A Vision for Health Research and Innovation in Canada Natalie Dakers President and CEO. Transforming Opportunity into Value 1
The Return on Public Investments in Research Have Not Been Maximized Net Royalty and License Fees by Country - 2010 Canadians are an inventive lot, but have trouble making it pay Globe and Mail, Oct. 2011 -$20 $0 $20 $40 $60 $80 Sector-specific expertise and initiatives are paramount, and the Panel s proposed large-scale, industry-directed and cofunded institutes could potentially serve as a catalyst in that respect. Jenkins Report, Oct. 2011 Billions ($US) Source: The State of Science and Technology in Canada 2012; Council of Canadian Academies 2
The Potential Impact of an Innovative Environment - Healthy People Products produced by the sector change and/or save lives not just locally, but around the world Exemplified by Canada s own health sciences commercialization history. 3
The Potential Impact of a Strong Commercialization Environment Healthy Economy & Society Boston s Strategic Approach * 2003 special summit of university leaders, educators and business representatives re: Boston life sciences Super Cluster All agreed that strengthening the sector was crucial to future global competitiveness 2007 Governor announces new Massachusetts Life Sciences Initiative 10-year, $1B investment Strategy focused on creation of a collaborative ecosystem Impactful Outcomes * $56.6M in tax incentives to life sciences firms (2009-2011): 2,500 jobs & $266M in wages and salaries over next five years $300M state invested in infrastructure: Over $1B leveraged in additional investment Now the top US life sciences cluster on per capita employment: 14,300 jobs for every million residents 20% require no more than a two-year associate s degree; & 50% require just a bachelor s * Source: Life Sciences Innovation as a Catalyst for Economic Development: The Role of the Massachusetts Life Sciences Center, by Northeastern University Mar. 2013 4
Canada Faces Considerable Competition Roche (Genentech s) total R&D spend for 2012: $10B CIHR s total grants and awards FY2013: $1B 5
Canada Punches Below its Weight in Venture Capital Source: State of the Nation 2012 - Canada's Science, Technology and Innovation System 6
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Regional Distribution of VC Investment in Canada (2010-2012) Source: Thomson Reuters Canada 2013 9
Total Spin-Off Companies by Province (2001-2012) 300 250 200 150 100 50 0 Atlantic Sask. Quebec Ontario Manitoba BC Alberta Based on AUTM STATT Data 10
Quebec Took Bold Steps That Are Paying Off ~$ 2 B venture dollars invested in Canada in 2013, 30% (~$590M) went to Quebec - Thomson Reuters February 2014 This represents a 46% increase, highest $ since 2007. Canada saw less growth at 31%. ~$200M came from outside of Canada, 84% more than previous year Reseau Capital 2014 6 foreign funds (US, Switzerland, Israel) Long term, international/national outlook paying off 11
The Life Science Investor Landscape (Traditional) Start-Up & Seed Series A-C Series B-D Series C-E Series D+ or Acquisition Acquisition or Strategic Partnership Large Pharma/Biotech Companies Private Equity Foundations Venture Capital Angels Family/Friends R&D Pre-Clinical Phase I Phase II Phase III Market Source: Nature Biotechnology; Volume 32; January 2014 12
The Life Science Investor Landscape (New) Start-Up & Seed Series A-C Series B-D Series C-E Series D+ or Acquisition Large Pharma/Biotech Companies/Corporate Venture Private Equity & Hedge Funds Family Offices/Foundations/Venture Philanthropy/Patient Groups Venture Capital Angels Family/Friends R&D Pre-Clinical Phase I Phase II Phase III Market Source: Nature Biotechnology; Volume 32; January 2014 13
R&D Funding in Canada Total R&D expenditures in Canada totaled around $30 billion in 2013 and have not grown since 2008 probably as a result of the economic downturn; Six sources are responsible for R&D investment in Canada: the federal government, provincial governments, businesses, universities, not-for-profit organizations and foreign entities. With the exception of foreign entities, each sector plays a role both as a funder and as a performer of research activities in Canada; The largest source of funding stems from businesses. In 2013, Canadian industry invested an estimated $14.4 billion in R&D or 47% of total R&D expenditure. Of these funds, 6.6% ($958 M) was directed to research performed by universities; 14
Flat Growth of Overall Canadian R&D Expenditure Since 2008 Gross R&D expenditure in Canada by funding sector $B (current prices) 40 0% 30 20 12 13 14 14 15 16 18 21 +6% 23 24 25 27 28 29 30 31 30 30 31 31 30 10 0 41% 1993 44% 1994 46% 1995 46% 1996 48% 1997 46% 1998 45% 1999 45% 2000 50% 2001 51% 2002 50% 2003 50% 2004 49% 2005 51% 2006 49% 2007 49% 2008 49% 2009 46% 48% 2010 2011 48% 47% 2012 2013 Funder: higher education sector Funder: provincial research organizations Funder: provincial governments sector Funder: federal government sector Funder: foreign sector Funder: private non-profit sector Funder: business enterprise sector x% CAGR: Compound Annual Growth Rate Source: Statistics Canada 15
Growth of Industry Funded Research in Higher Education Slowed Down Since 2008 R&D expenditure of business sector performed by higher education sector $M current prices +1% 1,000 800 755 803 808 870 892 896 842 938 948 958 600 553 +7% 603 643 679 460 400 314 296 297 335 381 411 0 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Year Source: Statistics Canada 16
Canadian Industry Invests Relatively Little in R&D Compared to Peers Abroad Greece Poland Russian Federation Spain Italy Portugal Hungary Norway Canada Czech Republic United Kingdom Ireland Netherlands Australia Estonia France China Belgium OECD United States Austria Germany Denmark Slovenia Switzerland Sweden Finland Israel 0.2 0.3 0.7 0.7 0.7 0.7 0.9 0.9 0.9 1.0 1.1 1.2 1.2 1.2 1.3 1.5 1.5 1.5 1.6 1.9 2.0 2.0 2.0 2.2 2.2 2.3 2.4 3.5 0 1 2 3 4 Business Expenditure on R&D (BERD) as % of GDP (2012) Source: OECD (2013) 17
Business Sector in Quebec Sources Less R&D in Higher Education Sector Gross R&D expenditure funded by the business enterprise sector $B (current prices) 6 6.2% 5.0% 4.7% 5.2% 5.4% 5.6% 5.8% 6.0% 5.2% 5.3% 5.5% 5.6% 5.8% 5.4% 5.9% 5.9% 6.1% 6.0% 6.4% Canada average 4 4.5% 4.8% 4.7% 4.9% 4.9% 6.0% 5.2% 5.3% 5.9% 5.2% 5.4% 5.8% 2 8.4% 5.5% 4.7% 4.2% 4.6% 4.6% 5.1% 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Performer: higher education sector Performer: provincial research organizations sector Performer: provincial governments sector Performer: federal government sector Performer: private non-profit sector Performer: business enterprise sector Source: Statistics Canada 18
Higher Education in Quebec Shows Relatively Low Share of Industry Sponsored R&D Ontario 57% 18% 11% 10% 4% 1.7 Quebec 50% 28% 10% 6% 5% 1.3 Alberta 40% 33% 10% 9% 8% 0.7 BC 59% 17% 12% 9% 2% 0.7 0.0 0.5 1.0 1.5 2.0 Federal Other govt Not-for-profit sponsored Busines sponsored Other $B research funding of Universities Source: CAUBO (Canadian Association of University Business Officers) 19
R&D Intense Sectors in Quebec Have Intensified R&D Whereas Other Sectors Reduced their Spend Scientific research and development services Computer systems design and related services Wholesale trade Machinery manufacturing Information and cultural industries Pharmaceutical and medicine manufacturing Primary metal (non-ferrous) manufacturing Other manufacturing industries All other services Communications equipment manufacturing Architectural, engineering and related services Paper manufacturing Semiconductor and other electronic component facturing Fabricated metal product manufacturing Navigational, measuring, medical and control instrument m Food manufacturing Wood product manufacturing Health care and social assistance Agriculture, forestry, fishing and hunting Electrical equoipment, appliance and component manufactur Plastic product manufacturing Motor vehicle and parts manufacturing (87) (31) (58) (22) (37) (59) (51) (20) (29) (56) (24) (18) (46) (28) (53) (6) 2 3 Total R&D expenditure in 2011 ($M) 32 665 42 455 23 414 92 248 236 139 114 96 93 90 89 77 74 60 59 55 37 37 36 31 29 22 Select industries 1 (100) (50) 0 50 100 % growth of R&D intramural expenditures (2007-2011) 1. Excludes industries for which no (full) data are available for confidentiality reasons, like Mining, Oil, Gas extraction, Utilities, Aerospace products manufacturing Source: Statistics Canada 20
Industry Research Funding in Canadian Universities Absolute industry sponsored R&D funding of universities (incl. affiliated institutions) Relative industry sponsored R&D funding of universities (incl. affiliated institutions) McMaster University 118 The University of British Columbia 76 University of Toronto 75 Université de Montréal 62 Queen s University 37 University of Alberta 37 Dalhousie University 36 McGill University 34 The University of Western Ontario 33 University of Calgary University of Ottawa 30 28 University of Guelph 22 Univeristé Laval 21 University of Waterloo 14 University of Manitoba 12 0 50 100 150 $M research funds sponsored by industry (2011-12) McMaster University 36 Dalhousie University 26 Queen s University 22 Université de Montréal University of Guelph The University of Western Ontario The University of British Columbia 14 14 14 13 University of Waterloo 11 University of Calgary University of Ottawa University of Alberta University of Manitoba University of Toronto Univeristé Laval 10 9 8 7 7 7 McGill University 7 0 10 20 30 40 % of research funds sponsored by industry (2011-12) Source: CAUBO (Canadian Association of University Business Officers) 21
CDRD Ventures Inc. (CVI) Transforming Opportunity into Value Transforming Opportunity into Value 22
The Health Research and Commercialization Landscape is Evolving Research and development, clinical evaluation, and healthcare delivery costs continue to rise Regulatory and reimbursement environments are becoming increasingly challenging Governments have increased investment in health research, but they are not satisfied with the returns (thereby jeopardizing future investment) There remains a gap between academic health-related discovery and the development of new medicines and other technologies Venture capital investments continue to decline leaving little financing available to develop new technologies, particularly new therapeutics 23
CDRD/CVI s Mandate CDRD/CVI was specifically created to de-risk promising discoveries stemming from publicly-funded academic health research, and transform them into commercially viable opportunities for the private sector. The Private Sector is then responsible (and much better positioned) to develop them into new treatments for patients And Government realizes the maximum economic and societal ROI.and re-invests back into research CDRD: national not-for-profit drug development and commercialization centre Provides specialized expertise and infrastructure Conducts critical proof-of-concept studies CVI: Commercialization vehicle Together bridge the commercialization gap between academia and industry..and ultimately, patients 24
CDRD s Network of Affiliated and Partner Institutions CDRD HQ & Nodes 44 Affiliated Institutions around the world >10,000 Principal Investigators 25
The CDRD / CVI Continuum Academic Discovery Commercialized Drug Candidate Canada s national not-for-profit drug development and commercialization centre Affiliated academic partners Provides specialized scientific expertise & infrastructure Conducts initial critical proof-of-concept studies Access to non-dilutive capital No claims on original IP Commercialization vehicle First rights to negotiate for technologies in CDRD Encapsulates and manages IP Business focus and expertise Preferred access to CDRD s scientific infrastructure to further develop technologies CVI s share of profits returned to CDRD 26
CDRD s Drug Development Platform Target Validation Screening Medicinal Chemistry Pharmacology/Toxicology Drug Delivery Biologics 100+ FTEs 40,000 sq. ft. of dedicated translational research space 27
The CDRD/CVI Innovation Model 28
CDRD and CVI Partners Pfizer-CDRD Innovation Fund GSK-CDRD Innovation Fund Western Canada Innovation Fund Roche Global CVI Fund GSK-CVI Fund Genome BC-CDRD Development Fund CDRD-MS Society Foundation Fund Partnership with IRICoR Pfizer Global CVI Fund CDRD CVI 29
Advancing Projects Toward Commercialization 828 Potential Projects/Technologies Reviewed 183 projects undertaken (on 125 distinct technologies) 94 projects - milestone data not supportive of further development at this time 47 Projects Advanced Toward Commercialization and/or commercialized (+ 42 Ongoing) 10 technologies commercialized including: 4 Spin-Off Companies 3 Out-Licenses 3 Under Current Development/Management of CVI (One product advanced into human trials) 30
March 31, 2014 Accel-Rx: Canada s Health Sciences Accelerator 31
Candidate Companies Nominated by CECRs Pan-Canadian opportunities supported by pan-canadian networks & resources Accel-Rx 32
Completing the Commercialization Picture 33
Acknowledgements Peter Geluk, on assignment to UBC from the Boston Consulting Group, 2014 Barry Gee, CDRD, 2014 34
For additional information, please visit CDRD Ventures Inc. at www.cdrdventures.com 35