Exciting year ahead as Canadian Biotech leads the way
As I visited many companies throughout the past year I was struck by their dedication and candor having moved through recent economic difficulties. Used to set backs, whether regarding delays for approvals or dealing with daily regulation matters our companies are nimble and effective. It is a fact that if you invested $1 in biotech at the end of 2008, today you would have $1.60, compare that with the TSX composite where $1 invested earned $1.48 in return.
Today I feel our industry is proud and receiving great enthusiasm from investors, and partners alike for a strong year ahead. As our Olympic athletes took to the international stage and owned the podium last year at this time the torch can now certainly be passed along to leaders within our bio-economy. This is our time to shine. The platform is wide open for us to share our story with others, and attracting capital in return. Member companies Acquinox received $25M venture financing, Bioniche experienced a $17M share offering, Protox received $35M in private equity investment, WEX Pharmaceuticals earned a $35M share offering, while Oncolytics enjoyed a $29M share offering, and Cardiome celebrated a $30M milestone payment.
Recently I appeared on CBC Newsworld’s Lang & O’Leary Exchange where we discussed the challenge for the industry in raising capital. It is critical for business to understand that over the recent economic recovery period Canada’s largest publicly traded biotech companies have outperformed the broader market, providing investors a 60% return over the last two years. Quite simply these entrepreneurs are asking for a level playing field when seeking investments.
A recent PwC / BIOTECanada industry forecast confirmed what I have been hearing from member companies for quite some time. 84% of respondents indicated the ability to access capital is the key challenge for the industry to become a stronger global competitor. The industry considers a variety of short-term, market-oriented incentives from government to be most helpful. 78% believe government must create incentives for risk capital. Canada’s flow through shares (FTS) program enacted in 1954 has successfully encouraged investment in high-risk natural resource exploration. Similar to junior mining companies, Canada’s junior biotechnology companies require a tremendous amount of time and risk capital to reach profitability. We know that permitting such biotechnology companies to issue FTS would stimulate more research investment, jobs, and commercialization of high-tech goods and services in Canada.
Canadian companies continue to build their operations and perform the majority of their R&D here. Nearly 25% of non-revenue earning companies believe it will take over five years for their companies to earn revenue (similar to 2009 and 2007). 74% of respondents indicate their next financing round will be spent primarily on R&D. The opportunity for Canada is to create the operating environment incentives to ensure the research is conducted primarily in Canada. Refundable research tax credits such as those currently under review by the federal Expert Panel will be key to Canada’s competitiveness. BIOTECanada encourages removing the CCPC restriction from the SR&ED tax credit program.
This will be a banner year for the many biotech companies as we continue to push the envelope on a number of possibilities. I look forward to meeting many of you at BioPartnering North America this is an opportunity to seize upon our success to date. The bragging rights are ours for the taking.
- Peter Brenders
President and CEO, BIOTECanada
About BIOTECanada
BIOTECanada is the national non-profit association dedicated to building the bio-based economy in Canada. From cleaner energy to sustainable agriculture; from greener manufacturing to life-saving health therapies, Canadian biotech firms are discovering ways to revolutionize the economy and improve our lives, everyday.. For more information, please visit: http://www.biotech.ca/
