The Quirks and Quarks of Vancouver Biotech

By Erika Siren, PhD Candidate, Kizhakkedathu Lab, CBR

Quark Venture, a venture capital (VC) fund launched in 2016, has followed through with its promise of investing in prominent Vancouver biotech companies. The US$500 million fund, the largest of its kind in Canada, is expected to have a significant impact in the biotech industry both locally and nationwide.

With over two thirds of research funding at the University of British Columbia allocated to the Life Sciences, UBC has provided a nidus for numerous innovative ideas and products in biotechnology. However, many UBC-initiated start-ups move south upon expansion, leaving Vancouver with few mid to large-sized biotech companies. While the arrival of Quark Venture promises new opportunities in the biotechnology industry, will its investments improve the longevity of biotech companies in Vancouver?

Canadian biotech has long been plagued by a lack of capital to assist in the transition of promising start-ups to more stable mid-sized companies. Unlike traditional tech companies which may easily transition with seed funding of a couple of million dollars, the biotechnology field is considerably more expensive, as rigorous clinical trials are often required for them to reach midmarket status.

“Canadian biotech has long been plagued by a lack of capital to assist in the transition of promising start-ups to more stable mid-sized companies.”

Sean Lumb, the current Director of New Ventures at e@UBC says that “when it comes to funding biotech, take a comfortable sponsorship from the tech world and multiply it by ten; that’s what is often needed to push these products into phase 2 clinical trials”.

The Canadian government offers several initiatives, including SHRED and IRAP that help soften the financial blow for start-ups in the first few years. In addition, most new companies must also rely on private funding to build and to keep operations running. Such is the case for biotech companies worldwide; however, more population-dense areas such as the US and Europe, have larger and numerous VC funds that are more readily accessible.

While some US-based VC companies such as Versant, do have Canadian offices, most money-lenders prefer to invest locally, leaving Canadian start-ups in the lurch. Lumb adds that at the present time, it is not possible to raise $40 million of seed funding exclusively in Canada.

The past 12 months however, have seen a major change in accessing capital for Canadian biotech companies. Bluerock Therapeutics, a regenerative medicine-focused company in Toronto recently attracted a $225 million investment from Versant and Bayer, the largest Series A (or initial) investment in history. The arrival of Vancouver-based Quark Venture, has also resulted in funding of Canadian innovation, with interests ranging from small molecules to medical devices. Quark Venture has thus announced partnerships with Aurora LifeSciences, Methylation Sciences Incorporated, Sitka Pharmaceuticals and most recently, Microbion Corporation. Sitka has close ties to the Centre for Blood Research (CBR), with Dr. Don Brooks being a founding member and Dr. Jay Kizhakkedathu acting as a Scientific Advisor for the company. Sitka focuses on utilizing polymer technology partially developed at the CBR to generate innovative drug delivery technologies. With backing from Quark Venture, Sitka plans to move forward in the near future with clinical trials.

The recent increase in financial investment in Vancouver biotech is encouraging; but strengthening the industry in this city is not without major challenges. Vancouver has long been a victim of ‘Brain Drain’, which is the relocation of promising talent to other places in Canada, the United States and Europe. The reasons are obvious: The cost of living in Vancouver is notoriously high and the wages offered cannot compete with similar companies in Toronto, Montreal, or the United States.  As a result, there is a shortage of managers in Vancouver who have successfully taken a drug through Phase 2 clinical trials. That is not to say that experienced managers are absent; rather Lumb emphasizes that a “critical number” of managers is needed to stabilize biotech in Vancouver. He explains that newly successful entrepreneurs are generated through mentorship from previously successful entrepreneurs.

“Sitka Pharmaceuticals focuses on utilizing polymer technology partially developed at the CBR to generate innovative drug delivery technologies.”

Blair Simonite, Program Director at e@ubc adds, “In theory you get experts that have done this [sold a developed company] once or twice before and are able to do it again with naïve entrepreneurs, who go on to sell themselves and add to the pool of experienced entrepreneurs”. It’s a fine balance: A critical number of these mentorships generated at the same time, is needed for growth in the biotechnology industry to be maintained.

Vancouver is already seeing success from efforts to address this issue, as former employees of Canada-based biopharmaceutical company QLT Inc., are becoming actively involved in new start-ups. David Main, now the President and CEO of Aquinox Pharma, has been widely acclaimed for effectively mentoring his employees who have eventually gone on to start their own companies.

For graduate students seeking employment following graduation and wishing to live in Vancouver, Lumb suggests one of two paths: Jump into a Vancouver start-up, or gain expertise from working in a mid-sized company before returning to Vancouver. The former strategy will expose employees to all of the moving parts of a new company. Many start-ups hire business developers to manage company growth. As most of these new companies use the lean employment model, employees will have direct access to the wealth of knowledge these developers possess. The alternative approach of working at a mid-sized company, whether it  be in Vancouver or elsewhere, will provide insights into how such a business runs, and will offer opportunities to establish valuable relationships with experts and mentors within the company network.

It is still too early to predict what the future holds for biotech in Vancouver, but generous funding from Quark Venture will certainly act as a catalyst for emerging medical innovation. Continued success is reliant on keeping both naïve and experienced talent in Vancouver and the rest of Canada. Focusing on training business-minded scientists (and science-minded business people) in the skills of resilient company growth is paramount for the effective translation of capital into a larger and more sustained biotech industry on the West Coast of Canada.

Thank you to Mr. Blair Simonite and Dr. Sean Lumb from e@UBC for their helpful insight and commentary.