Brooks lands on his feet...Hey people, look what I found online this am.
Regards, DH
Biotechs reach for cash lifeline
Firms pin hopes on predictions of improved funding climate
By SEAN McKIBBON, Ottawa Sun
OTTAWA'S biotech industry is in its infancy, and it's feeding time again. With Phase II clinical trials on the horizon, two local startups, Liponex and Zelos Therapeutics, are getting set to beat the bushes for cash.
They'll be foraging in a financial field that industry watchers say hasn't been good since 2000. But the situation may be on the rebound, says Biotech Human Resource Council spokesman Paul Watson.
"There are signs of it picking up again," says Watson, whose organization works to cultivate a skilled Canadian biotech workforce. Watson points to local enzyme and cellulose ethanol manufacturer Iogen's recent announcement it wants to open ethanol plants across Canada and a recent IPO announcement by Montreal-based MethylGene.
REASON FOR OPTIMISM
"I think there will be a number of deals that will happen later in the year," says Ken Lawless, president and CEO of the Ottawa Life Sciences Council. He explains much of the venture investment in Ottawa's life sciences sector comes from labour-sponsored funds.
Lawless says the biotech industry, which employs more than 10,000 Ottawans, has reason for optimism.
While he says hiring has been static and predicts this year's venture investment will be lower than 2003, the area has seen an increasing number of deals with U.S.-based venture firms -- companies that typically have deeper pockets than their Canadian cousins.
Mary Macdonald of Macdonald & Associates, a firm that tracks venture investment, believes things will "open up again."
"Investment has been very focused in Quebec and there has been a lot of upheaval in the investment community there," she says. That upheaval could translate into greater investment in Ottawa and Toronto.
For Dr. Daniel Sparks, chief science officer of Liponex, a change in the venture capital climate can't come soon enough. Despite promising results from the firm's research, he says Liponex has suffered from the damper on the equity markets since the 9/11 attacks.
"We've been struggling to keep alive," he says.
His company, which is working on a drug to regulate cholesterol and triglyceride levels in blood by regulating the electrical charges of lipoproteins, tightened its belt and focused on clinical development to survive. The company has only four employees, but now that it's completed Phase I clinical trials and is analyzing the results, it will soon need more cash to continue testing.
Former Adherex CEO John Brooks is working as a consultant to raise investment for Liponex. He says the firm will need at least another $2-3 million to follow the angel investment it attracted when it was spun out of the Ottawa Heart Institute about three years ago.
While Brooks is optimistic given the preliminary results of the Phase I trials, he says one of the biggest challenges facing Ottawa companies is follow-on financing. Angel investors are out there, but strong local venture capital for biotech isn't.
"To a large degree investors like to have a local presence," he says. While Ottawa's IT sector has firms like Capital Alliance Ventures and Venture Coaches, the closest venture firms in biotech are in Montreal and Toronto, he says.
"Clearly we don't have a Terry Matthews-type figurehead in the biotech industry that has made hundreds of millions of dollars -- which would be nice."
The Ottawa life sciences industry simply isn't as mature as those in the U.S., Montreal or Toronto -- a problem that can only be cured with time, says Rene Douville, vice-president of life science ventures at RBC Technology Ventures.
"Success breeds success," Douville says, adding Ottawa's less mature life sciences community can help itself by attracting more experienced management from the U.S. Such managers can be key in attracting investors, Douville says.
Robert "Duffy" DuFresne, CEO of Zelos Therapeutics, a firm researching drugs to treat osteoporosis, psoriasis, and other diseases, is one of those American CEOs running a Canadian biotech startup.
With eight employees, it's at a similar stage to Liponex. DuFresne will soon be looking for $20-25 million to support a series of Phase II clinical drug trials to be rolled out over the next two years.
'ALWAYS A CHALLENGE'
DuFresne says it's tough to attract follow-on cash, but that's not new.
"There is a relative dearth of VC funding available right now," he says. "It's always a challenge for any venture-funded company."
In the end, DuFresne says, companies must simply deal with the realities of the sector.
"Investors," he says, "have a lot more enthusiasm for companies at a late stage than early-stage technology."
sean.mckibbon@ott.sunpub.com