Q & A with Peter Brenders

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Incorporated in 1987 as the Industrial Biotechnology Association of Canada, BIOTECanada serves as the national voice for industry leadership for Canada’s biotechnology sector. Through its national network of partner organizations, it works to provide solutions to the challenges faced by biotech firms today. As part of our special September Hot Button Issue, Biotechnology Focus sat down with BIOTECanada president and CEO Peter Brenders on the eve of National Biotech Week to get his views on the current state of the industry and what we should expect at Canada’s annual week-long celebration of the industry.

Biotechnology Focus: How is the business of biotech faring in Canada?

Peter Brenders: The signs are positive as we’re seeing biotech rebound from the lows of 2009 with financings returning to more normal levels. Not to say that it’s been easy in any way, shape or form but biotech is on track to exceed last year’s numbers.

Generally, we’re seeing a little more optimism in the field that money is out there and our good companies are certainly getting access to it. We’re seeing a number of mergers and acquisitions that are up, that’s leading to new life. Companies that adapted, that found ways to adapt are the ones surviving because they’ve come up with new business models to succeed and are finding creative ways to take their products to the next step.

BF: How would you rate Canada’s current innovation performance?

PB: We have a very strong history and record of innovation and certainly great potential. There’s very strong support in place for basic research in Canada, but I think our challenge becomes taking it to that next step and capturing the full return on that investment. We have the innovation, but it comes down to financing and being able to make sure that we can get the capital our companies need to be able to finish the job in Canada.

BF: What are Canada’s strongest attributes when it comes to biotech, and its weakest?

PB: Our strength is our science but we also have a strong entrepreneurial culture within our emerging companies. There is a real desire to create start-up companies in Canada. Our biggest weakness really comes down to early stage financings. Financing an early stage life science company in Canada is certainly not for the weak of heart.

Venture money, and risk capital for biotechnology in Canada is virtually non-existent. In 2009, we saw the lowest levels for financing in over a decade. A lot of that venture money goes to other sectors, forcing biotech to go abroad to find money.

Thankfully, we have many companies that have continued to fight the fight and are very successful at it. As tough as all the messaging is out there, we mustn’t lose sight of some of the great successes we’re having. There are successful companies in biotech and; there is money to be made in biotech, and big deals are being closed. The money is coming in, our companies are getting to milestones and we are seeing success, and we need to focus on highlighting this success and remind investors of the ongoing and long-term potential for growth of our sector and remind them that they’re missing out on this.

BF: Are biotechs taking advantage of the programs available to them, and if not, what can be done to improve accessibility or communication of these programs?

PB: For some of the really early stage programs like IRAP, sure companies are taking advantage of those. They’re accessing them. Would they like more? Absolutely. Would they like the funds to come faster? For sure. And that’s what we’re pushing for, that opportunity to be a little bit quicker, more flexible, to get cash back into the hands of Canadian biotech companies. What can be done to improve it, simply speed of execution and a focus on the objective not the bureaucracy and paper work.

BF: Do you think Canada’s science policies are hindered by a lack of leadership from the top?

PB: Being without a chief science officer is one factor, but not necessarily the only factor that helps develop science policy. The federal government did come out with a science and technology strategy and they’ve announced in their budget earlier this year that they want to look at stimulating more domestic research and development. We laud the interest in the space. Part of the responsibility also comes back to us as an industry to clearly show what the future that can be, as we discuss in our Beyond Moose and Mountains Blueprint. We can be a world leading bio-based economy; we just need to have that goal in the forefront.

Do we need leadership sure, but we need leadership all around. We need to be taking the message out to Canadians that biotechnology, this bio-based economy, is Canada’s future. We need to show our government partners our value as an industry so that they can put the programs in place to help us with capital formation, to help us with people development, to help us with an operating environment.

BF: What are some of the key hot button issues that BIOTECanada is lobbying both government and the industry for right now?

PB: We’re continuing to focus on the three areas laid out in the Blueprint: finance, people and operating environment. If you take the sub-specifics within each, our pre-budget submission to the finance committee of the House of Commons examines the need to expand the flow-through shares into the biotechnology industry. Flow-through shares have worked well in oil and gas, and mining, and expanding this program for our small biotechs would assist in creating a more stable financing environment in Canada.

Our second focus is how to keep the money here, and the jobs here and that speaks to things like the SR&ED credit. In Canada, the scientific research and experimental development tax credit has two arms. There is a 35 per cent refundable tax credit, that’s cash back, 35 cents on every dollar you spend, but it’s only available to Canadian controlled private companies, or CCPCs. So any company that does an Initial Public Offering (IPO) loses those credits.

Any company that gets large non-Canadian investment and loses its Canadian controlled aspect, they too lose the refundable credits. And if they lose the refundable tax credits, they fall to the second level which is just the 20 per cent investment tax credit.

So, if you’re a company looking for investment, you find that there isn’t any investment in Canada, you go abroad and get your foreign investment, all of a sudden you lose that 35 per cent, it effectively goes to 0, and you are losing the business case to keep your jobs here. And when foreign investors look at this situation from the outside, they say why are you staying in Canada?

In biotech, a lot of these companies are pre-commercial, and don’t pay taxes. The refundable credit is real cash and that gives companies money to reinvest and maintain job sustainability. As such, it doesn’t make any sense to limit the refundable credits only to private companies, rather, these should be anyone who is doing in research and development, public or private, here. It doesn’t matter who owns the company, it’s about the work being done in Canada. We’ve been talking about this for awhile, Ontario used to have this restriction on a provincial level and they withdrew it back in 1999, and provinces that have since implemented SR&ED credits don’t have this restriction. Really, the CCPC restriction is a throwback to a different time, before free trade when there was a belief in protectionism and that Canadian controlled companies were much harder done by.

Another focus is the renewal of funds for vaccines, its one thing to develop it, the next thing we need to do is have a market for it, and then the last one is to recapitalize the sustainable development technology Canada fund, to make sure that’s available for not just biofuels, but next generation fuels and next generation biochemicals as well. That speaks to the financing environment; we continue to work within our policy committees on a range of areas that involve the operating environment. Everything from working with the government in terms of the introduction’s of new crops for food and biomass, improvements to the regulatory environment, to make sure that the backlog that they’ve slipped into disappears quickly, establishing a framework for orphan products for example. So there’s a litany of things that can be changed to allow companies to compete more effectively.

BF: Turning our attention to National Biotech Week, what are the major themes of this year’s event?

PB: Overall our theme this year is “powered by the bioeconomy.” We’re also focusing on our Beyond Moose and Mountains industry strategy. We want to show the integration of biotechnology in all aspects of our economy.

One of our partnerships this year is with Genome Canada and the regional genome centres. That network is part of our launch.

Just as the draft code of the human genome and the study of genomics opened the door to new avenues and approaches within biotech research, so now we can also show how biotech is changing how we understand and develop a traditional economy. We can see its footprint into industries like forestry, it’s footprint into materials, into bio-based chemicals and into so many other aspects of our traditional economy beyond just health. That’s where we’re trying to direct people’s attention, that biotech is more than just medicines.

BF: What’s new this year in terms of the broad range of cross-country events?

PB: We have a cross-national launch planned this year with a series of virtual and real and video launches in place on September 16, 2010. It’s the first time we’ve done a cross country launch and so we’re excited by the opportunity to show the breadth of involvement of communities across Canada right from the kick-off. We continue to see the week grow, with a lot more education events and innovative formats that are being put in place. In Nova Scotia for example, they’re doing rock star scientists this year to get students excited about careers in biotech. New Brunswick is working with provincial partners on the industrial biotechnology side. Ontario is doing a youth policy forum down at MaRS. Saskatchewan is going to have a strong launch again this year coming right on the heels of the ABIC agricultural conference held in Saskatoon just days before. Winnipeg has workshops at its inner city science centre throughout the week. These are just some of the events.

What I’m always impressed with is just to see how much each of the communities having going on, how creative the events are, and how engaging. The London ON Bio Olympics is always entertaining to see how many schools get involved, they sell out every year.

BF: How has the event changed over the years?

PB: If you think about where this started, the first National Biotechnology Week was very inwardly focused. It was us talking to ourselves; and we’ve come a long way from there to engage our local communities so they can see how biotech companies are working in the economy in very real terms.

One of the challenges with biotech is that you don’t see the companies; you don’t see the work in your community as much as you would think. Part of this is because biotech is in many different places in terms of the research. It is in the labs, in the small offices and in places you would least expect. It’s not until you start to shine the light on what our companies are doing and where their products are do you start to see community appreciation. I think that’s where we’ve gone with this, we’re going deeper into our communities now, we’re not just talking to ourselves, we’re talking to schools, local chambers of commerce, and the broader regional governments. They’re all starting to have a greater appreciation for the footprint, not just of biotech, but of the companies that develop it and use it, and how much more it has become part of our economy.