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CHAMPIONING THE BUSINESS OF BIOTECHNOLOGY IN CANADA September/October 2011

The Numbers RuleBiomathematics Emerges as the Future of Biology

Illinois’s Big Bio GrabMidwest State’s Biotech Push a Model of Economic Development

Canadian Biotech a Favourite of Foreign Espionage

Easy Targets

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CHOICEMATTERS

Choose what’s right for you.

Because No Two Labs are Completely AlikeScience should never be limited by a lack of options. Every lab deserves the freedom to � nd tools perfectly suited to speci� c needs. VWR is committed to offering broad product choice to a world of accelerating scienti� c advancement. We give you direct access to the world’s most respected equipment, supplies, chemicals, furniture, and more.

Talk to us about the needs of your lab. We are ready to help you succeed.

BD Biosciences

Sometimesall you needis reliability. Other times

you need a little more bite.

Cell Culture

VWR, forms of VWR and the VWR logo and/or design are either registered trademarks ® or trademarks™, or service marks SM of VWR International, LLC in the United States and/or other countries. ©2011 VWR International, LLC. All rights reserved.

Contact your VWR Sales Representative, visit VWR.com, or call 1.800.932.5000 today.

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September/October 2011 Bio Business 3

also inside standards

Canadian biotech business opps in Japan

Bio Business BusinessContents

CHAMPIONING THE BUSINESS OF BIOTECHNOLOGY IN CANADA

5 EDITORIAL

6 NEWS

22 BUSINESS LEADERSHIP

Right now our industry is in very difficult times, and the problem we have is that the investment community has no interest in Canadian biotech. We haven’t had enough success stories.

—Graeme McRae, Chairman, President and CEO of Bioniche Life Sciences. Read more on page 22.

”“

12 The Spies in Our Labs Biotech executives and government security experts know economic espionage happens inside Canada’s borders—and they also know just how vulnerable Canada’s innovation industries are to spying and interference by foreign governments.

17 The Biomathematics RevolutionMathematics will reshape how biologists research organic therapies. But many obstacles prevent Canadian companies from taking advantage of the revolutionary techniques of biomathematics.

8 Regional Profile: Illinois’s Big Grab for BiotechWith an entrepreneurial engine in Chicago, intellectual brainpower in the southern heartland, and a governor dedicated to building biotech, Illinois leads the U.S. Midwest, and much of the country, in discovery science and biotech business.

16 Steel from WheatA new pilot plant in Alberta hopes to turn recent discoveries in nanoscience into a commercial industry.

20 Securing Venture CapitalThey have the money so what does bio business have to do to get it?

12

16

CHOICEMATTERS

Choose what’s right for you.

Because No Two Labs are Completely AlikeScience should never be limited by a lack of options. Every lab deserves the freedom to � nd tools perfectly suited to speci� c needs. VWR is committed to offering broad product choice to a world of accelerating scienti� c advancement. We give you direct access to the world’s most respected equipment, supplies, chemicals, furniture, and more.

Talk to us about the needs of your lab. We are ready to help you succeed.

BD Biosciences

Sometimesall you needis reliability. Other times

you need a little more bite.

Cell Culture

VWR, forms of VWR and the VWR logo and/or design are either registered trademarks ® or trademarks™, or service marks SM of VWR International, LLC in the United States and/or other countries. ©2011 VWR International, LLC. All rights reserved.

Contact your VWR Sales Representative, visit VWR.com, or call 1.800.932.5000 today.

CA_Add template_final.indd 2 3/16/2011 2:43:20 PM BB_SeptOc11_Issue7.indd 3 10/17/11 11:06 AM

Need manufacturing talent?

Funded by the Government of Canada's Sector Council Program©20

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• The BioSkills Recognition Program—Reducing the challenge and risk of recruiting by givingyou access to BioReady™ talent. Workers can use our BioSkills Transfer Tool to determine howtheir current skills map to bio-economy needs—and you can connect with BioReady talentthrough our BioSkills Match solution.

• The PetriDish™—a free, bilingual national bio-economy online job bank for recruiting talent

When you have biomanufacturing positions to fill, turn to BioTalent Canada.

www.biotalent.ca/biomanufacturing

BioMan BioBusiness_Layout 1 11-09-27 2:11 PM Page 1



Editorial

Not long ago, I attended a photo shoot at the offices of a well-known biotech-nology company. When the photographer and I arrived, the man in charge said, “Look around. Find a good spot for the photo. I’ll be in my office.”

Unattended, the photographer and I prowled the office in search of a good backdrop. Had we been spies, we could have left the office with a couple of laptops in the photographer’s camera bag or documents tucked under our shirts.

Economic espionage—the theft of trade secrets by foreign governments—threat-ens Canadian business. CSIS admits this fact often. The scope of the threat remains uncertain because nobody talks about what is happening. Ex-spies estimate Canadian businesses lose more than a hundred billion dollars annually through espionage and sabotage.

Canadian biotech needs leadership in the area of economic espionage. Addressing economic espionage has to be a joint effort led by industry groups and government.

First, advocacy groups must determine the severity of the threat. Is the threat monstrously outrageous, as former spies want us to believe, or simply outrageous? Second, advocacy groups need to give startup biotechs, too busy raising capital to think about defense, the education and tools they need to protect themselves.

The bigger challenge in dealing with foreign interference leads to the federal government. Earlier this year, CSIS singled out biotechnology as a particularly vulnerable sector—yes, it’s that bad. But without some facts, some plan of action, bio businesses and their advocates will remain ignorant and exposed.

Why bureaucrats in Ottawa and CSIS insist on remaining silent is easily under-stood. They know their power resides in the secrets they keep, and so they do not talk. But to talk is to think. To ask a question is to seek an answer. Our bureaucracy prefers, for selfish reasons, not to think and not to question. Mute and unthinking, these middling power brokers offer nothing useful to the people they serve. They retreat to their well-appointed offices, secure against their own irrelevance by knowing something nobody else knows.

Championing the Business of Biotechnology in Canada

Publisher Christopher J. Forbes & CEO [email protected]

Executive Editor Theresa Rogers [email protected]

Managing Editor Robert Price [email protected]

Staff Writer Julia [email protected]

Editorial Intern Chelsea Shim [email protected]

Art Tammy Malabre Director [email protected]

Secretary/ Treasurer Susan A. Browne

Director of New Jacquie Rankin Business Development [email protected]

Account Paul Rankin Manager [email protected]

Marketing Heather Kerr Manager [email protected]

Marketing Keri LaPLante Co-ordinator [email protected]

VP of Roberta Dick Production [email protected]

Production Crystal Himes Manager [email protected]

Production Joanna Forbes Co-ordinator [email protected]

Bio Business is published 6 times per year by Jesmar Communications Inc., 30 East Beaver Creek Rd., Suite 202, Richmond Hill, Ontario L4B 1J2. 905.886.5040 Fax: 905.886.6615 www.biobusinessmag.com One year subscription: Canada $35.00, US $35.00 and foreign $95. Single copies $9.00. Please add GST/HST where applicable. Bio Business subscription and circulation enquiries: Garth Atkinson, biondj16@publication partners.com Fax: 905.509.0735 Subscriptions to business address only. On occasion, our list is made available to organizations whose products or services may be of interest to you. If you’d rather not receive information, write to us at the address above or call 905.509.3511 The contents of this publication may not be reproduced either in part or in whole without the written consent of the publisher. GST Registration #R124380270.

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Publisher ofLAB BUSINESS MagazineBIO BUSINESS Magazine

Printed in Canada

Editorial

Bio Business is a proud member of BIOTECanada and Life Sciences Ontario.

Canadian biotech business opps in Japan

Bio Business Business

Robert PriceManaging Editor

Without a Plan and Without a Thought

Need manufacturing talent?


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If your bio-economy business is looking for skilled workers with manufacturing experience,we can help. BioTalent Canada™ has the resources and tools you need to fill vacancies and connect withactive job seekers who know their way around the plant floor—and how to get products out the door.

Our resources include:

• A GMP Skills Check to confirm workers’ knowledge of Good Manufacturing Practices (GMP)

• The BioTalent GMP Tool Kit—a downloadable package that helps you develop training plans to fill gaps in employees’ GMP knowledge

• The BioSkills Recognition Program—Reducing the challenge and risk of recruiting by givingyou access to BioReady™ talent. Workers can use our BioSkills Transfer Tool to determine howtheir current skills map to bio-economy needs—and you can connect with BioReady talentthrough our BioSkills Match solution.

• The PetriDish™—a free, bilingual national bio-economy online job bank for recruiting talent

When you have biomanufacturing positions to fill, turn to BioTalent Canada.

www.biotalent.ca/biomanufacturing

BioMan BioBusiness_Layout 1 11-09-27 2:11 PM Page 1


6 Bio Business September/October 2011

Just read, and liked, your editorial in Bio Business ( July/August 2011). I especially liked the reference to (and accompanying article) about “Breaking the Plateau” targeting the root-cause of why cancer cells begin to divide

uncontrollably. One must ask after all these decades of everyone donating money to cancer

societies, running-for-the-cure, and lottery-type fundraising gimmicks, how the donated money is being spent. The drug companies will spend the money on developing treatments, hence should our donations go in that direction? Or should the donation money go solely to research the companies will not do, such as answering the root-cause question about uncontrolled dividing?

Please publish more about root-cause cancer research wherever you hear of it being done.

Paul Larocque, CChemPresident, Acerna Inc.

Give Root-cause Cancer Research AttentionLetter to the Editor

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PEI celebrated its sixth official Biotechnology Week with activities at various venues. Left to right: Mike Martin and Lisa McAskill, first-year students of Holland College’s Bioscience Technology Program, in a lab at the new Holland College Centre for Applied Science & Technology in Charlottetown. They are joined by Jennifer Slemmer, Program Instructor, and Rory Francis, Executive Director of the Prince Edward Island BioAlliance.

PEI Nurtures Biotech Community

Approximately 80 per cent of Canadians are supportive or somewhat supportive

of a Comprehensive Economic and Trade Agreement with the European Union and an upgrade of Canada’s Intellectual Property Regime, suggests a recent poll by

Rx&D. “If Canada adopts an internation-ally competitive IP regime, it will drive the creation of innovative medicines, which are crucial for patients and for protecting our health care,” says Russell Williams, President of Rx&D. If Canada develops

stronger IP protection, it will attract a higher percentage of the $100 billion invested globally in life sciences each year. Results from a joint Canada-EU study show CETA will stimulate the Canadian economy by $12 billion.

Canadians Support CETA and IP Regime Upgrade

Biotech goes to HollywoodAn unprepared medical community rushes to develop a vaccine as the outbreak of a deadly airborne virus poses a worldwide threat and ignites mass panic. This is the basis of Contagion.

UK-based Curb Media and Toronto advertising agency Lowe Roche teamed up to create a living window installation in an unoccu-pied storefront in downtown Toronto to promote the film. “We had two giant Petri dishes built,” explains Glen D’Souza, Art Director at Lowe Roche. “Each one was about six feet wide by two feet tall, and about eight to 10 inches in depth.”

The Petri dishes were filled with Penicillium, blue-green mould and a red pigmented bacterium called serratia marcescens. The bacteria eventually formed to reveal the film’s title. “The Petri dishes were inoculated on the Sunday morning, and it took about six days for it to fully grow,” says D’Souza. The title was visible by the second day. A time lapse video shows the site con-struction, process of bacteria growth and the reactions of curious spectators. www.warnerbroscana-da.com/index.php/wb-there/the-spread-of-contagion-hits-torontos-queen-west-201108



PREVENT Gets Coveted ProMIS Technology

Pan-Provincial Vaccine Enterprise (PREVENT) obtained an exclusive license from Amorfix Life

Sciences to use the company’s ProMIS technology to develop vaccines for diseases caused by misfolded prions, such as Lou Gherig’s disease, and to devel-op prophylactic vaccines and therapeutic vaccines for cancers. “The license agreement is beneficial because the technology provides PREVENT with the ability to generate alternate epitopes to incorporate in a vaccine singly or in combination, should the current epitopes being used prove unsuccessful in animal trials,” says PREVENT CEO Dr. Naveen Anand. “Further, these alternative epitopes/anti-gens would be useful in other applications if and when PREVENT pursues these as well.”

News

Comings and GoingsMichael Cauley has been promoted to President of laboratory supplier

Mandel Scientific. BioTalent Canada, a bio-economy human resources hub, announced the arrival of its new Executive Director, Robert Henderson. John J. Trizzino is the new Chief Executive Officer and Director of Immunovaccine. Sirona Biochem Corp., a biotechnology company specializing in carbohydrate chemistry technology, appointed Dr. Jocelyne Legoedec as Lead Project Biologist at its subsidiary company, TFChem, in France. Amorfix Life Sciences, a product development company focused on diagnostics and therapeutics for misfolded protein diseases, appointed Meryl J. Chertoff to its Board of Directors. BIOREM Inc. terminated the employment of Robert Wood, Chief Financial Officer. BioExx Specialty Proteins Ltd. appointed Richard (Ric) Rumble to its Board of Directors. Cédric Bisson joined Teralys Capital as Venture Partner to manage activities in the healthcare and life sciences sector. Dr. John Haggie is the new president of the Canadian Medical Association. RepliCel Life Sciences Inc. appointed Tom Kordyback as its Chief Financial Officer.

DevelopmentsNexterra Systems Corp. and the UBC have signed a Collaborative Research

Agreement to develop an advanced method of conditioning synthetic gas based on Nexterra’s proprietary biomass gasification technology. AMG Bioenergy Resources Holdings Ltd. incorporated AMG Bioenergy Plantations Co., Ltd., a wholly owned subsidiary corporation incorporated under the laws of the People’s Republic of China to facilitate the acquisition of a 133 hectare jatropha plantation and a 201 hectare eucalyptus plantation, and the associated land use rights, in China. The Government of British Columbia gave $25 million to Genome BC in support of its genomics research in the areas of agriculture, for-estry, fisheries, human health, bioenergy, mining and the environment.

Sirona Biochem Develops Cancer Vaccine Antigen

Sirona Biochem, a Vancouver-based company that specializes in carbohydrate chemistry, has made a major breakthrough in the

development of a cancer-associated antigen. Previous attempts to stabilize the antigen have been unsuccessful, but Sirona Biochem’s tech-nology was able to stabilize the antigen. Sirona Biochem is working with a well-known antigen that is prevalent in the aggressive forms of cancers such as colon, breast, lung and prostate. The antigen could be used in a vaccine to strengthen the immune system’s ability to fight these cancers.

The antigen is currently undergoing further testing to ensure it has retained the properties that create an appropriate antibody response. Sirona Biochem CEO Dr. Howard Verrico anticipates testing will be completed by the end of the year. Pharmaceutical companies have already expressed interest in this development, and Sirona Biochem has the potential to license this antigen to pharmaceutical vaccine manufac-turers, says Dr. Verrico.

Is an Aging Population Good for Biotech?

Within the next two decades, the Canadian labour force could look a lot different than

it does today. According to new data from a StatsCan labour study, by 2031 all baby boomers will have reached the age of 65. David Foot, pro-fessor emeritus of economics at the University of Toronto, says, “With an aging population and an aging workforce, you’ve got more people who are likely to need drugs, so an aging population ben-efits the biotech sector on average.” However, he cautions that if the demand for biotech products grows, that need will not be easily satisfied by new graduates. The study projected the participation rate to drop to between 59.7 per cent and 62.6 per cent by 2031 from 67.0 per cent in 2010. Slower economic growth is a continuing long-term trend, and with a declining rate of younger workers entering the labour force, biotech will have to come up with a way to include all workers.



Illinois, they say, is all of America in a single state. In the north-east, on the edge of Lake Michigan, sits Chicago, one of the great American cities, with its ports, skyscrapers, commerce,

sports, jazz and blues. Dense suburbs, as middle American as any U.S. suburb, enclose Chicago, and surrounding these neighbour-hoods, in the sparely populated prairie pastures, stretch the farms and fields that make up much of the south of the state.

Illinois has two personalities: the urban eccentric and the apple pie farm boy. Illinois’s biotech sector has two personalities too: a juiced up entrepreneur storming the corridors of Chicago, and a careful, mellow, methodical scientist growing seeds in an agricultural lab.

Chicago urbanityWhen asked why he moved his company from Palo Alto, California, to Northbrook, a hamlet just north of Chicago, Timothy Walbert, the President and CEO of Horizon Pharma, delivers a one-word answer and he delivers it three times: “Science. In Illinois you have science. You have a broad network and access to capital and human capital. You have great science.”

Today, Illinois’s science pours from more than 200 universities, government, and non-profit labs. Illinois’s schools, home to more than 900,000 students, collected more than $1.3 billion in aca-demic research funding for bioscience research in 2008 and graduated more than 10,000 students with degrees in bioscience.

The leading schools—Rush University, Northwestern University, The University of Chicago, and University of Illinois—house institutes and research programs that attack technology problems from dozens of angles. In the field of nanotech, for instance, Illinois’s universities host four of the state’s major nano-tech labs. Bioscience, particularly research into cancer, viruses, and biofuels—Illinois is the U.S.’s leading exporter of biomass—remains a focus of the state’s academic researchers.

These researchers are important to the state’s industrial sector. Like so many other jurisdictions around the world, Illinois’s pub-licly generated research fuels the products that private businesses commercialize.

Success, successWalbert says there’s another reason why he brought Horizon Pharma to Illinois: success.

Horizon Pharma, backed by $150-million in venture capital, has two approved products ready to take to the rheumatoid arthri-tis market. The company plans to hire 80 people to sell the thera-pies. In a few years, Horizon, which completed its IPO on August 2, grew from a company of one to a company of more than a hundred.

“Capital is built around good ideas and strong management. When you have people who have had prior success, and when you have good science and good ideas, it all comes together,” says Walbert.

According to the Illinois Venture Capital Association, the U.S. Midwest holds more than $100 million in venture capital, with huge sums residing in Chicago. Along with capital, biotech com-panies in Illinois have the big players in life sciences as neigh-bours: Abbott Laboratories, APP Pharmaceuticals, Baxter Healthcare, Astellas Pharma, Hospira, Takeda, Agilent

By Robert Price

Biotech in the MidwestA little exposure and a lot of infrastructure attract bio to Illinois

A researcher at the National Corn-to-Ethanol Research Centre on the campus of Southern Illinois University Edwardsville.



Technologies, and others.“The more success you have, the more you bring the investors

and you keep that good science here in Chicago,” says Walbert.

Exposure and supportIllinois hosted the BIO International Convention—the largest global event for the biotechnology industry—in 2006. Warren Ribley, Director of the Illinois Department of Commerce and Economy Opportunity, says exposure at the conference jump-started the government’s push to bring biotech to the state.

By 2008, two years after the conference, Illinois moved to first place in a ranking of U.S. bioscience industry employment, with more than 57,000 people working at more than 1,900

employers. These workers are well paid, earning an average of $90,000 annually.

“There is a direct correlation to exposure from the bio conven-tion and our ability to attract biotech to Illinois,” says Ribley.

But how Illinois attracts biotech business also deserves atten-tion. Illinois is an example of how government creates an environ-ment conducive to a market.

Leading Illinois’s activist government is Pat Quinn, the former lieutenant governor who took over as governor when the state legislature impeached Rod Blagojevich. Earlier this year, Quinn received the 2011 BIO Governor of the Year Award for his work to advance the bioscience industry.

Foremost among Quinn’s efforts has been to build a new investment tax regime. The state passed the Illinois Angel Investment Tax Credit, a law that gives a 25 per cent credit—up to $2 million—to investors who invest in early-stage technology companies headquartered in Illinois. Since becoming active in May of this year, 13 biotech companies have received private investment through this tax scheme.

“[It’s] a good way for many small development companies to connect

Regional Profile

The Illinois Science + Technology Park in Skokie is home to dozens of established and emerging biotechnology companies.

Mentoring New Bio BusinessesEach month, a group of scientists from Illinois’s three big universities—Northwestern University, The University of Chicago, and the University of Illinois—sit down to discuss what’s happening in Illinois biotech. The group, Chicago Innovation Mentors, matches university researchers and new bio business ventures with a mentorship team of vet-eran scientists and established businesspeople. Together, the team reviews the work of the mentees and develops ways to accelerate the technology translation and drive the new products to market.

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Regional Profile

with institutions who have capital to put into place,” says Ribley.In addition, Illinois created a fund to help small firms com-

mercialize technologies, transfer new technologies and continue their research in the state.

The state also created the Illinois Innovation Council, a group of business executives from across sectors that advises government about how to spur on invention, attract new research and develop-ment companies to Illinois, and grow existing clusters. And Quinn chairs the Midwestern Governors’ Association, a group with an agenda to develop the American Midwest into an inter-national biotechnology hub, with an emphasis on building a sus-tainable biofuel market.

Places to work Illinois has invested more than $50 million over the last 10 years to develop technology park infrastructure. Government spend-ing supports organizations that manage biotech incubators and market Illinois’s eight technology parks internationally, part of a state-wide push to bring technology companies business to Illinois.

These technology parks are easy to locate. Find a university and you’ll find a technology park.

The Illinois Science + Technology Park, one of the largest parks, sits beside Northwestern University and O’Hare Airport, in view of Chicago and the Lake County Pharmaceutical

Cluster. The park has 660,000 sq. ft. of office and laboratory space, with a full two million sq. ft. available after renovations finish. Designed like a university campus, the park houses the offices and labs of NanoInk, Nanotope, Fisher Scientific, Astellas Pharma U.S., NorthShore University HealthSystem, and others. The Southern Illinois Research Park, the largest park in the south of the state, puts biotech companies next door to Southern Illinois University Carbondale’s campus, where so much agricultural research happens.

The state uses grants to encourage small companies to gradu-ate from technology parks into larger spaces.

Rural muscleThe University of Illinois at Urbana-Champaign is one of the bioscience nerve centres in Illinois. The school’s rich agricultural science research contributes to the vitality of private partners, especially as world demand for biofuels and heartier stocks increases, says Jonathan Sweedler, Director of the Roy J. Carver Biotechnology Center, a university organization that offers sequencing and technology support for the university community and incubators.

“There seems to be quite a bit of upbeat optimism [in the Illinois agri-cultural biotech sector]. It seems to exceed the optimism in large pharma where you still hear about large cut-backs,” says Sweedler.

Also at Urbana-Champaign is John Rogers, one of Illinois’s science superstars. Rogers is the Lee J. Flory-Founder Chair in Engineering at University of Illinois at Urbana-Champaign and the 2011 recipient of the 2011 iCON Innovator Award (University Level).

Rogers’s research lab at Urbana-Champaign develops flexible elec-tronics that integrate with the human

body. The electronics, what Rogers calls “an electronic Saran wrap,” stretch, wrap, and laminate directly onto surfaces of inter-nal organs or the skin to provide monitoring and therapy.

Rogers founded two device companies—MC10 Inc. and Semprius Inc.—to commercialize technology invented in the Illinois lab. These companies operate on the U.S. east coast, but they’re a product of the science-minded environment found in Illinois.

“[Illinois] is well-configured and mindful of the power of sci-ence and engineering for economic development and the well-being of society and the future of mankind,” says Rogers. BB

• Between 2001 and 2008, Illinois saw the number of feedstock and chemical businesses and medical device manufacturers operating in the state increase by almost half. The number of research labs in the state increased nearly 60 per cent.

• Six of the top 20 pharmaceutical and life sciences firms have their North American head offices in Illinois.

• Illinois is courting Asia. In September 2011, the state government attracted Japanese manufacturer Sakae Riken Kogyo to set up shop inside the state, and agreed to co-operate with the China-based Shanghai Bio Pharmaceutics Association to increase economic opportunities for both regions in the biotechnology field.

• Illinois has 58,000 workers directly employed in the biosciences sector and more than 330,000 workers employed indirectly because of biosciences.

A pharmaceutical researcher at the Southern Illinois University Edwardsville.

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That’s quantfident.

The ChemiDoc™ MP imager can do it all — chemiluminescence, multiplex fluorescence, routine gel imaging, and more.

■■ Superior sensitivity — no need to go back to film■■ Exceptional image quality — publication-ready images in seconds■■ Unmatched application versatility — always meets your laboratory needs■■ Ease of use — hands-free operation■■ Stain-free enabled — visualize proteins in gels and on blots, without staining

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Wide Open and Blind


Security

When MP Bob Dechert stood up in the House of Commons and smiled for the cameras, he had no idea how bad he’d end up looking.

Dechert is the Conservative MP from Mississauga whose first significant mention in the national press came when reporters obtained flirtatious emails Dechert had written to a married woman.

In one of his emails Dechert told his crush, Shi Rong, to watch him on TV. He said he’d smile for her when he stood up to vote. And he did. With love in his eyes.

What’s embarrassing isn’t just what Dechert wrote—“I really like the picture of you by the water with your cheeks puffed. That look is so cute, I love it when you do that.”—but the fact that Dechert’s crush, Shi Rong, was a correspondent with Xinhua News Agency, the propaganda arm of the Chinese government known to house spies.

Michel Juneau-Katsuya, a former agent with the Canadian Security Intelligence Service (CSIS) and current CEO of The Northgate Group, a security firm, says Dechert’s story is a “classic, textbook” example of how governments get close to foreign targets. They send a young woman with legitimate cover to approach a middle-aged man with access. She earns his confidence. And when he talks, she shares it with her bosses.

Perhaps, as the Canadian government claims, Dechert shared no valuable informa-tion with Shi. Perhaps Shi is nothing more than a journalist. But the headlines Dechert made highlight a problem nobody talks about in polite company: the fact that foreign spies operate in Canada.

Attacks on bio businessesCanada’s biotechnology and pharmaceutical industries are favoured targets for foreign spies. According to a recent report by CSIS, Canada’s spy agency, foreign entities have robbed Canadian businesses of “assets and leading-edge technology, [leaked] confidential government information or applications, and [coerced and manipulated] ethno-cultural communities.”

The value of what Canada loses through espionage is difficult to calculate because nobody talks about foreign influence in Canada. The federal government hides behind

Wide Open and BlindCanadian business, especially biotech, is an easy target for foreign spies


By Robert Price



the wall of national security. There are no national databases to track losses. Businesses don’t talk for fear of scaring investors or looking inept.

When Richard Fadden, Director of CSIS, tried to talk about the issue last year—he said in an interview with the CBC that foreign governments were trying to influence Canadian politi-cians—Opposition parties shouted him down.

The silence that surrounds espionage makes matters worse, says Annick Tremblay, Security Manager at GlaxoSmithKline.

“We don’t talk about espionage and we should. The govern-ment should be the one who takes the lead of it because they have a lot of information, a lot of networks, but they’re a little bit reluc-tant to open that to the public,” says Tremblay.

The FBI estimates the U.S. loses $250 billion to foreign gov-ernments each year. Juneau-Katsuya, who tried to quantify losses when he worked for CSIS, estimates Canada loses $125 billion each year.

“If it wasn’t for the fact that terrorism sheds blood, by far the biggest national security issue for Canada would be espionage,” says Juneau-Katsuya.

Canada is an attractive target for foreign governments because it is a knowledge-based society. Canadian businesses work on the cutting edge of so many different fields. In pharma and biotech, the incentives for stealing intellectual property are huge. Developing a new therapy can cost upwards of $800 million. A break-and-enter or hacking a computer costs comparatively little. Buying a person on the inside might simply be a matter of setting up a tawdry affair. And for businesses with the backing of their national government, knocking a competitor out of business can be done creatively—with arson.

DefencelessThe other reason Canada is a favoured target is because Canadian

businesses are defenceless against foreign spies. After the Cold War ended, the long-standing military con-

frontation turned into an economic confrontation. Allies became opponents in a battle for market share. National governments deployed their spy agencies to protect their countries. “They went out to steal trade secrets, to steal intellectual property, in the name of protecting their own national interests, their own industry,” says Juneau-Katsuya. Canada, not weaned on the Cold War like Europeans were, never took to using government agencies to steal secrets to aid national businesses.

And Canada has done little to mobilize Canada’s spy networks to protect business interests against espionage. Tremblay believes some attacks on laboratories done in the name of animal rights are motivated by foreign governments. If this is true, businesses can do little on their own to stop the attacks. As Tremblay says, “It’s easier [for a business] to be against protesters than against espio-nage, because there’s a government behind espionage.”

Biotechs are especially vulnerable to foreign interference because they’re constantly hunting for cash and partnerships. “You open your door to the foreign company that wants to look at your product,” says Guy Chamberland, President and Founder of CuraPhyte Technologies. “That makes you lower your defences.”

Chamberland, who worked as a CSIS intelligence and scien-tific officer before jumping into biotech, says there are examples in Canada of spies portraying themselves as investors to get close to new products. “It’s an easy way of getting to a company,” he says. “I know it does happen. I can’t quantify or measure it.”

By necessity, biotechs invest their finances into product devel-opment, not security. If they do have security systems, the systems are rudimentary, reactive systems. Ron Myles, a former intelli-gence officer at CSIS, says most businesses won’t know when they’ve been infiltrated. If the security has been breached, it may take months or years before anybody finds out. When the secu-rity works, the business will likely never know.

A Canadian executive travels to another country to meet with potential investors. When he arrives, he checks into his hotel, unpacks his luggage, and runs downstairs for his first meeting. He gets to the hotel lobby and realizes he left his passport in his room. He runs back upstairs to get it. When he opens the door to his room, he finds two men dressed in hotel uniforms searching through his belongings. He calls security. Security takes no action because the state intelligence agency operates inside the hotel. Had the executive not returned to his room and caught them in the act, the spies would have downloaded a Trojan virus to his laptop and left the room as they found it.

How it Happens: The Sneaky Hotel Staff

A contract research company hired a university intern to work in the laboratory. The student excelled at everything the company gave her to do, so they put her to work on a special project. When she finished her placement, the student wrote a term paper. The professor published the paper to the web. By the time the company found out about the paper, it was too late. The student had unwittingly revealed the company had been planning to com-pete with its clients on their clients’ territory. Had the company vetted the paper and the student more carefully, they might not have lost their clients, soiled their reputation, and blown their investments into the new product.

How it Happens: The Eager Student



Biotechnology companies are no strang-ers to industrial espionage. The high

cost of developing new technologies or products, combined with the enormous potential value of viable innovations, make biotech companies prime targets for trade secret theft. One celebrated case involved charges that two men conspired to sell a patented formula for genetically engineered Epogen to an individual they believed to be a Russian spy, but who was actually an FBI agent. Although that case was publically reported, there are many thefts of trade secrets in the biotech sector about which one never hears.

There are various strategies that are being employed to minimize the potential for industrial espionage: being vigilant about maintaining the physical security of proprietary information at all times; moni-toring and auditing of information tech-nology systems; establishing and maintain-ing operational security such as access controls (allowing access to sensitive infor-mation on a “need to know” basis only); limiting the information that can be dis-cussed on open phone lines or disclosed over the Internet (including on social media sites); establishing procedures for reporting anything suspicious and making it incum-bent upon staff to do so. Staff training in

recognizing pre-texting and other forms of social engineering may also be a significant means of preventing the inadvertent release of sensitive information.

In addition, the literature indicates the importance of carefully designing and deploying information technology systems so as not to expose internal networks, including, for example, when transferring files in and out of the company. Regular assessments of the security of IT systems is important so as to be in a position to pro-actively address vulnerabilities, for example, that result from the use of authentication and encryption methods and standards that are out of date.

Information that is stored must be ren-dered tamper proof by integrating authen-tication and access controls that ensure that only specified authorized users can alter information and that alterations are tracked by date and author and made in a manner that preserves the previous draft. There must be provision made for auditing and monitoring systems to ensure adherence to policies and protocols. In addition to ensur-ing secure storage of information and the security and integrity of information in transit, through means such as encryption, information must be protected against unintentional deletion and other forms of

data loss. In fo rmat ion must be backed up, back up m a t e r i a l s retained for an a p p r o p r i a t e period and in a manner that makes them searchable (so that specific information may be found when required). A robust disaster recovery protocol should also be implemented. Finally, as the examples of industrial espionage perpetrated through dumpster diving and like techniques sug-gest, information in all forms and formats must be disposed of in a secure manner.

To the many other risks faced by bio-tech companies developing new technolo-gies and products, one must factor in the risk of trade secret theft. Careful planning, the implementation and monitoring of policies, practices and procedures, staff training and having available appropriate information technology resources are sound investments. Companies may also want to review the advice and guidance provided by CSIS at its website (www.csis-scrs.gc.ca).

Jeffrey Graham and Bonnie Freedman are lawyers at Borden Ladner Gervais LLP in the Toronto office.

“A lot of startup companies don’t have money to invest in security. Especially if they’re running on an idea. Even when secu-rity is successful, you don’t know it’s successful. All it’s managed to do is keep the secrets secret.”

Big Pharma does more to protect itself. Security directors share information about breaches and threats. “If it’s something happening to GSK, it’s going to happen to Sanofi, it’s going to happen to another company,” says Tremblay.

But without government to open a dialogue, Canadian busi-nesses will continue to suffer threats they may not know they face. “[Governments] keep it silent,” adds Tremblay. “That’s not their mission. Talking is not a weakness. It’s a strength.” BB

Security

By Jeffrey Graham and Bonnie Freedman

Espionage: A Legal Perspective

A development company sets up shop in an indus-trial plaza on the outskirts of the suburbs. After six o’clock, the area is a dead zone. One night, bur-glars break into the office. The alarms sound, but the area is so far away from everything that the burglars have time to escape before the police arrive. During the investigation, the police find that the burglar walked straight to the cabinet that held the company’s four servers. The burglar knew to steal the third server, the one that held the compa-ny’s research data. The burglar stole nothing else. The company lost $15 million in product develop-ment and went out of business. The police suspect a disgruntled employee tipped off a competitor, but they could prove nothing.

How it Happens: The Inside Job



Agriculture

We can make substances as hard as steel from plants as light as wheat, say researchers, and they’re building a new factory to manufacture this new wonder material.

The $5.5-million Edmonton-based pilot plant, a venture financed by government and industry, will allow researchers to explore the potential of nanocrystalline cellulose (NCC), a renew-able, recyclable and biodegradable substance that strengthens the properties of materials to which it is added. NCC can also enhance a substance’s optical capability. NCC can be extracted from cereal grains, such as wheat, and also from trees. It may be suitable for use in various industries and applications ranging from automotive to cosmetics.

The pilot plant will be located at the Alberta Innovates-Technology Futures (AITF) complex in Edmonton Research Park. AITF is an investor in this project. Dr. Gary Albach, President and CEO of AITF, says the pilot plant is important in relation to the future of the Albertan and Canadian forest indus-try. The plant also plays an important role, Albach says, in the development of new products that hold the potential for new businesses and the sustainability of current businesses in Alberta and across the country.

“In developing the plan for the pilot, it was critical to work in partnership. Combining the voice of Alberta industry along with the research capability is what will enable us to effectively demon-strate the economic potential of advanced biomaterials like NCC,” says Albach. Alberta Pacific Forest Industries Inc., a pulp mill, is an industry partner in this venture.

Western Diversification Canada invested $2.5 million into the project. Representatives say the data compiled through NCC production will be used to supply Alberta’s pulp producers with technical data for use in assessing the feasibility of a commercial NCC facility in Alberta.

Alberta is not the only province to recognize the potential of NCC. In Quebec, FPInnovations and Domtar Corporation joined up to create CelluForce, a company whose demonstration plant will produce up to one tonne of NCC per day beginning January 2012. CelluForce President Jean Moreau says that while the company’s objective at this time is to demonstrate the prod-uct’s capability, the ultimate goal is to create a sustainable com-mercial plant that will eventually reward shareholders and the community. Moreau is optimistic about NCC’s potential. “We are

Steel WheatSuper-strong “wonder material” gets million-dollar investment

hitting a lot of industries and applications because if a product needs to increase its strength, we can integrate [NCC] into this product.”

While the business opportunities are widespread, at this time, NCC’s full potential remains unknown. “It’s a little difficult to assess NCC’s business potential for Canadians because there aren’t any applications or products at this point. On the plus side, we’re world leaders both in terms of NCC research and produc-tion,” says writer Maryse de la Giroday, who focuses extensively on nanotechnology. “We’re at a very interesting juncture with NCC. The government and business investments in NCC research and production facilities are encouraging. Take for example the work being done in Mark MacLachlan’s lab at the University of British Columbia. He’s produced an iridescent film using NCC. Architects and builders have already contacted him about this product. Unfortunately, all he has a 1 cm2 sample, which he won’t let out of his sight.”

MacLachlan briefly describes his work with NCC. “What we have done is to transfer the chiral nematic organization of NCC into glass. We use NCC as a template to make glass and then we burn the NCC to give a porous glass. The glass films are irides-cent and appear coloured,” says MacLachlan.

Maryse believes that the new plants will give researchers like MacLachlan enough NCC to produce working prototypes for real-life applications. BB

By Julia Teeluck

Green, red and blue films of porous glass created using nanocrystalline cellulose.


Science Fields

Past the Limits of BiologyBiomathematics gives biologists another tool to advance discovery

By Robert Price

How does a drug get lost? That’s what Merck asked when an experimental Alzheimer’s drug disappeared inside the bodies of chimpanzee test subjects.

To find the drug, Merck enlisted the help of Daniel Coombs, a mathematician at the University of British Columbia. Coombs worked with Merck mathematicians to create a mathe-matical model of the internal systems of the chimps. Even though the researchers couldn’t find a conclusive answer to where the drug went—Coombs suspects the drug vanished in the liver—the model let the researchers see inner workers of the chimps in ways that even vivisection couldn’t.

The sixth revolutionCoombs’s work fits into a growing discipline called biomathematics. Biomathematics fuses bio-logical research with advanced mathematics to create mathematical models of organic systems. With these models—some so granular as to show the behaviours of individual atoms and elec-trons—scientists can predict gene interactions, engineer more rational drug molecules, chart the




evolutionary trajectory of viruses, and test how drugs diffuse through a body.

Ian Stewart, a professor of mathematics at the UK’s University of Warwick and the author of The Mathematics of Life, a study of biomathematics, believes biomathematics represent the sixth sci-entific revolution—a claim that puts the contributions biomath-ematics will make over the next decade on par with Darwin’s discovery of evolution and Crick and Watson’s discovery of the structure of DNA.

“Biomathematics are for real,” says Stewart. “I think this [revolution] is genuinely going to become a comparable change to the way we think about biology, comparable to the changes evolu-tion made to science.” For Stewart, what is revolutionary about biomathematics is its ability to make meaning of the totality of entire biological systems, over time, in a way traditional biology cannot. For mathematicians, biomathematics brings new rele-vance to their work.

“It’s a golden opportunity for new mathematical methods to tackle problems mathematicians haven’t really thought about in the past in a very important context: biology and medicine,” says Stewart.

Calculating the bodyIn 2009, the National Institutes of Health in the U.S. set out to fund biomathematical research into cancer. The result was the creation of 12 Physical Science Oncology Centers that bring together physicists, engineers, mathematicians, and biologists to apply principles of the physical sciences to cancer research. It is inside these centres that biomathematics is most quickly develop-ing. In one example, physicists at the University of Miami work-ing with physicists at the University of Heidelberg used a math-ematical model of a cancer tumour’s vascular system to predict the tumour’s possible growth patterns. In testing on mice, the model-ing proved 100 per cent accurate in predicting in what direction tumours would grow. With an understanding of how the tumour will grow, surgeons will be able to slow tumour growth by clipping the vessels that facilitate growth.

Compared to the U.S., Canadian funding agencies have been slow to support biomathematical initiatives, though centres of bioinformatics and biomathematics are emerging in different corners of academia. Many graduate schools have biomathematics specialty programs. The University of Guelph has a biomathe-matics study group. And the Government of Canada sponsors a Research Chair in Biomathematics, currently held by Troy Day, a professor in math and biology at Queen’s University.

Day investigates the evolution of drug resistance. Why, he asks, do some pathogens evolve into killers while others do not? In a recent paper, Day and his coauthors discuss the key challenge in attacking malaria pathogens: if you attack the pathogens with drugs and wipe them all out, you’re OK, but if the malaria mutates, using drugs increases the rate that the mutation spreads through the population. Modeling helps to predict when the mutation will happen and when doctors should stop administer-

ing drugs. “It’s desirable to know something about what you expect to

happen in your experiments so you can design it in a more rational way,” says Day. “Having some logical way to cut through all of these possibilities mathematically helps to narrow down what you might want to do experimentally.”

One of the strengths of biomathematics is its practicality. Mathematicians who might otherwise pursue abstract theoretical work can develop new mathematical languages to solve problems in the real world.

“[The application of math to biology] complicates math and makes it more interesting but it has practical implications,” says Jack Tuszynski, Allard Chair and Professor of Experimental Oncology at the University of Alberta Cross Cancer Institute. Tuszynski, a physicist who showed how to represent the branch-ing of blood vessels as fractal objects, uses computer modeling to investigate at an atomic level how to design drugs to achieve maximum absorption in the target organs. This work has enor-mous practical value—a practical result not lost on patients who suffer side effects when drugs miss the target—but underlines the enormous scope and costs of pursuing biomathematics.

Go big to see small Biomathematics emerged as a discipline only after scientists developed the technological capacity to do the work. Tuszynski’s simulations are incredibly time consuming. Ten years ago, he’d have to wait months for computations to complete. “We were simply unable to answer some of these questions with any level of confidence,” Tuszynski says. Now Tuszynski has access to super-computers with the horsepower of 2,000 computers running all day, every day. These computers spit out answers in days instead of months.

Improvements to software have also made biomathematics a reality in the lab. In years past, labs had to write their own code if



Science Fields

they wanted to model biological systems. Now commercially available software packages give researchers large libraries of chemical compounds; 3-D models of DNA, proteins, and other structures; and detailed information, right down to the atomic level, of how atoms, water molecules, protons, ion, and other ele-ments interact with experimental drugs.

Limits on the future In 20 years, biomathematics, along with cheaper technology and affordable DNA sequencing, will make personalized medicine possible. Oncologists will be able to tailor drugs for each patient’s body chemistry. Regulators—indeed, the scientific establish-ment—isn’t prepared for this revolution in medicine. Drug devel-opment relies on large samples, large tests, many patients, and statistical averaging to distinguish safe drugs from unsafe drugs. A move toward personalized medicine is a move in the opposite direction, towards a one drug, one person, one test system. Until regulators develop a system to account for personalized medicine, the full potential of biomathematics will remain constrained. Tuszynski puts it this way: “The science is easy, in my opinion. What is difficult is the approval process.”

Cautious and conservative establishment scientists may also seek to limit the reach of biomathematics. For centuries, biology has kept a careful distance from mathematics. Biology, some say, is too complicated for rational mathematics. Day says this ancient attitude is a cop out. “Biology is certainly more complicated than math, but that shouldn’t prevent you from trying to distil the most important processes in any given situation. Using math is a good way to cut through complexity and explore,” says Day. “The rich-ness of biological systems is what makes them interesting and math is a way to make sense of that richness.”

Finally, biomathematics in Canada faces a significant obsta-cle: a lack of opportunity in the private sector. Currently, most mathematical modeling happens within the confines of large companies and universities, and most of the companies with the capital to spend on mathematical groups reside in the U.S. or Europe. In the foreseeable future, young biomathematicians will likely leave Canada to work in countries where their skills are in demand. “I’m unsure where some of my students will end up,” says Coombs. The opportunity for biomathematics to spawn inside Canada’s biotech sector is just as unlikely, until the cost of biomathematics drops to a level affordable to startups unaffili-ated with universities.

Stewart remains optimistic about the future of biology, now changed by mathematics. He points to a computer model of a heart, developed by Dennis Noble at Oxford University, that is sophisticated enough to react to stimuli as a real heart might. This advancement came about because the mathematics of how to model the heart are better understood, today’s computers are capable of enormous calculations, and today’s biologists are more knowledgeable about how to uncover the raw data that fuels the computer models.

“It’s all coming together now,” says Stewart. BB

These 3-D models show different molecules interacting with the human body. Off-the-shelf computer modeling programs help scientists run through experiments before trying them in animal subjects.

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While the Canadian government invests in biotechnology through grant and loan programs, most often the funding they provide is insufficient to start or sustain a

successful business. Venture capital firms are always looking for the next innovative idea in which to invest. They have the money; so what do bio businesses have to do to get it? Partners at VC firms across North America reveal what it takes to get your hands on venture capital funds.

Perfect the elevator pitchCommunication is key. Biotech executives must be able to clearly

articulate their ideas and how these ideas will improve the field, or venture capital firms will be hesitant to invest. Robert Nelsen, Managing Director at ARCH Venture Partners, a leading venture capital firm in the United States that focuses on early-stage investing, stresses the importance of perfecting the elevator pitch. “I want to know in the first paragraph why I should care. If you can’t say it in one page then you don’t understand your differen-tiation enough.”

Mark Carlson, Vice President of Investment at AVAC Ltd., an Alberta-based company that invests in early-stage businesses in areas such as functional foods, nutraceuticals, and extraction tech-

Abingworth Management Inc.781.466.8800www.abingworth.com

Actium Capital Advisors416.646.7321www.actiumcapitaladvisors.com

Alta Partners415.362.4022www.altapartners.com

ARCH Venture Partners773.380.6600www.archventure.com

AVAC Ltd.780.485.2411www.avacltd.com

BDC Venture Capital877.232.2269www.bdc.ca

CentreStone Ventures204.453.1230www.centrestoneventures.com

Clairvest Group Inc.416.925.9270www.clairvest.com

Covington Group of Funds

617.425.9200www.mpmcapital.com

NDI Capital604.733.3609www.neurodiscovery.com

NSBI Venture Capital902.424.6650www.novascotiabusiness.com

OrbiMed212.739.6400www.orbimed.com

Paradigm Capital416.361.9892www.paradigmcap.com

Polaris Venture Partners781.290.0770www.polarisventures.com

Quaker BioVentures215.988.6800www.quakerbio.com

T2C2514.842.9849www.t2c2capital.com

Securing Venture Capital

Firms offering accounting and financial management services to Canadian life sciences companies.

416.365.9155www.covingtonfunds.com

CTI Life Sciences Fund L.P.514.787.1662www.ctisceinces.com

Discovery Capital Management Corp.604.683.3000www.discoverycapital.com

Domain Associates609.683.5656www.domainvc.com

Emerald Technology Ventures Inc.416.900.3457www.emerald-ventures.com

EnerTech Capital484.539.1860www.enertechcapital.com

Flagship Ventures617.868.1888www.flagshipventures.com

Foragen Technologies Management Inc.306.651.1066www.foragen.com

GeneChem Management Inc.514.849.7696www.genechem.com

Genesys Capital Partners Inc.416.598.4900www.genesyscapital.com

Growthworks Capital Ltd.416.934.7731www.growthworks.ca

Innovatech Québec418.528.9770www.innovatechquebec.com

iNovia Capital514.982.2251www.inoviacapital.com

Lions Capital Corp.604.688.6877www.lionscapital.com

Lumira Capital Corp.416.213.4189www.lumiracapital.com

MMV Financial Inc.416.977.9718www.mmvf.com

MPM Capital

By Julia Teeluck

Bio Business does not endorse any of the companies listed in this index.



Business Services

nologies, supports the importance of clear communication. He emphasizes that management should be able to demonstrate the key elements of the project’s commercial value. He stresses “cred-ibly outlining the company’s intellectual property and competitive position is also a must.”

Highlight what makes the business specialSince emerging biotech companies make up 90 per cent of the biotechnology industry in Canada, emphasizing how the busi-ness, product or idea is unique and relevant to current market needs will make all the difference. “Focus on the differentiation and tell us why it matters relative to the rest of the things that have been done in that scientific area. [At ARCH], we’re willing to look at some pretty contrarian things, but the more contrarian they are the more data we have to have,” says Nelsen.

Carlson also reinforces the need for companies to take current market trends into consideration. “Companies that approach AVAC are often ‘tech-push’ and give product-centric pitches with lesser effort given to outlining market and target customer pur-chasing criteria,” says Carlson. “We encourage entrepreneurs to dig into market validation area further.”

Take risksPlaying it safe and following the trends does not always guarantee

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success. Sometimes bio businesses have to take a risk and explore different avenues in the field for that untapped angle. “We’re very interested in people who are willing to take scientific risks and obviously when that works it’s a big deal,” says Nelsen.

It’s not all about youIf bio businesses want to improve their chances of getting an investment, Andy Haigh, an investment analyst at Lumira Capital in Toronto, suggests executives remember the venture capital firm’s interests. “Understand our business and that we manage money for other people—we are focused on generating a return for our shareholders as that is our job.” Show that the busi-ness aligns with the firm’s interests and timelines, and that inves-tors are not just a piggy bank but partners. BB

Bio Business does not endorse any of the companies listed in this index.

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Business Leadership

The meaning of success varies from company to company. Staying in business for another year can be an accomplishment for some, while a million-dollar profit is

commendable for others. Somehow, finances always seem to be an issue in biotech. “Right now our industry is in very difficult times, and the problem we have is that the investment community has no interest in Canadian biotech. We haven’t had enough success stories,” says Graeme McRae, Chairman, President and CEO of Bioniche Life Sciences Inc. in Belleville, Ontario.

McRae was born in Australia and was transferred to Canada in 1975. He started his first business, Vetrepharm Animal Health, in 1979, out of a concern about the misuse of antibiotics in the livestock industry in North America. “I felt that the marketplace needed alternatives to anti-biotics,” says McRae. He later created Bioniche Inc. to support Vetrepharm’s technologies for human health applica-tions.

In 1999, he merged the companies to form Bioniche Life Sciences, which develops and manufactures products for both the animal and human health markets. Bioniche has had success with a bladder cancer vaccine for humans. The company was contacted by a Canadian urologist who had been tracking one of their tech-nologies and believed that it could be applicable to bladder cancer.

“We made some pretty amazing discoveries and with that we were able to file a whole range of new patents and create a won-derful platform technology that is very effective in the treatment of bladder cancer,” says McRae.

The process was not easy, and the company put a lot of resour-ces into developing the product. “It has taken many years, a lot of money and a lot of redevelopment of the technologies we had—improving it and making it more applicable for human use,” says McRae.

Bioniche took a pro-Canadian approach when it came to a patent agreement with a large American company for the bladder cancer product. Bioniche retained manufacturing rights to the

product and has a plant in Montreal that solely produces the bladder cancer product for use in the clinical trial. McRae was proud to point out that as the product moves into phase three, the partnership agreement is evidence that a Canadian technology can be successful.

Despite the bladder cancer product success, Bioniche is cur-rently operating with a $1 million per month burn rate. McRae believes focusing on Bioniche’s strengths, which reside in developing and manufacturing products for the animal health

markets, will allow the company to reduce and eventually eliminate its burn rate. Their goal is to show sustained profitability by the end of 2013.

“Burn rates are inevitable in biotech,” says McRae. “It comes with the territory. We’re very lucky because we have an income stream from our animal health business.” To reduce its burn rate in 2012, the company will take some of its profitable large projects in animal

health across the finish line. Bioniche will launch three new ani-mal healthcare products, and will focus on increasing its animal health profits by focusing on high-margin products. The company also plans to reduce overhead as some of its late-stage research projects come to an end.

In addition, Bioniche is opening the Animal Health and Food Safety Vaccine Manufacturing Centre at its Belleville headquar-ters, in 2012, where it will produce larger quantities of its E. coli vaccine. The vaccine, developed for the Walkerton strand of E. coli, is approved in Canada and is the first vaccine of its type in the world. The government loaned Bioniche about $25.7 million of the $29 million facility. “By the government investing in a facility means we can react if there’s a national emergency, like H1N1 in humans. You know, these things happen,” says McRae.

Bioniche’s current business module to achieve profitability with the centre and animal healthcare products looks promising. “By the middle of next year when the Vaccine Manufacturing Centre is running, we expect to see increased sales in Canada, and we expect to see some penetration into the U.S. market.” BB

By Julia Teeluck

On establishing a platform technology and opening North America’s first Animal Health and Food Safety Vaccine Manufacturing Centre

Burn rates are

inevitable in biotech.

It comes with

the territory.

GraemeMcRaePresident and CEO, Bioniche Life Sciences

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easy targets - biolab business magazine · to a world of accelerating scienti• c advancement. we...

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