercialized are included and so from the very first day we anticipated a spinout company that would benefit from any intellectual property that might be identified and so the company was formed.”

Consistent with the company’s goal to offer personalized medicine through genomics, ArcticDx developed a test to predict people’s genetic susceptibility to age-related macular degeneration along side its flag ship colon cancer susceptibility product.

“The genetics of AMD are well defined and the condition is a huge public health problem,” says Zanke, “We were able to secure a dominant intellectual property position through inlicensing early in the discovery process.”

Remarkably within five years the company has been successful in its attempt to develop a test for AMD, and that it is already receiving market uptake. The test, Macula Risk®, can determine one’s inherited risk for AMD. It is being used in thousands of medical offices and its market uptake appears to be doubling every three months. The test is intended for patients who are over 65 and have a diagnosis of early or intermediate AMD.

“This is the most common cause of common blindness in the developed world, and the way the disease works is that in your senior years, people get hard deposits in the back of their eyes, and in about 30 per cent of cases these hard deposits induce bleeding and if they bleed you get scar formation and you can’t see,” says Dr. Zanke.

Using the complete combination of AMD genes and smoking history, the test which is a cheek swab identifies those most likely to progress to advanced AMD with vision loss by detecting variations in genetic markers known to predict the early asymptomatic AMD.

“The markers we have are about 83 per cent accurate, meaning that if you had an individual who has these dry deposits, you can predict about at an 80 per cent accuracy, whether that person would develop blindness associated AMD or not. After the cheek swab sample is taken, they are processed by a lab located in Denver, Colorado. The reports are then returned back to the practitioner, who is then encouraged to manage patients on a protocol developed in collaboration with retinal specialists in Nashville, Tenn. which we call the Nashville Protocol. It provides a very clear road-map for optometrists and physicians.”

“It’s something pretty remarkable, that over the last five years we’ve identified other opportunities in molecular diagnostics, but at the same time have taken one from the concept stage to commercial profitability,” he says.

In 2010, OGI provided a $100,000 PBDF investment to specifically help with the commercialization of this product.

“We’ve used the PBDF investment to partially support studies in support of a planned filing for Food and Drug Administration (FDA) approval for Macula Risk®. So now we have the FDA study in play and we expect to get that study complete by the end of the calendar year.”

And now with the AMD product in an advanced state of sales and marketing, Zanke believes that the revenue from that will further drive what’s in the company’s pipeline, including the colorectal test that initiated the ARCTIC project and a growing list of pharmacogenomic opportunities. “Primarily it is an approach that gives researchers the ability to obtain research funding. But the end goal of these unique investment and funding strategies is to spark company creation.”

— Dr. Mark Poznansky

Another company that was formed as a result of a project that received financial backing from both Genome Canada and OGI is DVS Sciences Inc. DVS is a beyond-earlystage biotechnology company that develops, manufactures and markets analytical instruments and reagents for high throughput, massively multi-parameter single cell analysis. The company itself spun out after OGI started funding it early on in 2005, with funds going to then principal investigator John Dick to build a mass spectrometer-based flow cytometer. Further funds were given to DVS Sciences via Genome Canada’s Technology Development Competition in 2008.

The culmination of six years of technology development has led to the development of a first-in-class analytical instrument, the CyTOF™ Mass Cytometer. The technology has been called a ‘game changer’ within the industry.

“It’s a cross between a flow cytometer and an atomic mass spectrometer,” says company president and founder Dr. Scott Tanner. “The device can be used whenever investigators need to know more about single cells, either for understanding the biochemistry of genesis or for rare cell detection. Current users apply it for immuno sub-population of complex samples, such as bone marrow; looking for correlates of viral pathogenesis; for identifying rare disease cells such as cancer stem cells or circulating tumour cells. The technology came out of my research group - it was initially conceived when we

“The solution for that problem was to tag the affinity reagents, and principally those are antibodies with stable isotopes (atoms of elements), and measure those atoms with an atomic mass spectrometer.”

— Dr. Scott Tanner

were working for the company MDS Sciex. But in order to further develop it and bring it to market we had to make the decision to leave MDS Sciex and move to the University of Toronto.”

There, Tanner and his team benefited from support from Genome Canada through OGI and a variety of other public and private foundations, which in turn allowed them to establish DVS Sciences Inc. to develop the instrument and bring it to the market.

“In all it came out to $17 million, of which explicitly $6.5 million came from OGI, and the rest from co- funding, i.e. the ORF Global Leadership fund award we got last year and the Ontario Research Fund –Technology Development fund we had two years ago. We’ve also had funding from Canadian funding agencies such as HTX, OCE, ORF, OICR.”

The device uniquely combines the considerable analytical capabilities of atomic mass spectrometry with the power of flow cytometry for cellular analysis. The instrument extends the assay capability to simultaneous quantitative and independent determination of up to 100 biomarkers in individual cells.

According to Tanner, the device has many research applications.

“When one is interested in the heterogeneity of a sample, that is if you’re looking for a rare population of cells in a complex matrix of cells, the right technology for that is called flow cytometry. In flow cytometry, you recognize proteins with antibodies or genes with oligonucleotides (affinity assays) and the affinity products are conjugated to fluorophores, and so in conventional flow cytometry you do fluorescent detection of the antigens at the single cell level. The challenge with flow cytometry is if you try to measure more than four things at the same time, then the fluorescent signals overlap and they require compensation between detection channels which is increasingly difficult with the more parameters you do.”

The solution for that problem says Tanner was to tag the affinity reagents with stable isotopes (atoms of elements), and measure those atoms with an atomic mass spectrometer.

“The advantage being that there are many stable isotopes of many elements that can be used as probes, and the mass spectrometer gives exquisite resolution between the channels so that no compensation is required. We’re really fundamentally no longer limited in the number of things we can measure at a single time at the single cell level. Today we can do 35, and in a few months we’ll be looking at doing 60 at a time, and it’s conceivable to do a hundred parameters at the same time at the single cell level at a 1,000 cells per second. The basis of its transformative nature lies in the incredible amount of information that it makes available. Instead of trying to identify a cell with a fairly small feature fingerprint, we’re looking at the massive multiplex signature of cells, and that allows very good and confident recognition of a rare cell in a complex matrix, but also allows the interrogation of translational pathways that are the functional proteomics of the cell,” Tanner explains.

As such, the functional proteins that are translated from the genes and that are the machinery of the cell can be interrogated in many dimensions simultaneously because the device has independent probes for measuring those.

In addition to the CyTOF™ Mass Cytometer, DVS Sciences Inc. is also the manufacturer of (the metal-labeled) reagents that the instrument reads, which are called MAXPAR® (standing for maximum parameters), and the supporting technologies used for simplifying massively multi-parameter analysis of single cells. The MAXPAR reagents include a reagent set for appending stable isotope tags to affinity reagents, including a methacrylate polymer that has 30 repeat units that bind 30 atoms of stable isotope atoms.

Combined with the MAXPAR reagents, CyTOF™ is a tool that Dr. Tanner believes has the potential to set a new standard in hospitals, clinics and research departments around the world.

“That’s our clientele really. Firstly researchers who are interested in the genesis of disease, those are going to be cancer researchers, viral pathogenesis researchers, people who are looking at what is happening at the single cell level that causes a disease to form and interrogating that at the protein level, not necessarily only at the gene level. And for Drug Discovery, we can interrogate many target pathways simultaneously to identify when a drug interacts with a particular translational pathway (which is what a drug does), and you can come up with all the parallel pathways that are either stimulated or suppressed at the same time, and it will give the drug discovery people far more information before they go to the clinic, enabling them to “fail early and fail often”, but take the right products into the clinical trial. And a third group is clinical researchers who are looking for diagnostic panels that will be used in the personalized health prognosis market or looking at signatures of disease so that they could be monitored through diagnosis, treatment, remission and, hopefully not, but relapse,” he said.

Overall, Tanner believes that the development of the technology wouldn’t have been possible without the assistance of OGI. “OGI has been a terrific opportunity for us: it was a mechanism that facilitated us to get going and I’m glad we did this in Canada. We couldn’t have done this any other way.”

While OGI definitely had a role to play in both the ArcticDx and DVS Science Inc. stories, Dr. Poznansky believes that the true credit for the early successes of these companies should go with the scientists and researchers who had the vision to take these technologies, develop them and see them through to the market.

“I have a silly expression that I sometimes use, credit is infinitely divisible,” he commented. “Helping them overcome the challenges and the hurdles, and taking one of the original chances on them. Sure we’ve been very important to the process, but their science is the true success story. They both came forward with financially viable commercial ideas that were past the academic laboratory stage, and they had the drive to take them through to commercialization.”

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Maurice

and the snow storm

Maurice, our Front Desk Agent, isn’t exactly a huge fan of the snow. And driving in the stuff? He dislikes that even more. But one cold, grey December evening, our intrepid Maurice ventured out into one of the biggest storms of the season. What could have driven him to drive into this tempest? His sense of duty. You see, one of our guests had left an important item behind. Knowing that a cab wouldn’t make it to the airport in time to reunite our guest with his property, Maurice took matters, as well as a frigid steering wheel, into his own hands. Arriving at the airport with mere minutes to spare, Maurice personally handed the item to our surprised, and extremely relieved, traveller. Proof once again that, even after you’ve left our hotel, you’re still a VIP.

We don’t go home happy until you do.

Downtown Ottawa 377 O’Connor St. 800.465.7275 victoriapark.com

Really, ReallyBig

Hotel Suites.

The moment.You know it. It happens any time you stayat a new hotel,right after you swipe your room key.The moment before you open the door.Will the room be big,or small? Light,or dark? Nice,or not?

Here’s what you’ll find the moment you open your door at Albert at Bay—space,and lots of it.Our suitesare the biggest in Ottawa and feature real bedrooms,real kitchens and real living rooms.And they don’t costany more than those of our competitors.Really, why would you stay any place else?

COMMERCIALIZATION OF BIOTECHNOLOGY IN CANADA

There has never been a better time to commercialize biotechnology in Canada. After more than a quarter century of experience with its applications finding their way into the global economy, Canada is poised to make its greatest impact on the global bio-economy.

The 2010 Global Biotechnology Survey prepared by Scientifi c America reinforces the promise of biotechnology commercialization in Canada. The survey found that Canada ranked behind only the United States and Singapore, in terms of the foundation for biotechnology based on IP production and activity, biotechnology innovation intensity (application), enterprise support, educational and workforce strength, and general foundations (R&D expenditures per GDP).

While medical biotechnology attracts the most public attention, the Canadian bioeconomy transcends the entire Canadian economy. As noted by BIOTECanada in its report on the Ontario bio-economy, car seat foam made from soybeans, new vaccines, bio-diesel and engine oils made from oil seed crops, biological therapies for Alzheimer’s and cancer, new plastic composites from agricultural sources, trans fat free cooking oil, renewable biomass energy sources, and biological based environmental control systems, are examples of the applications of biotechnology to many sectors of the economy.

In the recent Canadian federal election, the Conservative Party of Canada campaigned on a platform that included strong support for research and development. The new Government will be looking for advice from a panel of experts that is conducting a comprehensive review of all Canadian federal business research and development initiatives. The objective of the review, to be completed later this year, is to ensure the investments of our federal government deliver results. According to KPMG, Canada’s R&D environment ranks fi rst in terms of cost competitiveness for biomedical R&D amongst the G-7 nations. Canada has also established the fastest rate of growth in external patent applications and in industry investment in R&D among G-7 countries. Canada provides 20-year patent protection for pharmaceuticals, ensuring a favourable and stable investment climate for innovation. Recent amendments to data protection provisions in the Food and Drug Regulations, will benefi t innovative drug companies by guaranteeing a minimum of eight years of market exclusivity for their products. A further six months of protection is available to drugs, which have been subject to paediatric studies.

Canada has many other strengths. Overall, as a location for manufacturing, Canada has the lowest costs to establish and operate a manufacturing facility when compared to all other G-7 countries. Federal taxation offers a 20 per cent non-refundable tax credit for public companies and a 35 per cent refundable tax credit for private companies on current R&D expenditures, including capital expenditures on R&D and machinery and equipment. The Scientifi c Research & Experimental Development (SR&ED) program provides tax incentives to eligible companies that develop new or improved technologically advanced products or processes in Canada. When these incentives are combined with similar tax credits from Canada’s provincial governments, the after tax cost of R&D expenditures can be reduced by as much as 60 per cent. These generous incentives mean Canada has the lowest effective tax rate amongst its major competitors. The 2010 Global Biotechnology Survey prepared by Scientifi c America reinforces the promise of biotechnology commercialization in Canada.

Last year the Canadian federal government made changes to the Income Tax Act (Canada) that mean certain foreign investors such as U.S. venture capital funds are no longer required to fi le Canadian tax returns on top of their foreign tax returns, or fi ll out section 116 certifi cates upon exit. It is believed that this change will open the doors for investment into Canadian biotechnology fi rms, and signals an “open for busi-

The current provincial government of Ontario has demonstrated its commitment to fostering a bio-economy through a wide range of program initiatives, based primarily in the Ministries of Research and Innovation and the Agriculture, Food and Rural Affairs.

ness” attitude by the Canadian government.

Equally important to creating a favourable environment for the Canadian bioeconomy, is a strong overall economy. Canada’s economic performance continues to lead all other members of the G-7 Group of industrialized nations. The Organization for Economic Co-operation and Development (OECD) reported that Canada’s economy grew by 6.2 per cent in the first three months of this year. The OECD expects Canada’s economy to grow 4.5 per cent through the second quarter - nearly twice the G-7 average.

While capital formation and availability continues to be over weighted in favour of Canada’s natural resource based sector, there are signs that capital availability for technology sectors that are biotechnologyrelated is strengthening. This is particularly true in the clean-tech sector where a number of new funding initiatives have been announced in recent months.

In addition to a strengthening economy, and a federal government committed to a stable tax environment, one can expect to see continuing support for the bio-economy from provincial governments in regions of the country where a significant cluster of biotechnology already exists.

The current provincial government of Ontario has demonstrated its commitment to fostering a bio-economy through a wide range of program initiatives, based primarily in the Ministries of Research and Innovation and the Agriculture, Food and Rural Affairs. Québec has been very effective in developing and sustaining policy initiatives that have resulted in Québec attracting and retaining an enhanced level of bio-pharmaceutical research and development activities. Of all Canadian jurisdictions, Québec has long recognized the potential to attract biopharmaceutical research and development activities by enhancing formulary access and protecting brand medicines from generic competition.

In Western Canada, the governments of Saskatchewan and British Columbia have also made a strong impact on the development of local bio-economies. For example, Saskatchewan is recognized as one of the world’s leading Ag-biotech research centres. British Columbia has been the home of some of Canada’s greatest commercial success in biotechnology, including QLT, ID Biomedical and Angiotech. Other parts of Canada have also worked hard to nurture biotechnology in their jurisdictions, including the Maritime provinces, Alberta and Manitoba.

Looking Ahead

In the fall, there will be an election in the province of Ontario. It is reasonable to expect that both of the lead political parties Liberals and Conservatives, will continue to be committed to promoting research and innovation, including support for the bio-economy. In the next year or so, there will also be elections in Québec and British Columbia. These jurisdictions are likely to continue their support for their respective bio-economies.

These upcoming provincial elections present opportunities for industry groups to lobby for greater support. The two main national associations - BIOTECanada and Rx&D - have both presented important agendas for further reform. BIOTECanada has tended to lead advocacy efforts to enhance the SR&ED tax credit regime, seeking reforms to extend the refundable tax benefits to companies that are not Canadian controlled private corporations. In addition, BIOTECanada has developed and advanced a credible and well researched position to advocate for permission to adopt share structures that allow investors in emerging companies to use losses incurred by such companies to off-set income, i.e., flow-through shares. Canada’s current flowthrough shares program was enacted by the Canadian federal government in 1954 as a means of encouraging private sector investment for natural resources exploration. Today, flow-through shares issued by oil, gas, mining and renewable energy companies have been instrumental in Canada’s success as a leading resource nation. The hope of many industry leaders is that the Canadian government will create similar incentives to ensure that Canada’s status as a leading biotechnology jurisdiction.

Rx&D has made a strong case that Canada’s intellectual property laws need to be enhanced to ensure that Canada has a system of protection that is an incentive for companies to establish in Canada. In addition, Rx&D members have also made an effective case for government procurement of pharmaceutical products that encourage local commercialization.

Over the next few years, as the bioeconomy continues to contribute to Canada’s prosperity, one can expect that the important ground work that has been laid to facilitate commercialization will begin to pay enhanced dividends.

Jeffrey Graham is a partner of Borden Ladner Gervais LLP and the head of the firm’s national life sciences practice.

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