Biotech looks for bigger role in Alberta
With the oilpatch flat on its back, the big push is on to diversify Alberta’s sputtering energy-bound economy. It’s a familiar story, as anyone who has lived through the province’s previous economic cycles can attest.
When crude prices are cruising along at US$100 a barrel, few care about the D word, except to pay it the obligatory lip service.
But when the excrement hits the fan, as it has over the past 18 months, the importance of other industries — including tourism, financial services, agriculture, biotech, information technology, environmental services, agriculture and manufacturing — becomes abundantly clear.
Provincial politicians, struggling to counter the impact of forces well beyond their control — namely, slumping oil prices and the lack of export pipelines — also like to latch on to the diversification theme as a way to show they are fully engaged in defence of Alberta’s economy.
Although no sector outside the oilpatch is yet big enough to replace the hefty tax revenues, jobs, and royalties generated by Alberta’s energy industry, they can collectively provide muchneeded economic resilience for a province that remains heavily dependent on oil and gas.
At least, that’s how Mel Wong sees it. Last August, the veteran provincial bureaucrat took over as CEO of Bio Alberta, an association that represents some 200 companies that focus on biopharmaceuticals, medical devices, environmental biotech and related areas.
“The biotech industry in Alberta is pretty broad, and we’re building a great foundation for diversification and improving the economic resiliency of the province,” says Wong. “Anything that’s tied to health is not going to go away, so there’s going to be a market need for it.”
Most are small players. There is no biotech industry equivalent to energy giants like Imperial Oil or Suncor. The vast majority have fewer than 30 employees, and 80 per cent of Bio Alberta’s members have less than 12 months’ worth of cash on hand to stay afloat. Access to continued financing is critical.
But you’d be wrong to dismiss the sector as inconsequential. The province’s biotech players generated revenues of about $1.2 billion last year and directly employed nearly 4,500 people, according to an industry survey. Many hold PhDs or other advanced degrees and earn six-figure incomes.
The sector also generates a lot of critical research — $132 million of it in 2014 alone — that may one day lead to new drugs or other commercially valuable products.
There are other key factors that could spur growth. Aging demographics means demand for new drugs, medical devices and natural health products will only grow. And it will grow even faster in rapidly developing nations like China and India, where a rising middle class is demanding better quality care.
At one point about a decade ago, Edmonton was home to several promising biotech companies, including Isotechnika, BioMS Medical and Biomira. All had compounds that were in advanced clinical trials, and their shares were widely followed by Bay Street analysts. Many industry players hoped to see a homerun drug product emerge.
Unfortunately, it didn’t happen, and Edmonton’s stature as a burgeoning biotech hotbed fizzled out. But that didn’t prevent dozens of other startups from forming. Some are already generating revenues in areas like medical devices, where the regulatory hurdles are less onerous.
“The numbers show that about 38 per cent of our industry is now focused on medical devices, an area where there is a growing global demand,” says Wong.
“One company that is doing well is Innovative Trauma Care, which was started by two military doctors. They created a clamp to stop hemorrhaging in the field, but it can be adapted to hospital operating rooms as well. They raised some money (in the U.S.) but maintain their head office in Edmonton, and are trying to break into other markets, including the U.S. military.”
Two other firms that have played central roles in the development of the local biotech sector are Raylo Chemicals — formed decades ago by Ray Lemieux, an organic chemistry professor at the University of Alberta — and NAEJA Pharmaceuticals, a private contract drug manufacturer headed by Christopher Micetich, son of company founder Ron Micetich, who died in 2006.
Indeed, the elder Micetich once worked for Raylo, which was acquired by California-based biotech giant Gilead Sciences in 2006. The deal proved so successful, Gilead has significantly expanded its local presence.
Last year it opened Phase 1 of a major three-phase manufacturing and R&D campus in northeast Edmonton. By the time the $200-million project is completed in 2017, Gilead expects to boast a local staff of roughly 430 people, making it by far the company’s largest operation in Canada.
“That represents a significant number of local jobs and Gilead has become a key industry anchor. It’s a great success story,” says Wong.
NAEJA, which has provided contract research since 1999 to over 150 companies worldwide, has played a key role in developing many important new drugs. Now its CEO hopes to hit a home run of his own, as CEO and founder of Edmonton’s Fedora Pharmaceuticals.
A year ago Fedora and its Japanese partner, Meiji Seika Pharma, announced a licensing deal with Roche, the global pharmaceutical giant, that could ultimately be worth up to $750 million, making it one of the biggest biotech licensing deals in Canadian history.
The partners are developing a beta-lactamase inhibitor — a drug aimed at restoring the effectiveness of antibiotics to drugresistant bacteria.
“And then of course we all know about the success of Cold-fX, the natural health product developed by Jacquie Shan,” says Wong. Cold-fX, later renamed Afexa, was sold for $76 million in 2011 to Montreal-based Valeant Pharmaceuticals.