Canadian universities train and graduate some of the top scientists in world. Likewise, Canadian entrepreneurs are just as visionary and creative as the best in Massachusetts and California. Furthermore, angel investors in Canada are willing to back and coach start-ups through the thick and thin (as an example, Zymeworks has raised close to $50 million in Angel investments). So why doesn’t Canada hold the #1 or #2 spots, or at least rank in the top 5 in the world for biotech? Right about now you are thinking this piece is about the lack of U.S. venture capital in Canada; it is not, in fact, far from it.
This piece is about how in Canada we say we want to be #1, but subliminally message that we should build “it” so the
real #1 buys “it” from us. This piece is also about some small steps that will put us on track to contend for the #1 spot.
The Problem – A lack of confidence to aim towards building revenue rich Canadian biotech companies that anchor in Canada. We want our entrepreneurs to dream big, but constantly push them for an exit plan at the first opportune moment. We have enacted legislation to entice investors to invest in Canada, but not enough so that they can take the “long view” versus “a quick exit”. We have invested in infrastructure, but not enough to message our support for continuous growth at the global scale. We refuse to take steps to bring our seasoned executives back to Canada. We don’t do all we can to keep our growth-stage Canadian companies and end up losing them to other countries that
incentivize them to move. We seem content with being an incubator.
The Solution – There are many near- and long-term solutions. I will elaborate on three to stimulate thought.
In the near-term I would start by identifying innovative Canadian biotech SMEs that seem to have the “it factor”; meaning those who are leaders in their field and have been continually growing because they have revenue or have been successful at securing long-term financing. I would pave the path for them to stay by updating out-dated legislation that is more harmful today than useful (e.g. the SR&ED claim caps should be increased). The objective here is to further enable our success stories to recruit more, retain more and build more. Currently, we are primarily focused on getting start-ups off the ground and maintaining them for a short while until they get their feet under them. However, our support starts to diminish the more they generate revenue and in fact grow. We should reward success and not abandon it.
Next, I would make it easier for startups to be able to afford employing and bringing back seasoned Canadians executives that have left the country. Again, this can be accomplished by expanding the IRAP program, or offering an income tax break for a defined period and on a limited basis. The objective here is to address multiple roadblocks at the same time. To start, seasoned and successful executives “bring” funding with them. They know investors, they are connected to decision makers in big Pharma, and they mitigate risks associated with investing in “first- time” entrepreneurs.
Last but not least, in terms of a long-term solution, I would in invest in Biotech parks and campuses that house our biotech SMEs together in clusters. Although there are some of these in different provinces, again, I would argue that their mandate is to support a small company in the very early stages. I am unable to think of a single example in Canada where 50+ employee Biotech companies operate in the same campus as five employee start-ups. And yet this is a model that would work. Moreover, the bulk of the benefit from such a campus will go to the smaller companies versus the larger ones. From mentorship, to increased exposure on the back of the success of the bigger company, to an environment that is more conducive for innovation, to one location that investors and customers need to go to, such an initiative unites and sends a clear message that we want to contend for the #1 spot.
In closing, we have all of the pieces in Canada to be a leading Biotechnology ecosystem. The path to the #1 spot does not start with more money; it starts with the right mentality, commitment and actions to be #1. Investment and funding always follows success, and importantly, a plan for continued success.
About the Author
Dr. Ali Tehrani is one of Zymeworks’ co-founders and currently serves as president and CEO of the company. He has been an integral part of many of the company’s corporate achievements including raising seed and angel financing and overseeing the company’s technical operations and patent filings. While completing his PhD degree he co-founded the Student Biotechnology Network, for which he received the UBC Faculty of Science Achievement Award for Outstanding Leadership in 2002. He has served as a member of LifeSciences British Columbia’s Board of Directors, MITACS Industrial Advisory Board, and BIOTECanada’s Industrial and Environmental Committee. Currently, he is a member of the Board of Directors of the Student Biotechnology Network.