Look at Canada

In a series of issues we will look into the life science business scene in different parts of Canada, starting with Montreal, Quebec in this issue. We will report on governmental incentives to spur innovation as well as highlighting a number of corporations and research organisations present in each region.

The life sciences represent a booming industry in Metro Montreal. In all, 40,500 people are employed in 628 companies, including 149 public and para-public research organisations. Between 2000 and 2005, the industry benefited from foreign investment projects worth more than CAD 700 million, thanks to Montreal International's involvement. The Montreal region ranks first in Canada for contract research organisations (CROs).

Attractive infrastructures

Montreal ranks first in Canada for research centres and academic research funding. Greater Montreal is home to 11 institutions of higher learning, including two faculties of medicine (McGill University and the Université de Montréal), as well as a truly integrated life sciences complex, Metropolitan Montréal's City of Biotechnology and Human Health.

In addition, several major research institutes and specialised centres are located in the region. They are the National Research Council of Canada (NRC), the Biotechnology Research Institute (BRI), the Institut national de la recherche scientifique (INRS – National Scientific Research Institute), the Institut de recherches cliniques de Montréal (IRCM – Montréal Clinical Research Institute), the Montréal Neurological Hospital, the Montréal Genomics and Proteomics Center and the Montréal Heart Institute.

In combination with a readily available, highly skilled and affordable workforce, this network of research facilities makes Metro Montreal one of the few places in the world capable of carrying out every phase of product development, from the initial research stage to the final product launch, including all the required pre-clinical and clinical trials.

Generous tax incentives

Many countries offer incentives for R&D to encourage innovation and hi-tech development. However, Canada's tax incentives are quite generous by international standards and the most generous among the G7 nations. For the sixth consecutive time Canada for instance leads all G7 countries with the lowest business costs, according to a study made by KPMG in 2006.

While Canada's overall cost is 5.5 percentage point lower than the US, this advantage double to 10.9 percentage point for R&D activities due to differences in labour costs for scientifi c and technical employees as well as tax incentives. For instance, business costs for biomedical R&D in Canadian locations were on average 10.1% lower than their US counterparts.

At the option of a company entitled to receive an R&D deduction or tax credit, these items can be deferred in Canada, unlike in some other countries such as the US. This mean that the Canadian company does not need to take the deductions in the year they are incurred. This flexibility in deferring R&D deductions is designed to benefit companies that invest heavily in R&D in their start-up years and need to defer the tax benefits to later years in which they make a profit.

R&D expenditure form part of the R&D expenditure pool, which can be claimed in the current taxation year or future taxation years, indefinitely. Federal SR&ED tax credit can be carried backwards up to three years or carried forward up to 20 years.

R&D projects can be structured to suit the needs of the companies involved, without affecting their access to R&D incentives.

When it comes to genomics and proteomics, Genome Canada is the primary funding and information resource. The organisation is dedicated to developing and implementing a national strategy in genomics and proteomics research for the benefit of all Canadians. So far, it has received CAD 840 million from the Government of Canada.

Genome Québec

As one of six genome centres across Canada (Atlantic, Québec, Ontario, Prairies, Alberta and British Columbia), Genome Québec allows researchers to conduct genomics and proteomics research at an international level of excellence.

In addition to contributing to better health among Quebecers, Genome Québec acts as an economic development tool, providing businesses in the province with access to high-quality human and technological resources and to advanced research infrastructures.

Genome Québec is a private, non-profit organisation that invests and manages funds from the public and private sectors. More than 90% of its financing is directed towards research.

"The mobilising effect created by these investments will contribute to maximising socio-economic benefits and to establishing Quebec as a leader in the field of life sciences," says Michel Leblanc, VP Public Affairs and Communications.

This money is provided by Genome Canada and the Ministàre du Développement économique et régional et de la recherche du Québec, as well as by the private sector. Genome Québec is currently managing large-scale research projects in six key sectors: human health, bioinformatics, ethics, the environment, forestry, and agriculture. By focusing on a national genomics research project, it brings together industry, governments, universities, hospitals, research institutes, and the general public and promotes the study of genomic issues as they relate to ethics, law and society.

The advancement achieved in biotechnology, genomics, proteomics, and biopharmacology will result in major changes to diagnostic processes and patient treatment and monitoring.

"In this respect, Quebec society enjoys considerable advantages: outstanding researchers, cutting edge infrastructures, and the support of public and private sector leaders. Genome Québec leverages these advantages to help find solutions to important health issues and to position itself as an international player in the knowledge economy," Michel Leblanc concludes.

James McGill

Born in Glasgow, Scotland and educated at Glasgow University, James McGill (October 6, 1744 – December 19, 1813) became one of the Montreal merchants involved in the fur trade south of the Great Lakes from 1770. He diversified his activities into land speculation and by 1810 had abandoned the fur trade altogether. Rumoured to be the richest man in Montreal, he left a great deal of money to charity, including an estate and 10,000 pounds to the Royal Institution for the Advancement of Learning to found McGill University.

He was the first honorary Lieutenant Colonel of the regiment The Canadian Grenadier Guard. James McGill was buried in the old Protestant Dufferin Square Cemetery but in 1875 his remains were reinterred in front of the Arts Building on the university campus.

Biggest business technology park

Being the biggest R&D Park in Canada, Technoparc Montreal pursues the mission of fostering the economic development of the greater Montreal Metropolitan area.

Technoparc Montreal, located close to Montreal's Pierre-Elliott-Trudeau Airport, downtown Montreal and the City's major arteries, is the technology park that has achieved one of the highest rates of growth in North America over the past few years. 30 companies have moved into the park, generating 5,000, and investments amounting to more than CAD 1.5 billion.

The park specialises in the life science, aerospace and telecommunications sectors, as well as the agri-food, environment, transportation and other related domains.

Competitive cluster

Life science companies can be more competitive by locating part of their R&D activities in Montreal InVivo.

SCIENCE CLUSTER Montreal InVivo is at the heart of a lively, cosmopolitan region. Thanks to inexpensive housing, state-provided healthcare and low tuition fees for university students, Metro Montreal offers one of the lowest costs of living among large North American cities.

The Montréal InVivo cluster endeavours to establish conditions that will enable the life sciences industry to make a significant contribution to the economic and social vitality of Greater Montréal. Its mission is to identify levers that can accelerate the development of life sciences in the region, and to work as a network to position the cluster among the world's leaders in the sector.

Montreal InVivo's mission is to ensure the recognition of Metro Montreal as a world-leader in the life sciences and health technologies, by virtue of its growth, synergy and the vitality of its financial and human investments.

"Given the critical mass, history and successful models of our medical device and biotech sectors, together with intensive clinical and pre-clinical research activities, dynamic life science companies will be more competitive by locating part of their R&D activities in Montreal InVivo," says Carl Viel, General Manager of Metro Montreal's life sciences cluster, Montreal InVivo, as of June 2007.

Mr. Carl Viel has over 15 years of experience in the pharmaceutical industry, and has been President of the Conseil de l'innovation en biopharmaceutique (Biopharmaceutical Innovation Council).

Montreal InVivo collaborates with the organisation Montréal International whose mission it is to contribute to the economic development of Greater Montreal and to enhance its international status. Its mandates include attracting foreign investment, international organisations and strategic workers, and supporting the development of innovation and high-technology clusters in the metropolitan region.

RIDE THE WAVE OF DISCOVERY IN QUEBEC

Finding a potential treatment for Alzheimer's disease, overcoming antibiotic resistance, and developing human bionic devices-these are some of the life sciences breakthroughs happening in Quebec.

Industry trailblazers such as Neurochem, MethylGene and Victhom are making bold scientific discoveries and are part of one of the most dynamic life sciences clusters in North America.

Quebec offers everything that an innovative, R&D-intensive business needs to launch a successful project, whether it's creative talent, financial support or local resources.

AstraZeneca, GSK Biologicals, Boehringer Ingelheim and Sanofi Aventis are among the European biopharmaceutical companies that already have R&D activities in Quebec.

Montreal prides itself in offering a business environment where there's knowledge for all drug creation operations locally, from basic research to manufacturing and marketing.

You could also be part of this exciting environment. Come and discover Quebec for yourself.

For more information:
Invest Quebec
59 Pall Mall
London SW1Y 5JH
United Kingdom
Telephone: +44 20 7766 5931
nordics@investquebec.com
www.investinquebec.biz

Creation of a CAD 107 Million Fund

In March, The Minister of Economic Development, Innovation and Export Trade and Minister of Tourism, Raymond Bachand, and the CEO of FIER Partners, L.P., Jean-Sébastien Lamoureux, announced a new investment of CAD 25 million by the FIER Partners limited partnership in iNovia II, a CAD 107-million fund that will invest in seed and pre-seed companies in the information technology, life sciences and clean technology fields.

iNovia Capital's value-added approach to investment offers its portfolio of companies unique access to the intellectual property of its university partners and to an extensive network of industry partners, advisers and sector-based co-investors.

"We are pleased to have FIER Partners as a key investor in iNovia II. FIER Partners shares our vision and our approach in supplying capital to entrepreneurs with innovative ideas who are looking to make a difference," said Mark de Groot, President and CEO of iNovia Capital.

"With the ongoing support of dynamic investors like FIER Partners, BDC Venture Capital, the Caisse de dépôt et placement du Québec, the Fonds de Solidarité FTQ, the Export Development Corporation (EDC) and Fondaction, and strategic investors like the Consensus Business Group, Telesystem, AVAC Ltd., McGill University, the University of Alberta, the Université de Sherbrooke and Bishop's University, we will continue to implement our investment strategy. We are also continuing to expand our North American network of co-investors and sources of investment opportunities to offer our partners solid returns."

Consolidates industry segments

FIER Partners is one of three components of the Regional Economic Intervention Fund (FIER) set up by the Québec government. With CAD 180 million in capital, FIER Partners has invested in ten sector-based and pre-seed funds based in Québec. Through its subsidiary IQ FIER, Investissement Québec (Invest Quebec) participates as a limited partner in the FIER Partners limited partnership, as do the Fonds de solidarité FTQ, Capital régional et coopératif Desjardins and Fondaction, the Fonds de développement de la CSN pour la coopération et l'emploi.

The regionally managed FIER-support and FIER-regions programmes invest in companies at the start-up and development stages by facilitating access to sources of capital (equity financing). Invest Quebec also manages the Strategic Support for Investment Programme (PASI), designed to support investment projects with strategic impact as well as new product development. Th is programme aims to consolidate industry segments in which Quebec has clear competitive advantages. Financing is mainly in the form of a repayable contribution or repayment guarantee on a loan, line of credit or letter of credit.

So we have what it takes to meet a company's demands. Our team of experts can help an enterprise interested in establishing in Quebec with gaining insight into the challenges and opportunities stemming from Quebec's life sciences industry, build productive, strategic alliances with local and international partners, find a location that suits their needs, benefit from attractive tax incentives, as well as to find the right financing solutions including loans, loan guarantees and working capital," says Liliane Laverdière, Business Development Manager Americas, Foreign Investment, Invest Quebec. The agency has assets in excess of CAD 4.5 billion and is Quebec's central agency responsible for foreign investment.

New drug policy

Québec's new research and innovation strategy recognises research and innovation as the foundation of the province's competitiveness and as the engines of both economic development and job creation. For companies that want to innovate, the strategy includes a range of measures that foster innovation, encourage networking and ease access to various resources. As part of this strategy, the Québec government plans to invest CAD 1.2 billion over a three-year period, mainly to encourage the implementation of infrastructures.

Québec also adopted a drug-medication policy in the spring of 2007, which is the first of its kind in North America. The integrated strategy is designed to ensure that economically disadvantaged people get better access to prescription medication and it encourages rational use of medication. Th is policy also recognises the pharmaceutical industry's significant contribution to the economy and encourages its development.

Worldwide license agreement

MethylGene initiates worldwide research collaboration and license agreement with Otsuka Pharmaceutical Co. Ltd.

PHARMA The biopharmaceutical company, MethylGene, in late March announced a worldwide research collaboration and license agreement with Otsuka Pharmaceutical Co. Ltd., a global pharmaceutical company, for the development of novel, small molecule, kinase inhibitors for the local delivery and treatment of ocular diseases, excluding cancer.

The compounds, which are the subject of the collaboration, were initially evaluated under a material transfer agreement with Otsuka. The chemical basis for these compounds was identified as part of MethylGene's effort to develop multi-targeted kinase inhibitors for oncology. MethylGene's multi-targeted (c-Met) kinase inhibitor clinical candidate for oncology, MGCD265, is expected to enter Phase I clinical trials in patients with advanced solid malignancies. The compounds that are included in the collaboration with Otsuka are expected to be distinct and separate from MethylGene's kinase compounds for oncology.

Responsible for design

MethylGene will be responsible for the design, synthesis, characterisation and initial screening of kinase inhibitors. Otsuka will be responsible for and fund efficacy and toxicology studies, as well as preclinical and clinical development of compounds. Otsuka is also responsible for the global commercialisation of any resulting product.

Under the financial terms of the agreement, MethylGene will receive an upfront license fee of USD 2 million and may receive additional payments based on successful development, regulatory, commercialisation and sales milestones that could total USD 50.5 million. Otsuka will also provide MethylGene with a minimum of USD 1.875 million in research funding for the initial 18 months of the research collaboration, which can be extended with additional funding from Otsuka.

MethylGene will receive royalties on net sales for any resulting product. In addition, Otsuka is committed over the next 18 months to make an equity investment of USD 3 million in MethylGene stock in the event the Company completes a concurrent financing of at least USD 10 million and is listed on a US stock exchange; or alternatively, a USD 1.5 million equity investment at a 20% premium if MethylGene is solely listed on the Toronto Stock Exchange (TSX) after such 18-month period.

"We are pleased to have Otsuka, a leading Japanese multi-national pharmaceutical company, as our partner for this exciting project," said Donald F. Corcoran, President and Chief Executive Officer of MethylGene Inc. "This is another example of leveraging our strong research capability into indications beyond cancer and our ability to strategically partner with industry leaders in order to fully realise the value of our technology."

No need to find the perfect 2D slice

The Clarity™ Prostate System developed by Resonant Medical is today's most rapid IGRT solution for precise non-invasive guidance for prostate treatments.

ULTRASOUND Located in Montreal, Resonant Medical develops, manufactures and commercialises 3D ultrasound image-guided adaptive radiotherapy products, with the goal to help cancer centres make significant improvements in radiation therapy planning, verification and delivery, to advance patient care.

"We design high-performance products based on next-generation technologies that exceed the technical and clinical requirements of our customers, while respecting the realities of operating cancer centres," says Rui Lopes, Director Sales & Support of Resonant Medical.

It has been clearly demonstrated over the years that prostate motion over a course of treatment can jeopardise the intended outcome. In addition, the success of conformal therapy, including IMRT, requires accurate delineation of tumour volume. Low soft tissue contrast of CT imaging makes it challenging to contour target anatomy and critical structures.

Ultrasound, however, presents superior soft tissue and organ boundary definition. At time of planning, Clarity™ Prostate System exploits the benefits of ultrasound by combining its superior soft tissue imaging characteristics with other imaging modalities, such as CT.

"At time of treatment, our unique, proprietary Mutual Referencing™ and assisted segmentation technologies are indispensable to achieve a high level of clarity, accuracy and speed in prostate position volume verification. They allow structure-based displacement calculations based on comparison of reference 3D structures to daily 3D structures," says Rui Lopes.

Resonant Medical has also developed the Clarity™ Breast System, a precise nonionising guidance for boost and conformal breast treatments.

"Presently, multiple aspects of our innovative technologies are being validated in real clinical settings, and we enjoy frequent collaborations with clinics and academic institutions across the continent," Rui Lopes, concludes.

Now you can see it

The ultra-sensitivity of ART's molecular imaging platform allows clinicians to better locate and characterise tumours as benign or malignant, and could provide faster assessment of therapeutic effectiveness.

MOLECULAR IMAGING The Canadian medical device company, ART Advanced Research Technologies Inc (ART), located at the Technoparc Montreal, is a leader in optical molecular imaging products for the healthcare and pharmaceutical industries. The company recently announced their first sale of SoftScan® optical breast imaging system to the Sunnybrook Health Sciences Centre (Sunnybrook) in Toronto, Canada.

"SoftScan is one of our key products and is approved in Canada and the EU, with the US clinical research market also open. Our immediate corporate objective is to grow the revenue line with high margin sales to reach positive EBITDA," says Sébastien Gignac, President and CEO of ART Advanced Research Technologies Inc.

With an estimated total market potential of USD 20 billion, for molecular imaging, there is certainly money to earn. Another strong feature of ART is their strategic alliance with GE Healthcare. "Optix®, another key product of ours has a sales track-record initiated by GE with established reference accounts, and is now transitioned and owned by ART," Mr. Gignac adds.

The ultra-sensitivity positions Optix to image the newest, and most relevant, molecular libraries. It delivers clear operational efficiencies to critical-path for pharma development, and enables new market and application development via academic exploratory research in nanoscale molecular imaging. Optix addresses all key therapeutic areas like oncology, CV, CNS, diabetes etc.

To complement their devices, ART has also developed a platform for multimodal probes and contrast agents, Fenestra®, which enables high contrast in optical/CT fusion.

"ART's ultra-sensitivity is the key to better predicting the success or failure of drugs. Better prediction profoundly impacts development costs and accelerates time to market," Mr. Gignac concludes.

The first SoftScan® optical breast imaging system was sold to the Sunnybrook Health Sciences Centre in Toronto, giving the centre's oncologists an objective method of measuring treatment response to breast cancer.

Sébastien Gignac, President and CEO of ART Advanced Research Technologies Inc.

Building on the buzz

—MaRS Discovery District puts Toronto on the innovation map

What does the King of Sweden have in common with California Gov. Arnold Schwarzenegger and North America's leading science park developer? Each has made a trip to MaRS — Toronto's innovation centre — an essential element in their efforts to promote a global culture that creates economic and social value from science and technology.

SCIENCE CENTRE For King Carl XVI Gustaf it was about furthering Sweden's already enviable position on the global technology stage, while the 'Governor' focused on medical research during his 2007 trip to Canada, announcing at MaRS with Ontario Premier Dalton McGuinty a new Cancer Stem Cell Consortium to coordinate and fund research in California and Ontario.

And for Alexandria Real Estate Equities Inc. of Pasadena, Calif., a 2007 commitment to build an iconic 750,000 sq. ft. development as Phase II of MaRS places Toronto in fi ne company: San Francisco, San Diego, Cambridge, Mass., New York City and Edinburgh are among the sites of Alexandria's current science park holdings.

"Projects like this one are further evidence of the architectural renaissance that is taking place in Toronto," Mayor David Miller said at the announcement of MaRS Phase II project, which drew nearly 400 guests for the unveiling of the architectural plans. "But more than that, it's a display of the trust that companies have in our city as a place to invest and bring high quality knowledge-based jobs, which is what makes us North America's third largest biotech centre."

Toronto's Discovery District – a 2.5 sq. km area downtown anchored by MaRS, the University of Toronto and leading research hospitals – offers one of the most concentrated mixes of research, biomedical companies, finance and business support services anywhere in the world. Add to that, proximity to key government organisations and the creative milieu of the downtown arts and culture scene and the potential for innovation amplifies.

As an independent non-profit organisation with partnerships across all of these sectors, MaRS is uniquely situated to catalyze innovation activity – in science, technology and social enterprises – not only from within this deep pool of talent and resources in Toronto but also across the province. The goal is to propel the best of Ontario innovation into the global marketplace with the greatest chance for success.

That means actively seeding a vibrant entrepreneurial culture that equips a new generation of thinkers and inventors with the 21st century tools it needs to transform novel ideas into real-world ventures.

130,000 people to MaRS

The MaRS approach to building that culture has three facets: creating a physical space for the convergence of people and ideas; delivering inventive programming by entrepreneurs for entrepreneurs; and offering hands-on business-building services, from market research and business planning to intellectual property advice and investment strategies.

The physical space itself rivals tech clusters anywhere in the world, with a stunning 700,000 sq. ft. suite of three linked buildings that form the MaRS Centre, including a renovated heritage wing of the venerable Toronto General Hospital with two adjoining modern glass towers. Since the doors opened in the Fall of 2005, the centre's soaring glass atrium and tech-ready meeting spaces have become prized locations for more than 3,000 meetings, conferences and events, drawing in excess of 130,000 people to MaRS.

The centre is also home to a mix of more than 65 tenant organisations, promoting a mix of research labs, emerging science and tech companies, private corporations, as well as policymakers and quasi-governmental agencies.

Since opening its doors two and a half years ago, MaRS has provided hands-on advisory services to more than 250 science and technology entrepreneurs, the majority in the information/communications technology (ICT) sector, followed by pharma/biopharma, advanced technologies, medical devices and bioproducts.

Hundreds of other students and young innovators have participated in entrepreneurship educational programmes, including the weekly flagship series, Entrepreneurship 101.