If B.C.’s biotechnology sector were an NHL team, sportscasters would say it’s in a rebuilding phase. Ten years ago stars like Angiotech Pharmaceuticals and QLT Inc. were in their prime, building new headquarters in Vancouver’s False Creek Flats and churning out profits. But strategic missteps, new competitive threats and choked-off credit changed the dynamic. The past two years saw Angiotech file for bankruptcy protection and QLT lay off 90% of its workforce. Cardiome Pharma Corp., another public company, cut its entire research staff in 2012.
There were concerns the industry built around these anchor companies would lose its critical mass, and expertise would disperse. But this year, a new crop of hopefuls has made strides toward commercialization—and, possibly public offerings—with late-stage venture-capital financings. In October Boreal Genomics accepted a US$18-million series C deal that will help it through final trials of its cancer genomics and tumour-detection tools.
Similarly, Aquinox Pharmaceuticals, known for its work in treatment for cancer and inflammatory diseases, raised US$18 million in a series C financing led by Johnson & Johnson’s development arm last spring. That brings its total raised to date to an impressive $60 million.
What’s emerging is a biotech market made up of raw startups and small to mid-size enterprises, says to Paul Drohan, president and CEO of industry association LifeSciences British Columbia. In order to survive, many of these smaller companies are focused on niche products that are eventually sold to larger firms—often located south of the border. Still, the renaissance of public offerings in the U.S. is improving the investment climate here too. There have been more than 30 IPOs in the U.S. biotech sector this year, making it one of the busiest years in more than three decades. And Big Pharma’s interest in B.C.-designed biotechnologies is a “bellwether that says ‘Yup, it’s starting to pick up,’” says Drohan.
“Access to equity capital for the life sciences sector, at least in the U.S., is approaching historic highs not seen since 2000,” says Doug Loe, health-care and biotech analyst at Euro Pacific Canada. Merger-and-acquisition activity (especially in medical devices and specialty drugs), relaxed regulation and underperformance in other growth sectors have made biotech more appealing to investors.
The many small firms that now populate the B.C. landscape fit an emerging model whereby pharmaceutical giants outsource their research and development, Drohan adds. And the cancer-profiling niche occupied by Boreal, Aquinox and several other B.C.-based companies is expected to see significant growth. According to research firm MarketsandMarkets, the global cancer-profiling market is currently valued at almost US$15 billion and will reach US$35 billion by 2018.