There’s only one word running through my mind these days: pipeline. I’m not referring to Kinder Morgan, oil development or Canada’s latest acquisition.
The pipeline I am referring to is the one that we must continually replenish in our health sciences sector.
Given Canada’s considerable investments in research and development and in healthcare, why is Canada seemingly content to rely on health innovation created in other countries? Canadians take great pride in our world class health care system – shouldn’t the health sciences sector fit into the same paradigm?
I’m asking these questions because it’s Global Biotech Week. I’d like to use this opportunity to highlight the state of Canada’s health sciences sector and particularly, the state of early stage companies in this ecosystem. I’ve spent most of my career helping promising companies scale up to become profitable but I haven’t done it in isolation, and the road is never easy.
A brand- new report from the Government of Canada’s Economic Strategy Tables states we aren’t doing enough to increase access to capital and grow our Canadian health science firms. Here, here, I say! I’d also add we can’t forget about the start ups that create a pipeline and become the companies we scale up.
The advancement and growth process require a great deal of collaboration between researchers, entrepreneurs, venture capitalists and government funding. Success only happens when there’s public-private risk sharing, effective filtering at the front end of development, and lots of commitment from all sides to get a breakthrough out of the lab and into the marketplace. One of the major stumbling blocks for many promising ventures is that fork in the road where more money is needed to reach clinical validation, but funding is scarce for early growth capital.
At the health sciences accelerator I created to address the gap in seed stage funding, I’ve seen first hand the impact that de-risking can have. It doesn’t take much to make a big difference. For example, with an investment of only $5 million in ten start ups, we’ve enabled $44.6 million in co-investment. That’s a leverage ratio of 8.9. Three companies we’ve nurtured have gone on to attain an additional $39.7 million in follow on funding. This is the type of refueling required to keep the ecosystem thriving. I’m not suggesting we only front load: we need to look at the ecosystem in a holistic way.
The fact is, while our research and development strengths are the envy of many other countries, we must become more efficient. Right now, organizations compete with one another for limited resources and in a fragmented manner. This is only compounded by a lack of commercial pull and sector collaboration.
Add to the picture that taking a drug or therapy to market can take at least a decade with plenty of technological and financial risks along the way and the challenge to accelerate becomes even more clear. Yet when a company is successful, the return on investments and economic impacts can be extraordinary. In the United States, publicly traded biotech companies have raised over $17 billion in capital during the 2013-2015 period where the collective value of the four biggest bio techs – Amgen, Celgene, Gilead and Biogen Idec have a combined worth of all of Canada’s Big Six banks combined. It’s a staggering amount of money and value to be gained with an ongoing commitment. Clearly, we must seize our commercial potential or we will continue to risk losing our brightest companies. As the Economic Strategy Table report says “we must incentivize companies to build to scale, not build to flip.” I could not agree more.
When we talk about building a continuum of innovation in the healthcare system, it makes sense to fund and nurture the start ups that contribute to our well-being. Let’s be constructive about the commercialization problem and work across the sector to make it more robust. Through strong leadership and collaboration across the ecosystem, I believe we can get aligned on a vision to build capacity and bridge scientific expertise in drug development, drug delivery and precision medicine with industry demand and commercial viability.
This is the pipeline we really need to talk about. Shall we?
Natalie Dakers is the Founding President and CEO of Accel-Rx.
You can read Canada’s Economic Strategy Tables report on Health and Biosciences here: https://www.ic.gc.ca/eic/site/098.nsf/eng/home
First published in the Hill Times, September 27, 2018.