National Post (National Edition)
When Vancouver’s Punit Dhillon decided to start a biotechnology company, oncoSec, in 2011, he knew he would have to do it in the United States. Canada simply didn’t have the nurturing climate needed to launch the complicated cancer treatment he was developing.
oncoSec is creating treatments for advanced-stage skin cancer and is foc using on three cure-resistant and often fatal skin cancers — melanoma, Merkel cell lymphoma and cutanious T-cell lymphoma. The treatment regime involves the use of electrical pulses to open the “pores” of cancer cells, enabling the injection of anti-cancer agents into the cells. The process stimulates the body’s natural immune system to attack the cancer.
At 30 years old, Mr. Dhillon was already a veteran of Canada’s venture capital and research financing climate.
Before the launch of oncoSec, he was vice-president of finance and operations at pharmaceutical company In- ovio, engineered several licensing deals with large pharmas and was involved in a merger with VGX Pharmaceuticals.
He also acted as a consultant and board member for a capital pool company and several TSX-Venture earlystage life science companies. In short, he knew the funding territory for new life science companies in Canada quite well, and didn’t much like it.
“In the ’90s biotech was a thriving industry in Canada, but it has died in the past decade,” he said. “It’s a highrisk, high-reward business that is easier to fund in the U.S. There are different economies of scale in Canada than in the U.S. My theory was that there were better opportunities elsewhere.”
Mr. Dhillon’s thoughts aren’t unique. It’s well known that financing for highrisk life sciences research projects is hard to find in Canada. There is some venture capital around to finance early-stage biotech research. But, for the most part, biotech’s huge demands for capital — about $100-million for required clinical trials — and development timelines that can reach out for years scare off most investors.
Add to that the strong likelihood that the trials can easily prove a drug worthless, and you have a recipe for the financial starvation of an industry.
Andy Haig, of Lumira Capital Corp., the largest venture capital and private equity firm within life sciences in Canada, told the Ivey International Centre for Health Innovation e-newsletter the prime reason for this is that during the past decade much of the money put into the sector produced “dismal” returns. This, in turn, caused venture capital companies to flee, making it very difficult for a Canadian venture-backed company to raise more capital.
Also, the most recent Canadian Life Sciences Industry Forecast from PwC, while pointing out that there has been some growth in the sector, indicated that companies surveyed have lost confidence because of the difficulties in raising capital.
Collectively, life sciences companies that responded to the survey required more than $1-billion to achieve further growth, the report said. However, it added that access to capital “remains challenging.”
Even more telling about capitalization conditions in Canada, was that respondents to the survey tended to be more mature companies that were already profitable. Smaller companies that are still in product-development mode must fight even harder to access capital from the few small life-science funds that exist.
Complaints of similar problems are not unheard of in the U.S., but the size of its economy coupled with
The grass is always going to be greener on the other side of the fence
continuing flows of money into all economic sectors has created a more vibrant atmosphere that would make any Canadian biotech company drool.
Mr. Dhillon’s knowledge about the scenes in both the U.S. and Canada proved helpful when he launched OncoSec in San Diego, Calif. He had already been working in the region for his previous employer and recognized that the city was a hub for life sciences research, startups, and financing.
He has been able to receive financing from several U.S. funds focused on life sciences and is advancing through Phase 1 and 2 trials quickly. The trials have provided enough validation of assumptions to draw further funding.
Of course, not all is gloom and doom in Canada. There are advances being made, said Gordon McCauley, an industry veteran, chief executive of Vancouver-based Allon Therapeutics and chairman of the board of Life Sciences B.C.
Mr. McCauley pointed to the creation of centres of excellence such as the University of British Columbia’s Centre for Drug Research and Development, which helps researchers become more business-oriented and, as a result, enhances their chances of obtaining financing.
“The grass is always going to be greener on the other side of the fence,” he said, explaining that for life sciences companies, the situation is growing better.
Still, it will be too late for Mr. Dhillon, who will continue working in California during the week and flying home to Vancouver on weekends to be with his family. The three-hour flights provide him with time to catch up on his paperwork, he said.