FedDev Ontario is Feeding $45 million Through NRC-IRAP to Support SMB Innovation

During a visit to Sernova (TSXV: SVA) today, Gary Goodyear* announced that $45 million of FedDev Ontario money will be deployed through the NRC’s Industrial Research Assistance Program (IRAP).

IRAP has been a relatively effective vehicle for funding life science companies and has taken a prominent role since having been allocated $200 million in the 2009 federal budget. In 2010, NRC-IRAP has funded companies directly, including Isotechnika, Critical Outcome Technologies and Covalon (among others) and indirectly through the Health Technology Exchange (HTX).

Sernova press-released the announcement today, noting that they received $486,000 from NRC-IRAP in the 2009-2010 cycle; but it was unclear whether that funding was part of the FedDev allocation or whether FedDev-IRAP funds were forthcoming in the 2010-2011 cycle.

* Yes, Gary Goodyear is now the Minister of State for FedDev Ontario.

Monday Biotech Deal Review: March 8, 2010

A busy week in Canadian deals, with Paladin Labs in a global transaction with SpePharm; M&A activity from therapeutics and consulting companies; the last of the SIFT/SR&ED deals; over $20 million of new offerings from BioSign, Bradmer and YM; government funding for Medicago and Isotechnika; a new standby equity deal from Yorkville for Allon; and the closing of the first deal of the rest of BioMS’ new life.

Monday Biotech Deal Review: February 15, 2010

A busy Monday Deal Review is headlined by Labopharm and ProMetric on the securities front, MDS’ final divestiture on the M&Eh front and Biovail and Bioniche on the licensing front, and there’s lots more activity behind those for over $100 million of deals.  Check out all the details (and the witty headlines)

Has NRC-IRAP Run Out of 2009 Grant Money?

NRC-IRAP, which got $170 million in the 2009 Federal budget (spread over 2 years) for company funding, has been very active lately, including in biotech.

Maybe too active?  I heard rumo(u)rs (plural!) this week that IRAP may be out of funds for this cycle.  Are they?

Drop us a line.

NRC-IRAP Is On A Roll: 7 Bio Investments in 7 Weeks

NRC-IRAP,* which got $170 million in Canadian stimulus money, has been deploying funds quite rapidly and has included a significant number of biotechs in its largesse.  I found these from July and August:

• a $260,000 grant to ImmunoVaccine Technologies Inc.;
• a $498,500 grant to Opsens Inc. (TSX-V: OPS);
• an undisclosed amount to Paladin Labs (TSE: PLB);
• a $374,500 grant to MedSenses;
• a $345,000 grant to Timeless Technologies Inc.;
• Chemaphor (TSX-V: CFR), after its breakup with Lilly, gets $296,386; and, last but by no means least…
• a $1,950,000 contribution to Genesis Genomics Inc.

Am I missing others?  Let us know in the comments.

Oh, and speaking of government money, hopefully you’ve started following the Twitter stream @crossborderbio and you saw this announcement earlier today about EDC and Brookfield’s $1 billion fund for DIP lending.

* National Research Council of Canada Industrial Research Assistance Program.  Stick to the abbreviation.

Interview With Garrett Herman Yields More Detail on the LOM-BioQuest Joint Venture

We have new details about the LOM-BioQuest joint venture that was announced last week.  The WSJ article about the JV emphasized the goals of supporting good science and expanding the two companies’ presence in the life sciences market.

I spoke to the Director of LOM BioQuest, Garrett Herman, and one of his associates yesterday about their vision for the joint venture.  They also shared with me the letter they sent announcing the JV (pdf).  Here are the highlights of the letter and our conversation:

• They are taking a broad view of “life sciences” and plan to have the JV be the intake point for all their new projects in the space.
• They want to take whatever approach will maximize the likelihood of good science succeeding and are willing to engage shareholders as well as management and boards.
• Although the JV does not have any current employees, it does have “the full attention of both firms.”
• For now, interested parties should contact the principals in the letter.
• The plan is to nurture a few dramatic successes that will allow them to have an in-house source (or a regular stable) of capital to lead future deals, and a revived Canadian investor ecosystem to syndicate to.

I look forward to seeing LOM-BioQuest’s private sector approach to combining operating and financial advisory services, which should complement analogous efforts at NRC-IRAP and MaRS Innovation…

Monday Deal Review: July 27, 2009

Well, July is wrapping up with no sign of summer, or of the summer doldrums.  Read on for all the rainy-day deals we found this week

New Data Shows 70% of Canada’s Biotech Companies Have Under 12 Months’ Cash. BIOTECanada’s New Ask: Government Loans.

A Canwest story today highlights new BIOTECanada data showing 70% of survey respondents have under 1 year of cash, up from 50% in January.  FierceBiotech picked it up as well, guaranteeing a full dose of international attention.  

Even though the remaining 30% of respondents likely include some with big recent successes — Bioniche, Allostera and Zymeworks — and some with creative approaches — ConjuChem, Neuromed, etc. — the top-line number is grim indeed.  Plus, as Kasia Majewski points out:

“Most firms have found away to extend their cash, but they’ve done that by massive layoffs, by shutting done operations to the bare bones. So essentially the lights are on but there’s one guy home.”

Given that there has been no systemic cash infusion, it’s not surprising that the number of firms in trouble has gone up since January. 

On the other hand:

There is a bolus of fund-of-funds and direct capital waiting to be deployed, including:

• The Ontario Emerging Technologies Fund, which is getting ramped up,
• The Ontario Venture Capital Fund, which has plenty of dry powder,
• Teralys Capital, which opened its doors with $700 million this week, and 
• Some NRC-IRAP money that is starting to trickle out.

Plus, Lumira Capital’s Q2 newsletter (pdf) points to the new BDC money, Alberta Investment Management Corp’s PE plans and the new Alberta Enterprise Corporation as potential additional sources of funding in the medium term.

BIOTECanada bottom line:

In the winter, the organization was focused on tax initiatives.  Yesterday, though, the focus was entirely on

“negotiations with Industry Canada to obtain a loan program for Canada’s biotech sector that can hold the industry over until capital markets rebound. … [Specifically,] government loans to be repaid after a two- year period at six per cent interest.”

Maybe it’s the new money looming on the horizon, or the seeming lack of traction for the tax policy asks, but the focus has definitely shifted.

My bottom line:

Even the new loan program advocated by BIOTECanada will not help if the other government funding doesn’t make it to biotech companies and VCs. We’ve been keeping an OVCF scoreboard that still shows a goose-egg for biotech investments.  It may be early days for these new capital sources, but the hour is late for Canadian biotech companies.

Monday Deal Review: July 12, 2009

The highlights of this week were definitely the Bioniche-Endo deal and Allostera’s $17 million raise, but that was just the tip of the iceberg as Canadian deal activity heated up along with the weather.  A novel deal with an income trust swapping cash for a biotech’s public shell starts things off

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.