The Canadian Biopharmaceutical Industry Technology Roadmap — Foreword

• Letter of Transmission
• Synopsis
• Reading the Roadmap
• Methodology and Acknowledgements
• Executive Summary
• Key Recommendations

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Letter of Transmission

A Technology Roadmap (TRM) is a tool used by countries to frame strategic decisions on where to invest public and private resources in technology-related industries. Its purpose is to assess the situation and plan for the future of the technology by outlining strategic choices for the most effective use of resources. It is intended to provide guidance to industry, government and the research and development communities. This TRM sets out an overview of the technological and scientific issues in the biopharmaceutical areas of greatest promise for Canada and then examines the new issues of commercialization. These issues have arisen as Canadian companies themselves undergo a transformation in response to the rapid evolution of technology and capital markets.

As Canada enters the 21st century, strategic investments in biopharmaceuticals will be increasingly important in improving the health and quality of life for Canadians, maintaining national prosperity and even dealing with issues of national security. The next five to 10 years will be critical for the maturation of Canada's potential in this industry and its pivotal role in clinical medicine, especially in the areas of genomics, proteomics, regenerative medicine, nanobiotechnology and novel plant molecular manufacturing.

The Government of Canada has identified biopharmaceuticals (by far the most significant component of biotechnology) as an important leader in innovation. Through increased investment in both public- and private-sector R&D, key strategic alliances, progressive regulatory and investment policies, increased student enrolment and management training programs, Canada will realize the economic potential of a home-grown and -developed biopharmaceutical industry.

Federal investment in initiatives such as the Canada Foundation for Innovation, the Canada Research Chairs Program and Genome Canada has put significant building blocks in place. The continuing partnerships among the federal government, agencies such as the Canadian Institutes of Health Research and the National Research Council (including the Industrial Research Assistance Program) and Canadian industry will be an integral part of positioning Canada as a world leader in biopharmaceutical discovery and technology commercialization. It is essential, however, that science, capital and commercialization be in place at the critical mass and coordinated levels required to ensure an entrenched and prosperous industry for years to come.

This document is designed to serve as a basis for continuing dialogue within the business, scientific and policy-making communities and externally with other important stakeholders, in order to provide guidance for future programs. It highlights the necessity for governments in Canada to rethink and readjust their support measures for this sector, so as to encourage it to prosper from new developments and to further the progress in our areas of scientific and economic leadership.

Dr. Anthony Schincariol, 
Chair 

Michel Noiseux, 
Co-Chair

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Synopsis of the Champion of the Biopharmaceutical Technology Roadmap

Anthony Schincariol, PhD, MBA 
President, Schincariol & Associates

Dr. Schincariol has held several positions over the last 25 years in the biotechnology and pharmaceutical industry. This included: President and CEO, Viventia Biotech; President and CEO, Novopharm Biotech; Senior Vice President, Corporate Development, DUSA Pharmaceuticals; General Manager, Synergen Canada; Director, Professor & New Product Development/Marketing & Scientific Director, Genentech Canada; and Director, New Product Development & Medical Administrator, Boehringer Ingelheim Pharma. He has had responsibility for new company start-up. R&D, business development, regulatory, intellectual property and marketing for several biological products including tPA, human growth hormone, gamma interferon, pulmozyme, interleukin-1 receptor antagonist and levulan. He has also consulted to several biotechnology companies on product development. Dr. Schincariol also served as marketing Assistant in the New Business/Technology Program in the School of Business Administration, University of Western Ontario. Prior to completing his MBA he was on the faculty of the University of Western Ontario with appointments in the Cancer Research Unit and the Department of Biochemistry. He received his doctorate from the University of Toronto, Department of Medical Biophysics in the Ontario Cancer Research Institute. Postdoctoral studies were conducted in the Department of Microbiology & Immunology, Duke University. He also served as a reviewer on grant panels for the Medical Research Council and the National Cancer Institute of Canada.

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Reading the Roadmap

The TRM is divided into two parts. The first, the Science Challenges section, examines current issues in biopharmaceutical research and drug discovery, the convergence with nanotechnology, and biomanufacturing. A segment that benchmarks Canadian research, discovery and patents against its international peers is also included here. The Science section concludes with recommendations for strengthening Canadian biopharmaceutical science performance. The second part, Commercialization Challenges, deals comprehensively with Canada's biopharmaceutical commercialization challenge. It discusses opportunities, outlines the industry drivers and development requirements, reviews industry structures, and then looks at issues of financing and technology transfer at the start-up and development stages of company progress. The extensive and wide-ranging discussion offers a detailed portrait of the commercialization challenge and concludes that the current national approach needs to be refocused to nurture strong companies. Changing that strategy is essential if the industry is to grow in Canada. The commercialization section then concludes with a detailed matrix of recommendations and a proposed action program.

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Methodology and Acknowledgements

The Biopharmaceutical Technology Roadmap process was championed by Dr. Anthony Schincariol, piloted by a Steering Committee, and facilitated by the Life Sciences Branch, Industry Canada. These pages comprise an overview of some of the major barriers in the biopharmaceutical development process, of preclinical and clinical development, of current research initiatives and of advances needed to overcome these gaps. The data and recommendations were compiled from a set of workshops, panel discussions, and interviews among stakeholders from industry, academia and the government. Further input was gathered from a CEO Forum charged with identifying solutions to barriers and from published literature.

The Steering Committee piloted the project and assimilated advice from industry experts emanating from the business, scientific and policy communities and supported by the men and women of the Life Sciences Branch, Industry Canada, under the direction of Dr. George Michaliszyn. The final report was developed by Dr. Anthony Schincariol and Mr. Michel Noiseux, President of Michel Noiseux, Bio-conseil, with assistance from Mr. Mario Perek, Life Sciences Branch, Industry Canada. Dr. Guy Stanley, Universities of Ottawa & McGill, served as chief editor. Dr. Kelly Butler was science advisor for numerous early drafts. Ms. Ingrid Pongratz, Life Sciences Branch, Industry Canada, served as project co-ordinator.

Research was provided by consultants from Science-Metrix (Montreal), Secor (Montreal), SHI (Toronto), James G. Heller Consulting Inc. (Toronto), and Dr. Paul Arnison, FAAR Biotechnology Group, Ottawa. The Roadmap team also acknowledges with thanks the assistance received from the Toronto Biotechnology Initiative, BioQuebec, BioteCanada, the Canadian Institute for Health Information, the National Research Council, and the Canadian Institutes of Health Research (CIHR).

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Executive Summary

Canada's biopharmaceutical industry is a world leader, particularly when our population and economic output are taken into account. Especially impressive is the number of biopharmaceutical companies Canadian scientific entrepreneurs have created. Based on the omics revolution ¹ — a science that is less than 10 years old — Canada's biopharmaceutical industry has created 490 companies and generates $3.8 billion in revenues. ²

However, the industry is also growing explosively in the US, Europe and the Asia-Pacific region, and every nation is vying for investment. As global competition for investment capital intensifies, Canada must succeed not only in company formation but also in enabling new companies to grow in value.

Currently, too many Canadian biopharmaceutical companies lack the resources and capitalization to survive in this more difficult environment. This is in part because of the way Canada now funds early-stage commercialization. Without changes to Canada's current approach to innovation, it is by no means clear that sufficient numbers of Canadian companies will grow to their full potential. Under these conditions, the risk is that discoveries of Canadian bioscience will be sold off at fire sale prices, their full value reaped by more robust international competitors with greater financial strength. Without a strong Canadian biopharmaceutical industry, it would ultimately become more difficult to justify the resources currently devoted to the science base.

The report argues, however, that this outcome is far from inevitable. Instead, Canadian policy-makers must take concrete steps to ensure that when more Canadian biopharmaceutical start-ups go public they are strong enough to attract private capital on a competitive basis. This is not simply a question of finding more public money; rather, it is about the way that public money is spent, the incentives created by public programs and the ways to improve them to achieve the necessary goals.

The scientific inputs for continued and even enhanced Canadian success are clearly in place. Even though virtually every international analysis shows that compared with other leading countries Canada continues to under-fund its science base, Canadian bioscience is achieving impressive results. In terms of outstanding scientific publication, Canadian researchers continue to rank among the best in the world, especially in the areas of genomics, tissue regeneration and nanobiology. In addition, Canada has a very real potential to become a world leader in novel bioprocessing techniques. Our scientific successes in this area potentially form the basis for the next generation of commercialization platforms. The impact of the 'omics revolution in general, and of its application to the areas of Canadian excellence highlighted in the technical section of this report, are examples of what Canada can achieve to advance human health and in the process, revolutionize clinical practice.

Because of the urgent situation that the biopharmaceutical industry now faces in Canada, the main recommendations of this report focus on commercialization. The proposals are aimed at strengthening early-stage companies so that they can advance further along the development chain: from proof-of-principle to Phase I, II and III clinical trials and finally to full regulatory approval of their therapies.

That said, while we have our problems, Canada's biopharmaceutical sector should not be underestimated. It can perform. During the '90s Canadians grew companies of considerable value, although a number of them were ultimately acquired by larger global players. This report underlines the fact that Canada has the necessary elements to continue and even enhance its leadership in biopharmaceuticals. In particular, it has the scientific base and the entrepreneurial drive. The main problem afflicting commercialization is that companies are in too many ways over-encouraged to spin off from research and become dependent on private funding before they are fully ready to face the rigorous competition of today's private capital markets. This is discussed more extensively in the commercialization section of the report.

Once it is recognized that the root of Canada's commercialization problem is the premature birth of promising companies, contributors to this problem become evident at virtually every level of Canada's innovation system.

• Universities emphasize the numbers of start-ups they produce rather than their quality and strength.
• Governments award grants that emphasize scientific measures instead of business success measures. Some private investors maintain that there is sufficient capital in Canada for strong companies, but that there are too many start-ups with insufficient strength.
• Mid-stage companies also receive inadequate investment, leaving them with insufficient resources to complete clinical testing. Consequently, they resort to limiting product development to one or two products, a risky strategy that is often unsuccessful.

The recommendations below and the rationales set out in this report show how to overcome these problems and move forward. The underlying vision: a strong Canadian bioscience base with a mature, world-leading biopharmaceutical industry, working to advance knowledge and create wealth for Canada and Canadians.

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Key Recommendations

Canada should re-examine its existing programs of support for R&D and early-stage commercialization with the aim of generating more robust companies, better able to attract investor capital. That means:

• Research spin-off companies should be enabled to build up their management teams, intellectual property positions and proofs of concept before advancing to private markets.

  An examination of funding available for early-stage companies transitioning from research settings to commercialization suggests that programs now in place need to be made more flexible and to be given more resources. Some jurisdictions — notably the US — have created special programs to accomplish this goal. ³ Canada might achieve similar results through such existing programs as Industrial Research Assistance Program (IRAP), Technology Partnerships Canada (TPC) (or its successor, if any) or CIHR's Proof of Principle program, if the enterprise-readying objective were to be made explicit and applications criteria appropriately adjusted.

• University industry liaison offices should be encouraged to devote resources to readying companies for approaching capital markets.

  In many cases, current emphasis is on rapid revenue generation from often premature technology licensing. More appropriate would be to encourage universities or third-party technology evaluation funds to act as investment banks, combining where necessary different small companies and their technology to make a more attractive and robust new enterprise.

• Despite some positive changes in the immigration rules, a great deal needs to be done both in immigration and taxation if Canada is to succeed in attracting supremely capable international managers here to pilot Canadian companies.

  Some provincial initiatives — in particular those of Quebec — show the kind of imagination and initiative required. But to be fully effective, such programs need to be generalized to the national level.

A complete set of commercialization recommendations with a proposed action program appears in Appendix 1: Eradicating Development Barriers to Canadian Biopharmaceuticals, and a list of science recommendations appears in Recommendations for Strengthening Biotechnology Scientific Results.

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