Biotech Bailout: Five Reasons Ontario Needs to Do More to Support Bioscience Companies in 2010

As we head into another budget cycle here in Ontario, there has been a flood of news showing that other jurisdictions are investing heavily in recruitment and stimulus for biotech companies.  Each one of these investments raises the bar for what has to be done in Ontario to build our own companies and capitalize effectively on our R&D resource base:

1. Close to home, Quebec’s recently-announced $122 million Biopharmaceutical Strategy is expected to match Ontario’s OTEC tax holiday (not so useful for biotech) and adds $30 million for R&D credit monetization (fantastically useful for biotech).
2. Across the border in the U.S., things have been even busier.  The Senate version of the health care reform bill includes the famous (/infamous) 12-year exclusivity period for biologics, but according to a BioWorld article the bill also includes “a therapeutic discovery project tax credit.”  Sen. Arlen Specter (D-Pa.) also reportedly offered a measure that would create a translational science grant program through the National Institutes of Health, called the Cures Acceleration Network, and that would aid in expediting the FDA review.
3. Add to the federal stimulus an array of state-level initiatives:
   • Indiana has launched a $58 million fund that includes Lilly Ventures as part of the team;
   • Arizona is opening a biotech incubator in a region where development is anchored by Covance; and
   • Missouri’s Governor was at the state’s life sciences summit pushing for legislation to direct “tens of millions” to support biotech commercialization.
4. Even the traditional U.S. biotech hotbeds are not standing still:  North Carolina’s $250 million innovation fund is almost up and running, with an RFP out for a fund manager. (h/t @GenomicsLawyer)
5. And in case you still think we can afford to rest on the laurels of the OETF and OVCF, take a look at John McCulloch’s post on the MaRS blog about his trip to the Suzhou New District in China, which has already incubated NASDAQ-listed solar power company Canadian Solar.

Image from User:Bdk on WikiMedia under the GNU Free Documentation License.

Wednesday Brain Dump: Around the World Edition

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Canadian Budget Reaction Boils Over

A meeting this week between the Canadian Association of University Teachers and Gary Goodyear, Canada’s Minister of Science and Technology descended into a shouting match over cuts to research funding announced in Canada’s 2009 federal budget.

Interestingly, the Minister focused on a point I made last week — that the Canadian approach lately has centered on commercialization:

Mr. Goodyear, a chiropractor from Cambridge, Ont., said the government has been steadily investing in science and technology since 2006, with a new emphasis on commercialization…

I think commercialization is a worthwhile investment; but funding commercialization at the expense of Canadian research is a major  blunder, for the following reasons:

1. There is no commercialization without research.  Researchers from Boston or San Francisco or Edinburgh will not suddenly move here to start their companies because of extra NRC-IRAP funding.  If the developments aren’t made here, the companies won’t be formed here either.
2. Research is an area in which Canada punches above its weight.  Check out our Friday Science Reviews and you will see international headlines and top tier journal articles.  However, a lot of hard reputational work is undone by the kind of international reaction generated by the 2009 budget.
3. The timing is bad.  The increased research funding provided by the U.S. budget and stimulus makes for a terrible comparison.  Plus, Obama is poised to lift the U.S. federal funding ban on stem cell research tomorrow (Monday); and this is an area where we have benefited from an extra structural advantage that is about to be erased (as observers in the UK have already noted).

So, Mr. Goodyear, by all means focus on commercialization.  We can (and will) quibble about that implementation another time.  But in the meantime, restore the research funding that makes us a world-class producer of scientific innovation.

Allocating Spending to Support R&D: UK, U.S. and Canadian Approaches

The U.S., Canada and the UK have all acknowledged the central importance of R&D even in these recessionary times.  However, the three national governments have decided to focus their spending on different steps of the R&D equation:

1. Education: UK Takes the Long View
   British PM Gordon Brown, in a speech this week, identified three priorities: research, education and training, and public discourse.  However, only one of the three, education, was the subject of specific increased targets and spending:  retraining to increase the number of science teachers, a goal to double the number of pupils in state schools taking ‘triple science’, and a new Diploma program.  The U.S. and Canada have increased funding for graduate studies, but the UK effort is focused at an earlier stage, to rebuild the interest and capabilities of domestic graduates. 
2. Publicly-Funded Research: U.S. Takes the Lead
   The focus of the U.S. R&D spending increases has absolutely been on research.  The increases for the NIH and NSF in the stimulus and the budget will go largely to increasing the volume of publicly-funded research.  PM Brown’s speech also vowed to protect funding for science from competing demands for Government support during the downturn, but did not propose increases over the existing 10-year plan.  Canada’s budget actually cut research funding across the three main granting agencies.
3. Commercialization: Canada Takes Off 
   Canada’s focus was on commercialization.  The 2009 budget included $200 million allocated to the National Research Council’s IRAP program — $170 million to double the program’s contributions to companies, and $30 million to help companies hire over 1,000 new post-secondary graduates.  It also provided significant additional funding to BDC.  The only comparable spending in the U.S. was the $400 million for ARPA-E, which is allocated to energy programs, and supports research as well as commercialization.  PM Brown’s speech recognized the importance of maintaining the country’s struggling start-ups, and he has reached out to big pharma, but promised no specific action.

What’s still missing:  Stimulating Output

• Despite calls in the UK, the U.S. and Canada, there have been no major tax policy changes enacted in this round of budgets and bailouts that ease the burden on, or return money to, early-stage technology companies.  Ontario has actually taken some steps in this direction with the Ontario Venture Capital Fund and the Ontario Tax Exemption for Commercialization.
• Nor have there been many changes that increase the value of outputs: in the bio/pharma area, the UK has probably moved farthest in this direction, with upcoming reforms of the National Institute on Comparative Effectiveness (NICE), while the U.S. has seen decreasing FDA approvals and is allocating new comparative effectiveness funds.  On the other hand, approvals of GE animals, support for personalized medicine and big spending on electronic medical records will provide support to specific industry initiatives.

Stay tuned to our Bailout Page for updates.