New pre­scrip­tions

After years in the lab, a new gen­er­a­tion of phar­ma­ceu­ti­cal firms is poised for a pay­off.

Ottawa Business Journal - Techopia - - Biotechnology - BY ADAM FEIBEL

I n re­cent years, Ot­tawa’s phar­ma­ceu­ti­cal sec­tor ap­peared to be on life support.

Once-promis­ing firms that at­tracted in­vestors and sci­en­tific at­ten­tion to their work failed to make com­mer­cial break­throughs and folded.

Such ex­pe­ri­ences high­lighted the unique chal­lenges of the phar­ma­ceu­ti­cals sec­tor, such as its large cap­i­tal re­quire­ments and long de­vel­op­ment cy­cles, and raised ques­tions about whether the in­dus­try had a fu­ture lo­cally.

But as 2014 draws to a close, sev­eral startups ap­pear poised to be­come new stan­dard bear­ers for the sec­tor after spend­ing years on clin­i­cal tri­als, hon­ing new mar­kets and, in some cases, piv­ot­ing mul­ti­ple times.

“It’s a lot more like a marathon than a sprint,” says Artenga founder and CEO James Keenan.

FULL CIR­CLE

Artenga spent more than a decade de­vel­op­ing mi­cro-bub­ble tech­nol­ogy that works with ul­tra­sounds to open up cells and de­liver less in­va­sive med­i­cal treat­ments at the cel­lu­lar level.

The Ot­tawa-based company was look­ing into po­ten­tial ap­pli­ca­tions in can­cer treat­ment un­til it se­cured fund­ing sev­eral years ago from an in­vestor who wanted to look fur­ther into the bub­ble tech­nol­ogy’s po­ten­tial to treat cellulite. It was an un­ex­pected change of di­rec­tion, but not an un­wanted one.

How­ever, its cellulite treat­ment has since been aban­doned. The company got as far as hu­man test­ing in 2010, but due to other com­pet­i­tive treat­ment op­tions on the mar­ket their part­ner was un­able to find the fund­ing they needed to move for­ward.

Now, Artenga has come full cir­cle. With the help of Toronto’s Sun­ny­brook Re­search In­sti­tute, the company is once again de­vel­op­ing its bub­bles as a po­ten­tial can­cer treat­ment, used with chemo­ther­apy to dam­age tu­mours and de­liver the drug in one shot, Mr. Keenan ex­plains. Artenga was also re­cently awarded a grant from the Michael J. Fox Foun­da­tion to de­velop, with the help of the Na­tional Re­search Coun­cil, a non-in­va­sive tar­geted treat­ment for Parkin­son’s dis­ease.

“There’s no point in try­ing to de­velop a new tech­nol­ogy that’s five per cent bet­ter than what’s

out there,” says Mr. Keenan. “We need to come up with some­thing sig­nif­i­cant. And in both the Parkin­son’s and on­col­ogy ar­eas, our test re­sults are in­di­cat­ing that.”

Artenga was for­tu­nate enough to have a solid seed fi­nanc­ing round, but the search for fund­ing is never- end­ing, he says. In Ot­tawa, in­vestors are more likely to look for faster re­turns in other tech sec­tors than to wait it out in biopharma. That makes it harder for com­pa­nies to make it through clin­i­cal tri­als.

“The length of time is an is­sue in Ot­tawa,” says Mr. Keenan. “We’ve been able to hang in there, con­tinue to ad­vance the tech­nol­ogy, and just keep work­ing away at the business de­vel­op­ment.”

STAY­ING LEAN

Part of the sec­tor’s re­silience is the city’s tal­ent pool that tends to stick around, jumping from company to company, lab to lab, and en­dur­ing the odd ac­qui­si­tion or shut- down along the way.

That ex­tends to se­nior ex­ec­u­tives and company founders.

Six years ago, Bill Dickie was the CEO of Liponex. An OBJ Startup to Watch in 2007, Liponex de­vel­oped a drug that in­creased the amount of high- den­sity lipopro­tein, or “good choles­terol,” in pa­tients. It was a drug with huge mar­ket po­ten­tial as rates of heart dis­ease and other ill­nesses climbed.

A set­back in clin­i­cal tri­als was fol­lowed by a $10-mil­lion merger and Mr. Dickie’s de­par­ture. Two years later, Liponex’s in­tel­lec­tual prop­erty was sold for just $75,000 to a French firm.

Not long after leav­ing Liponex, Mr. Dickie – who had pre­vi­ously spent two decades at lo­cal life sciences firm Nor­dion – joined Atreus Phar­ma­ceu­ti­cals. The firm is de­vel­op­ing a new type of in-body ra­dio­phar­ma­ceu­ti­cal prod­uct that can be used in molec­u­lar imag­ing, al­low­ing doc­tors to study de­bil­i­tat­ing or fa­tal med­i­cal con­di­tions such as rheuma­toid arthri­tis, Alzheimer’s and Crohn’s dis­ease.

The company has at­tempted to stay lean, con­tract­ing out where pos­si­ble rather than build­ing a large bricks-and-mor­tar foot­print.

It scored $6 mil­lion in fund­ing in 2010 and was poised to bring its prod­uct to mar­ket next year, but var­i­ous hur­dles have set them back by about two years. Atreus is now in clin­i­cal tri­als and ex­pects a prod­uct on the mar­ket by 2017. Re­gard­less, that $6 mil­lion has made a big dif­fer­ence.

“To have a strong strate­gic part­ner at an early stage was a very pos­i­tive thing for us,” says Mr. Dickie.

SUR­VIV­ING BY GET­TING SIDE­TRACKED

While sheer per­se­ver­ance is an ob­vi­ous in­gre­di­ent of suc­cess, some lo­cal biotech firms have also found suc­cess get­ting side­tracked.

Like many bio­med­i­cal com­pa­nies be­fore it, Chemaphor’s orig­i­nal plan was to de­velop a cure

“The life sciences peo­ple that are pros­per­ing right now are the post-apoc­a­lyp­tic sur­vivors that the ra­di­a­tion couldn’t kill. We’re a pretty hard­core bunch that I think are in the in­dus­try for the right rea­sons.” – Cameron Groome, CEO, Avi­vagen

for can­cer. While test­ing the com­pound on pigs, the company found their test sub­jects grew faster, used their feed more ef­fi­ciently and fought off in­fec­tions, much like they would on an­tibi­otics. One of the company’s co-founders be­gan giv­ing the prod­uct to his own dog, and no­ticed the ca­nine de­vel­oped a very shiny coat as a re­sult.

By 2011, the par­ent company had taken a back seat to the sub­sidiary, Avi­vagen, and adopted its name. It’s now mar­ket­ing its prod­uct as an al­ter­na­tive to an­tibi­otics in the an­i­mal live­stock in­dus­try and be­lieves it will reach $50 mil­lion in gross an­nual sales.

But mak­ing it that far is a chal­leng­ing process for most firms, ac­cord­ing to Avi­vagen CEO Cameron Groome.

“It’s never an easy field,” he says. “The life sciences peo­ple that are pros­per­ing right now are the post-apoc­a­lyp­tic sur­vivors that the ra­di­a­tion couldn’t kill. We’re a pretty hard­core bunch that I think are in the in­dus­try for the right rea­sons.”

CROSS­ING THE ‘ VAL­LEY OF DEATH’

The mul­ti­year prod­uct de­vel­op­ment cy­cle means biotech­nol­ogy firms are par­tic­u­larly cap­i­tal in­ten­sive. De­lays in get­ting a prod­uct to mar­ket, or pro­duc­ing suf­fi­ciently pos­i­tive re­sults to woo new in­vestors, can have se­ri­ous reper­cus­sions.

That was one of the chal­lenges faced by Phar­maGap, which raised mil­lions of dol­lars to de­velop a can­cer-fight­ing drug but was forced to shut its doors last year after be­ing un­able to se­cure ad­di­tional fi­nanc­ing.

Mr. Dickie says startups of­ten strug­gle to raise enough money to get through the “val­ley of death” that spans the area be­tween a good idea and clin­i­cal tri­als.

He noted that many of Ot­tawa’s in­vestors made their money in the hightech sec­tor, and they’re gen­er­ally more com­fort­able with tech­nol­ogy-based in­vest­ments, such as med­i­cal de­vices and health IT – sec­tors that are closer to what they know. But that’s not al­ways the case. Ron Vered may be bet­ter known lo­cally for his work in real es­tate as the CEO of de­vel­oper Arnon Corp. and past-pres­i­dent of Ron En­gi­neer­ing and Con­struc­tion. How­ever, he’s also an ac­tive in­vestor in Cana­dian biotech­nol­ogy com­pa­nies and sits on Atreus’ board of direc­tors.

The company also went abroad search­ing for funds and landed US$6 mil­lion from a strate­gic part­ner in France – prov­ing that it is pos­si­ble to raise money with the proper mar­ket­ing.

“De­spite the chal­lenges in in­vest­ment, it’s still a sec­tor where block­busters are common,” says Mr. Keenan. “You see peo­ple de­velop a new tech­nol­ogy, and if it works and it serves an un­met need, then there’s just an ex­plo­sion of in­ter­est and fi­nan­cial re­ward.”

Sophie Chen, the se­nior business de­vel­op­ment man­ager of life sciences at Invest Ot­tawa, says it’s a mat­ter of show­ing would-be in­vestors the huge po­ten­tial in the re­search un­der­way in Ot­tawa.

“We have a big pool of tech­nolo­gies and the patents to be picked up by in­vestors – it’s a gold mine,” she says.

“If they could iden­tify that, then it could gen­er­ate a resur­gence of the whole sec­tor.”

Pho­to­byColeBurston

Bill Dickie, pres­i­dent and CEO of Atreus Phar­ma­ceu­ti­cals.

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