It’s been nearly a century since Canada’s greatest achievement in biotech took place; the discovery of insulin by Frederick Banting and his assistant Charles Best, in 1922. While nothing since has matched that miraculous feat, which has saved countless millions of lives, it’s not like Canada has been sitting still in the meantime. Canadian researchers have contributed to The Human Genome project, cracked the genetic code of the mosquito that carries the deadliest strain of malaria, and deciphered human chromosome 7, which holds the gene for cystic fibrosis.
But despite our many achievements in the life sciences, many experts believe our foothold, as a nation, is tenuous. An extensive 2005 report by the Conference Board of Canada found that although the country has “enjoyed a history of good performance in biotechnology thus far…we are not well positioned for the future”.
The Companies listed below, which run the gamut from RNA interference therapies to vaccine and drug delivery systems, are trying to carry the torch. All have innovative, exciting ideas and have passed the most basic of all tests in the sector; they have all had success raising money in the Canadian capital markets. We rank these public companies according their market capitalization as of Friday, November 26th.
Want the latest on the hottest Canadian tech stocks? Sign up for CANTECH BUZZ, our weekly newsletter. Simply enter your email address in the form to the right.
1. Theratechnologies (TSX:TH)
On Remembrance Day, November 11th, Montreal’s Theratechnologies got marketing approval for Egrifta, a treatment that has been shown to reduce excess visceral abdominal fat in HIV-infected patients with lipodystrophy, from the FDA. This made the Montreal based company “one of the very few Canadian biotechnology companies to have successfully discovered, developed and brought a drug to the market on our own” as the press release noted.
Theratechnologies achievement triggered a milestone payment of $25-million from EMD Serono Inc. a German based Merck affiliate. As now former Theratechnologies boss Yves Rosconi pointed out to industry mag Bioworld Today, the money will cover the company’s burn rate for the entire year. Investors seemed to like the news; after trading 3,450,164 shares on Thursday, November 11th Theratechnologies was up $.50 cents to $5.50. The stock was as low as $1.25 in early 2009.
There’s little doubt that some investors believe Egrifta may have more general applications as a weight loss drug, but the company is quick to play down these notions, pointing out that it is “not indicated for weight-loss management”. The weight of increased expectations, however, clearly falls on John-Michel Huss, who will assume the role of CEO on December 1st. Huss brings an international flavor to the fledgling Canadian stock, having had a twenty year career in Germany, Canada, Switzerland and France, on top of sporting a US MBA. Huss, incidentally, got his start twenty years ago at company called Merck.
2. Oncolytics Biotech (TSX:ONC)
Calgary’s Oncolytics Biotech grew out of discoveries made in the 1990’s in the Department of Microbiology and Infectious Diseases at the University of Calgary. The Company’s Reolysin, a formulation of reovirus, a family of viruses that can affect the gastrointestinal system and have shown to have oncolytic, or cancer killing properties, is about to enter Phase 3 trials. Recently, Cantech Letter’s Nick Waddell talked to Dr. Brad Thompson, Oncolytics President and CEO.
For our readers that are unfamiliar, what is reovirus and what are the possibilities for its use in cancer treatments?
Reovirus is a virus naturally found in mammalian respiratory and bowel systems. Most people have been exposed to reovirus by adulthood, but the infection does not typically produce symptoms. Reovirus was noted to be a potential cancer therapeutic when early studies suggested it reproduces well in certain cancer cell lines. It has since been shown to replicate specifically in cells that have an activated Ras pathway (a characteristic that may play a role in more than two thirds of all human cancers and in most metastatic disease), while leaving healthy cells that do not have active Ras pathways unharmed. This suggests that REOLYSIN®, a proprietary formulation of human reovirus, may be an effective therapeutic for many Ras-activated tumor types and potentially for some cell proliferative disorders.
Oncolytics’ technologies are based on discoveries made in the 1990s in the Department of Microbiology and Infectious Diseases at the University of Calgary. Do you feel the biotech work being done in Canadian Universities is important enough to support financially, even if there is no immediate financial benefit?
Absolutely. Pharmaceutical companies continue to look to biotech companies for novel technologies and products to help fill their pipelines and support long-term growth. A fair number of these projects originate in Canadian Universities. I believe that the long-term benefits that may come from such discoveries far outweigh the initial start up and funding challenges.
Can you tell us a bit about your partnership with the Gynecologic Oncology Group?
The Gynecologic Oncology Group (GOG) intends to conduct a randomized Phase II trial of weekly paclitaxel versus weekly paclitaxel with REOLYSIN® in patients with persistent or recurrent, ovarian, fallopian tube or primary peritoneal cancer. The study will be Oncolytics’ second randomized study and will be sponsored by the Cancer Therapy Evaluation Program, Division of Cancer Treatment and Diagnosis, U.S. National Cancer Institute (NCI), under its Clinical Trials Agreement with Oncolytics. Partnerships like these allow us to cost-effectively expand our clinical program allowing us to look at indications we might not have the resources to be able to address on our own. We have partnerships with a number of groups including the GOG, NCI and the Cancer Therapy & Research Center at the University of Texas Health Science Center.
Oncolytics was formed in 1998 and you are currently conducting a phase III trial for head and neck cancer. If all goes to plan, how long before we see REOLYSIN® on the market?
The Phase III trial for head and neck cancers is designed to enroll 80 patients in the first stage of the trial. The second stage is adaptive, and is designed to enroll between 100 and 400 patients, depending on what we see in the first stage. The range in the number of patients that will be enrolled in the second stage will affect the time to trial completion. Taking this into consideration, along with the time required for regulatory submission and review, we anticipate REOLYSIN® is still at least a couple of years from the market.
Needless to say, curing cancer is the Holy Grail for any biotech company, but just how big is the immediately addressable market for REOLYSIN®?
The value of the head and neck cancer market is in the US$300 to US$500 million globally and we believe REOLYSIN® can address a significant portion of this market. That said, REOLYSIN® is involved in multiple Phase I and II studies in other cancer indications, many with billion dollar plus markets, so there is the potential to substantially expand the total addressable market for the product.
You just announced a CDN $25 million bought deal financing. Where does this level of funding take you?
On closing we ended up raising gross proceeds of $28.77 million as the underwriters elected to fully exercise their overallotment option. The capital we raised in the financing will fully fund the Phase III combination REOLYSIN® and paclitaxel/carboplatin clinical trial for patients with platinum-failed head and neck cancers. This trial is significant because it is the first pivotal study we are conducting and, if successful, will form the basis for our submission to regulatory authorities in multiple jurisdictions. The remainder of the funds will be put towards other REOLYSIN® clinical development programs, which could ultimately help expand our addressable market, and for the manufacture of clinical REOLYSIN® supply.
3. Bioniche Life Sciences (TSX:BNC)
For years, Belleville, Ontario’s Bioniche Life Sciences (TSX:BNC) was better known to your veterinarian than your doctor. Bioniche, which formed in 1979 to develop veterinary bio pharmaceutical products, received worldwide attention two year ago when it received a Canadian license for Econiche, the world’s first cattle vaccine against E. coli.
Sales of Bioniche veterinary products such as FOLLTROPIN-V, used for the induction of superovulation in reproductively mature heifers and cows, and SETTLE®, a endometritis therapy for broodmares helped establish the company as a public entity that has grown from $27 million in revenue in 2007 to more than $45 million in fiscal 2010.
Bioniche’s animal health products sales have been slipping of late, but many investors aren’t too worried. As it turns out the company’s move into human health may be much more lucrative.
In the early 90’s Bioniche established a human health division, and the results of this venture are now, finally, paying off. Since late 2009 shares of Bioniche have rallied from just over $.40 cents to a recent high of $1.80 on October 15th. The reason? Urocidin. Urocidin is a product Bioniche has developed to treat non-muscle-invasive bladder cancer that doesn’t respond to current first-line therapy.
On November 17th, Bioniche received a $4.0-million (U.S.) milestone payment from its development partner, Endo Pharmaceuticals Inc. This milestone is the fourth achieved by Bioniche since they signed the agreement with Endo last summer. That’s on top of an upfront payment of $20-million. if Bioniche hits all its Urocidin clinical milestones it would receive a total of $110-million (U.S.)
Bladder cancer, which sees 70,000 patients diagnosed each year In North America alone, is the fifth most common type of cancer. Approximately 70 per cent of bladder cancer patients have the non-muscle-invasive form of bladder cancer.
4. Tekmira (TSX:TKM)
Celine Dion was at the top of the charts, singing “My Heart Will Go On” from the hit movie “Titanic”. Impeachment trials began against Bill Clinton over the Monica Lewinsky scandal. And about four million people were without electricity in Quebec, Ontario and upstate New York after a massive ice storm. 1998 doesn’t seem like too long ago, but it’s enough for the world to change. In 1998 a scientific discovery, RNA interference, set the world of science in its ear. Since then, scientists have begun to pick apart a process that may help advance therapies in some of our most lethal diseases by leap and bounds.
Burnaby’s Tekmira is one of a handful of companies around the world already developing therapies based on RNA interference, and is clearly a leader. So what is RNA interference? Basically it’s a process that cells use to turn down, or silence, the activity of specific genes. RNA interference works by blocking the molecular messengers of a a cell, rendering the cell useless. RNAi has already shown great potential with viruses such as HIV and Hepattis C. Tekmira has three internal RNA interference (RNAi) product candidates, one to treat hypercholesterolemia, or elevated cholesterol, one for Ebola and an. anti-tumour drug in the treatment of cancer. This is big stuff; in the Q3 of 2010 Tekmira secured a contract for up to US$140 million from the U.S. Government for the Ebola treatment alone.
Shares of Tekmira took a hit in mid-November when it was announced that partner Roche decided to get out of sRNA amid a restructuring, but Tekmira President and CEO Dr. Mark J. Murray said he didn’t expect the news to have a big impact, and highlighted its blue chip roster of partners in Pfizer, Takeda and Bristol-Myers Squibb, as well as the fact that the majority of current revenue is derived from Boston’s Alnylam Pharmaceuticals.
5. Protox Therapeutics (TSX:PRX)
When private equity firm Warburg Pincus, with over $25 billion under management, makes an investment, they do their homework, says Protox Therapeutics boss Dr. Fahar Merchant. “We went through an incredible amount of scrutiny with respect to the investment they decided to make,” Merchant told BioTuesday. “The due diligence team they brought together was quite amazing. They brought in experts in intellectual property, pricing, reimbursement, market research, drug development, regulatory activities, including a former director of the FDA urology division.”
Warburg, a noted investor into health care sees potential in Vancouver based Protox’s prostate cancer drug PRX302, which recently met a primary endpoint in a phase 2b trial. Protox’s focus is on using genetic enginnering to transform naturally occuring proteins to treat cancer. Protox looks for therapies that have high potency to a diseased cell, but no toxicity. Warburg Pincus investment, is big, $10 million to begin and another $25 million if and when the FDA gives Phase Three approval. but Protox is no stranger to big deals. This past April they signed a deal with Japan’s Kissei Pharmaceutical to Develop and market PRX302 in that country. The deal, which inluded an upfront payment of US $3 million, will be worth $75 million if all milestones are met.
Prostate gland enlargement, or benign prostatic hyperplasia (BPH), is a big problem and therefore big business. Every year about a quarter million North American men are diagnosed with prostate cancer. Noted analyst David Martin of Dundee Capital Markets estimates that the U.S. second line BPH market alone is in the range of $1 billion a year.
6. Medicago (TSX:MDG)
A cursory look at the chart of Quebec City’s Medicago might give you an idea of what the company is up to. The Company’s shares peaked in late 2009 as swine flu panic ripped through North America., and trailed off after the most dire of predictions failed to materialize. Medicago, which develops plant based vaccines to combat new strains of influenza, will likely always have some seasonality to its chart, but the company has been busy filling in the value beneath. In August the U.S. Department of Defense awarded the company a $21 million grant from to build a facility that can mass-produce its influenza vaccines. Medicago is using tobacco leaves to produce pandemic and seasonal influenza VLP vaccines. One of the real benefits to Medicago solution, compared to traditional egg-based or cell based production is speed; a vaccine can be produced for testing a month or less after the identification of a new strain. During the swine flu it took more than six months from the time the pandemic was declared to the supply of the vaccine hit the public.
7. Immunovaccine (TSXV: IMV)
Halifax based Immunovaccine’s slogan is “Delivering Breakthrough Vaccines”. Look into Immunovaccine’s technology and you’ll quickly realize the accent in this phrase is clearly on the word delivering. Immunovaccine is based around the idea that the delivery method of vaccines may be of greater importance to their success than had previously been suspected by the medical community. The Company’s DepoVax™ platform has been shown to enhance efficacy with fewer doses. IMV has partnered with Pfizer Animal Health to develop enhanced cattle vaccines, and with Merck KGaA on an investigational therapeutic survivin-based cancer vaccine designed to target multiple solid tumours and hematological malignancies. Nick Waddell sat down with Dr. Randal Chase, President and CEO to discuss where the company is today.
How did Immunovaccine come to be? Where was the technology developed?
Immunovaccine got its start when the Federal government asked researchers at Dalhousie University to develop a contraceptive vaccine to control the seal population. The vaccine with its unique delivery system was so effective that, after one shot, 90% of seals were immunocontracepted for 10 years. It was the power and broad potential of this unique vaccine delivery platform that gave rise for launching Immunovaccine.
So the company was founded on animal vaccines but now is moving into humans – what are you planning to do with your animal business?
Our animal vaccines have proven effective and Pfizer is currently applying our vaccine delivery technology to design enhanced vaccines for livestock. Our plan is to leverage this asset by negotiating additional veterinary licensing agreements and apply these near term revenues to our human health business.
Where are you at with regards to human clinical trials?
Immunovaccine has two clinical stage vaccines in development. Our lead product is a therapeutic cancer vaccine called DPX-0907. It is in a Phase 1 human clinical trial and we plan to have interim safety data by year end. This clinical trial will finish mid 2011. And our second vaccine is DPX-Survivac.
And your deal with Merck, what about that?
We have a powerful vaccine delivery technology that caught Merck’s attention and enabled us to negotiate a deal to acquire exclusive worldwide rights to commercialize their survivin-based vaccine. This vaccine has already been through a Phase 1 clinical trial and our plan is to formulate it with our delivery technology to design DPX-Survivac, a vaccine for ovarian cancer.
Your technology is a delivery method, which seems to have a large variety of applications. Do you feel the diversity of this multi-pronged approach provides a degree of safety for investors, that the company is not a “one shot” deal?
Our DepoVax™ vaccine delivery technology has broad potential, in fact we haven’t found a vaccine yet that we cannot improve. As a result, we have signed more than a dozen research agreements. Looking ahead, we’re confident that the research collaborations will grow into commercial licenses and generate revenues for the company and its shareholders.
Some are calling this the “golden age” for vaccines – why is that?
Today, we have genetic engineering capabilities combined with new vaccine delivery technologies that enable us to design vaccines capable of targeting diseases that have evaded us in the past. These new vaccines are capable of generating targeted and effective immune responses that command premium pricing in the marketplace.
How is the financial health of Immunovaccine? Do you have enough cash in the bank to get you to profitability?
Immunovaccine is an early stage company but we are strongly positioned to fund our clinical strategy and business development programs. We have $11.7M of cash on hand to complete our DPX-0907 Phase I clinical trial by mid-2011 and we will continue to advance DPX-Survivac to the end of a Phase 1 trial. Our plan is to sign additional licensing agreements that generate near term revenues and, over the longer term, we will licence out or auction off one of our premium vaccines at an appropriate time.
8. Prometic (TSX:PLI)
With revenue increasing from just $2.65 million in revenue in FY 2006 to $13.56 in 2009, Quebec’s Prometics is on the march. The Company’s protein technologies, which mimic one protein’s interaction with another, represent an extremely wide platform with multiple applications. What prometic has initially concentrated on is to use the technology to develop therapeutics that remove pathogens from blood and extract and recover valuable proteins from plasma. The Company is beginning to have success internationally; Prometic recently entered into an agreement with Allist Pharmaceuticals to develop and commercialize ProMetic’s drug candidates PBI-1402 and PBI-4419 in China.
9. Innovotech (TSXV:IOT)
We’re always reminded that health care costs are spiraling, we’re less often reminded of exactly why. One number might surprise: the Center for Disease Control estimates that the financial burden attributable to healthcare associated infections is between $28 and $33 billion. The trouble? Antibiotics. Patients with infections take a series of antibiotics, but the infections develop resistance over time. Biofilm, or microbial infections are much worse. Edmonton based Innovotech’s new test developed allows doctors to more accurately identify the right antibiotics required to treat serious, chronic infections that are biofilm based. The test has shown postive results for treatment for serious lung infections in patients with Cystic Fibrosis (CF), a population recognized as having among the most life threatening lung infections. Nick Waddell talks to Ken Boutilier of Innovotech:
Ken, can you give us a brief overview of how Innovotech came to be? Where did the idea for the company originate?
Gerry Tertzakian, Innovotech’s first CEO and I met for lunch one day as I was looking for a new career challenge, and was hoping that he would be able to provide me with some suggestions as to networking opportunities within Alberta’s biotech sector. Instead, he asked me if I would be interested in joining a start up ….as the CEO. It was at that point that we started looking for a technology, and by either chance or serendipity, a Board member of the newly formed company sat next to Dr. Merle Olson on a flight. Merle had a company that was a spinoff from the University of Calgary that was looking for management and money. This is how we entered the biofilm space. One of our criteria was for a company or a technology that was close to, or, at revenue. This approach has served us well, specifically during the economic meltdown of the past 2 years.
Innovotech is currently in clinical trials for bioFilm PA™ test. Can you tell us what this is and what ramifications it may have for the treatment of Cystic fibrosis?
bioFILM PA™ is the world’s first biofilm susceptibility test. Susceptibility tests simply test whether a bacteria is susceptible or resistant to a panel of different individual antibiotics. This helps doctors in choosing an antibiotic for treatment. The problem is that current tests do not test the biofilm state of the bacteria which can be up to 1000 times more resistant than the free-floating organism. As already mentioned, it is estimated that over 80% of all infections are caused by organisms in a biofilm state, meaning that in 80% of cases laboratories are using the wrong test resulting in treatment failures in chronic and medical device-related infections. Over 35 million susceptibility tests are used annually. Lung infections in patients with cystic fibrosis are just one of many chronic infectious diseases caused by biofilms.
What is the nature of your partnership with Teleflex (NYSE:TFX)
We provide Contract Research Services to Teleflex. These services are available on a fee-for-service basis to anyone with a biofilm problem. Approximately 50% of our revenue comes from medical device companies like Teleflex because biofilms easily grow on catheters, stents, etc. We design and conduct research studies to support claims made for specialized antimicrobial coatings on devices being submitted to regulatory agencies. The balance of this business is with a wide variety of companies including cosmetics, paint, oil/gas, food processing, disinfectant and agriculture.
This revenue model is somewhat unique in biotech but has provided substantial benefits to Innovotech over its existence by reducing overhead costs and burn rate. Arguably the greatest benefit is that it has provided the company with an awareness of biofilm problems in the world, knowledge that the company uses to assess new product opportunities.
Innovotech was recently awarded $900,000 from Agriculture and Agri-Food Canada to facilitate the commercialization of Agress your environmentally friendly seed treatment and plant spray designed to protect crops against both bacterial and fungal infections.How big do you think the immediately addressable market for this product is?
The immediate addressable market will be seed treatment worldwide worth an estimated value of $1.5 billion. Innovotech has a partnership agreement with Syngenta, the world’s largest seed treatment company, with revenues of over $10 billion. Expansion into the foliar spray market (with an estimated value of $20 billion) and into other products will evolve in the future.
What is the revenue mix, percentage wise between the different segments of your business?
Over 90% of our revenue is from our contract research business. The balance is from sale of our MBEC Assay, a basic research tool for biofilm research. There were a small number of sales in 2010 for bioFILM PA as it just entered the market. In summary, Innovotech provides a unique opportunity for investors for a number of reasons, including an innovative technology with multiple applications that can be utilised in a variety of industries. Additionally, we have a strong product pipeline supported by engaged channel partners who understand the significance of the issues caused by biofilms, and the need for solutions to deal with these issues. Last but not least, we have a healthy revenue stream. In short, we believe that microbiology will need to be reinvented to meet the needs of biofilm microbiology – this is Innovotech’s opportunity.
10. Intelgenx (TSXV:IGX)
If you’ve ever tried to choke down a series of pills while laid up in a hospital bed, you know it can be inconvenient. Quebec’s intelGenx has a solution for that and for a host of other ineffificiences related to current drug delivery methods. You’re probably already somewhat familiar with IntelGenx Quick Release Wafer Technology, it’s based upon the edible film technology used for breath enhancement strips. Convenience, however, isn’t the only reason Intelgenx is on the rise. Oral controlled-release drug delivery technologies have the ability to improve the performance of a wide variety of existing pharmaceutical compounds. Traditional drug tablets without controlled-release, blood levels of the drug tend to rise quickly after administration, reach a peak and then drop fairly rapidly, thus requiring frequent dosing. Side effects may also occur at the high peak blood levels experienced. Next up for Intelgenx is the building a product pipeline around the technology. Nick Waddell recently sat down with Horst Zerbe, President and CEO of Intelgenx.
Horst, how did you get involved in drug delivery? What attracted you to this area?
My journey into drug delivery began almost 30 years ago. Prior to founding IntelGenx, I served as the president of Smartrix Technologies Inc. in Montreal, and as Vice President of R&D at LTS Lohmann Therapy Systems in West Caldwell, NJ. It was while at LTS that I developed Listerine thin film strips as a novel breath freshener. That was a revolutionary product that has proven very successful for its current owner Pfizer. However, I always felt that there were bigger opportunities in putting pharmaceuticals on film, so in 2003 I formed IntelGenx to focus on pharmaceutical films and other oral drug delivery technologies. Drug delivery is a fast, affordable, and de-risked method for getting products to market. We work with FDA approved drugs where the existing delivery method is suboptimal. We optimize the delivery of the drug in one of our platforms, such as a film, and then confirm its safety and efficacy by conducting a Phase I (bioequivalency) study. We generally don’t have to invest in Phase II or Phase III efficacy studies, so we can develop a product and submit it to FDA for approximately 1/100th the cost of a new drug.
Are pharmaceutical films new? Have any been approved by the FDA?
We are one of only three or four companies actively working on pharmaceutical films, so it is definitely a new area of drug delivery. Films offer several advantages over other drug delivery methods, most notably faster onset of action, convenience, and improved bioavailability. Despite being new, we have seen some significant validation for pharmaceutical films both from Big Pharma and the FDA. Novartis has launched two over-the-counter thin films for the treatment of cough and cold in children, and earlier this year the FDA approved the first prescription pharmaceutical film for chemotherapy induced nausea and vomiting. So we clearly are at a very exciting time for pharmaceutical film development.
What pharmaceutical film products do you have in development?
We have a well diversified portfolio of pharmaceutical film products with large blockbuster potential and targeting a combined market in the tens of billions of dollars. We are currently working on film products for erectile dysfunction, migraine, insomnia, bipolar disorder, and pain management. Our erectile dysfunction and migraine products have already completed successful human studies, and another two studies will be completed in the near future.
Do you plan to partner these films?
Yes, our plan is to partner our film products. Generally we will complete a Phase I bioequivalency study on our own, and then initiate discussions with both development and/or commercial partners. We have successfully completed one development partnership for our migraine film, so that project is funded going forward. We are in active discussions currently with potential commercial partners for several of our other film projects.