Part 2:  Simon Pimstone, President & CEO of Xenon Pharmaceuticals Interview

As a large part of the life sciences group in BC Simon Pimstone met with Liberal leader Michael Ignatieff on life sciences and explained the issues of funding, and you would think that it would fit in with Ignatieff’s desire to build a larger knowledge based economy and a louder opposition to the Canadian federal government’s budget would have sent that message on behalf of the life sciences community that it does have greater support, especially in the downgrade in future funding in this area.

The Canadian TV & film industry according to industry reports employed 126,900 FTE’s (full time equivalents) and the value of production was $5 billion in the 2006/2007 years.  This compares to the Life Sciences industry in Canada which produced sales of $1.9 billion but the tax breaks are not equal with the Canadian federal government and provincial government film and TV tax credits allowing up to 53.5% of BC labour expenditures on a yearly basis.

BC universities produce between 3,000 to 4,000 science graduates of which many do not find employment in Canada, yet all the life sciences is asking for is a fair share of funding to continue to find cures for different diseases that helps all Canadians and the world.    The public cost of educating students who end up working in another country is approximately $48 million (3,000 students * $40,000 expected cost of education * 40% funding from governments, estimated) .  This a huge cost only for a single province, not the entire country where the Canadian people are funding scientists to work in other countries at the end of the day.

What’s important is not providing funding on an ad hoc basis but continued basis even if its smaller amounts to foster an environment of innovation and then onto commercialization opportunities through Genome Canada, CIHR (Canadian Institutional  Health Research) and tax incentives.

Our health system is arguably one of the best in the world, some say the United States, but only if you’re willing to pay $2,000 per month.

SRED is a good funding tool starting from 1995, but really now inadequate for Canada’s life sciences sector as drug development takes much more time and money in order to recoup research funding.  It is only good for Canadian controlled private corporations, (CCPC’s) which many are not anymore because they’re too large and Aspreva Pharmaceuticals & Biovail Pharmaceuticals are some of the few companies which have profits in order to recoup some of these research that takes several years to make create a single drug.  A cap limit on SRED would even be more palatable to the sector ie. $100 million if they took off the CCPC eligibility requirement and the threshold are too low with barely any increases  since 1995.

Even if tax incentives, to entice offices in Canada such as providing tax holidays for bringing in new manufacturing facilities where they employ 200 people which are paying income tax now where they don’t pay personal income tax for the first 2 years with a commitment for 5 years residency then people would be paying taxes and spending that income in the country and province.

Allow investments earned from life science investments in 2009 and 2010 to be exempt from capital gains tax but was ignored by the federal government in the budget.   Use some of the carry forward losses that life science companies have accrued and provide a formula where say 1/2 of all carry forwards are eligible ie. 40 million and provide a cash reimbursement for 25% of the 1/2 which would result in needed funding to continue doing research to reaching the milestones.

The facts are that SRED was really designed for large company models, large drug companies, large aerospace companies, not really the Canadian life sciences sector which the majority are small companies from 5 to 150 people.  The inadequacy of updating the Canadian Scientific Research & Exploration Development tax credit system is costing the Canadian economy jobs in the short and long term, but more importantly the potential cures to the various diseases and cancers out in the world.

Written by Richard Wong, CMA     rwong@firstchoicecapital.ca

Orthocon, Inc.: Series B $25M
Orthocon (North Brunswick, NJ) a preclinical-stage company focused on implantable devices that deliver therapeutics to bone, closed a $25M Series B financing.

Aerovance, Inc.: Series C $38M
Aerovance (Berkeley, CA) a clinical-stage company focused on respiratory and allergic diseases, closed a $38M Series C financing. Participants include ProQuest Investments, BB Biotech Ventures, Apax Partners, Clarus Ventures, Alta Partners, Lehman Brothers, NGN Capital and Burrill & Co.

OPX Biotechnologies, Inc.: Series B $17.5M
OPX Biotechnologies (Boulder, CO) a research-stage biofuels company using synthetic biology to engineer the microbes as a renewable fuel source, added to their Series B financing bringing the round up to $17.5M. Participants include Braemar Energy Ventures, Altira Group, Mohr Davidow Ventures and X/Seed Capital.

Traversa Therapeutics, Inc.: Series B $5M
Traversa Therapeutics (La Jolla, CA) a preclinical-stage biopharmaceutical company developing RNAi delivery technologies, closed a $5M Series B financing. Participants include Morningside, Mesa Verde Venture Partners and Tech Coast Angels.

CeraPedics, Inc.: Series B $15M
CeraPedics (Broomfield, CO) a clinical stage device company focused on osteobiologic products for bony voids, closed a $15M Series B financing. Participants include NGN Capital and OrbiMed Advisors.

KeyNeurotek Pharmaceuticals, AG: Series C $10.9M
KeyNeurotek Pharmaceuticals (Germany) a clinical-stage small molecule company focused on autoimmune and CNS diseases, closed a $10.9M Series C financing. Participants include DVC Deutsche Venture Capital, IBG Beteiligungsgesellschaft and KfW Bankengruppe.

Ambrx, Inc.: Series D $10M
Ambrx (La Jolla, CA) a clinical-stage protein therapeutic company focused growth deficiency, closed a $10M Series D financing. Participants include 5AM Ventures, Aravis Ventures, CMEA Capital, Maverick Capital, Versant Ventures and Tavistock Life Sciences

Part 1:  Simon Pimstone, President & CEO of Xenon Pharmaceuticals Interview

Canadian government’s announcement on reduction of future funding for Genome Canada affects life sciences companies in British Columbia, including larger start ups such as Xenon Pharmaceuticals.

Affects of this including having fewer jobs and hindering the ability of companies to commercialize their intellectual property they have created in Canada because of the cost to do this, hence the need for Canadian life sciences companies needing to partner up with large American and European pharmaceutical companies in order to get these discoveries to market.

For start-up companies Genome Canada has provided bio-tech companies with the ability to do research and keep our science graduates from our universities to bolt to the United States & Europe with the so called brain drain.

A current Xenon Genome BC project has 10 to 15 scientists working on the project currently, which if Genome Canada funding wasn’t available, these high paying jobs would not exist in British Columbia.

Because Canada has such a tiny venture capital pool for life sciences,  life sciences funding is largely dependent on foreign venture capital funding as the primary source of funding as well as Canadian federal and provincial funding.

While in the United States the National Health Institute (NIH) funding will be increasing by $3 billion announced by President Obama whereas the funding from the Canadian government has decreased.  The government is doing exactly the opposite and sending a statement on the importance or lack of it on science and technology in British Columbia.

President Obama has announced already funding for green energy grids, health and innovation, whereas in Canada we are still focused on the old school infrastructure is an opinion in the life sciences community.

Simon Pimstone commented that if you’re putting money into infrastructure which will build a knowledge based economy, such as technology parks for Pharma companies.  Companies like GlaxoSmithKline or Johnson & Johnson will be enticed to build manufacturing vaccine facilities which provides high paying opportunities for science students for years to come.

Continued in Part 2 of Interview with President & CEO Simon Pimstone

Vancouver, B.C. based Cardiome Pharma shares skyrocket on a $700 million licensing agreement with Merck based out of Whitestation, New Jersey for Vernakalant, an investigational drug for treatment of atrial ibrillation. The agreement provides Merck with exclusive global rights to the oral formulation of vernakalant (vernakalant [oral]) for maintaining of normal heart rhythm in patients with atrial fibrillation, and provides a Merck affiliate, Merck Sharp & Dohme (Switzerland) GmbH, with exclusive rights outside of the United States, Canada and Mexico to the intravenous (IV) formulation of vernakalant (vernakalant [IV]) for rapid conversion of acute atrial ffibrillation to normal heart rhythm.

Cardiome to receive initial fee of US$60M and up to $300M in milestones.   Cardiome, a Canadian biotech which currently does not have any drugs approved for marketing, will get up to $200 million for achieving development and regulatory goals and another $100 million for approvals related to other heart conditions. And there’s $340 million available in sales milestones. Cardiome retains U.S. co-marketing rights in the deal and gets a $100 million credit facility from Merck that is available in 2010 in several tranches.

“Given Merck’s long-established leadership in the cardiovascular space, we believe there is no company better suited to advance Vernakalant,” said Bob Rieder, chairman and chief executive officer of Cardiome. “This collaboration places Cardiome in a strong financial position as we conclude our strategic review, and moves the Company closer to providing doctors with an important tool to address this critical unmet medical need.”

This deal also shows Merck continuing it direction of finding other external partners to help lead its drug pipeline for the future.

The effectiveness of the collaboration agreement is subject to the expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, if applicable, as well as other customary closing conditions. The agreement between Cardiome and Astellas Pharma U.S., Inc. for vernakalant (IV) in the United States, Canada and Mexico is unaffected by this agreement.

Written by Richard Wong, CMA     rwong@firstchoicecapital.ca

Short updates on Life Sciences funding for March 2009.

BiOptix Diagnostics, Inc.: Series A $3M

BiOptix (Boulder, CO) a commercial focused developer of an array-based biomolecule detection system that addresses many markets that currently cannot obtain the needed sensitivity and throughput in a single solution, closed a $3M Series A finacing.

NeoVista, Inc.: Series D $18M

NeoVista (Fremont, CA) a clinical-stage device company focused on epimacular beta radiation for the treatment of wet age-related macular degeneration, closed a $18M Series D financing.

Neuraltus Pharmaceuticals, Inc.: Series A $17M

Neuraltus Pharmaceuticals (Menlo Park, CA) a preclinical-stage developer of small-molecule drugs focused on Amyotropic Lateral Sclerosis and dyskinesia, closed a $17M Series A financing.

Nexstim, Oy: Series C $7.9M

Nexstim (Finland) a commercial-stage developer of non-invasive brain imaging technologies focused on cortical mapping prior to surgery, closed a $7.9M Series C financing.

Atritech, Inc.: Series E $30M

Atritech (Plymouth, MN) a clinical-stage medical device company focused on developing minimally invasive technologies designed for the prevention of atrial fibrillation related stroke, closed a $30M Series E financing.

Ikano Therapeutics, Inc.: Series B $9M

Ikano Therapeutics (Lexington, KY) a clinical-stage nasal delivery platform company focused on seizures and pain, closed a $9M Series B financing, the final tranche of a $18M round.

GetWellNetwork, Inc.: Series C $10M

GetWellNetwork (Bethesda, MD) a commercial stage telemedicine provider of interactive patient care solutions, closed a $10M Series C financing.

GlycoVaxyn, AG: Series B $22M

GlycoVaxyn (Switzerland) a preclinical-stage company developing vaccines focused on bacterial caused disease, closed a $22M Series B financing.

Surface Logix, Inc.: Series E $15M

Surface Logix (Brighton, MA) a clinical-stage small molecule company focused on metabolic and cardiovascular disease, closed a $15M Series E financing.

Proteon Therapeutics, Inc.: Series B $38M

Proteon Therapeutics (Waltham, MA) a clinical stage biopharmaceutical company focused on renal and vascular disease, closed a $38M Series B financing.