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Bioniche founder Graeme McRae, one of the longest serving CEOs in the biotech sector. (Michelle Siu for The Globe and Mail/Michelle Siu for The Globe and Mail)
Bioniche founder Graeme McRae, one of the longest serving CEOs in the biotech sector. (Michelle Siu for The Globe and Mail/Michelle Siu for The Globe and Mail)

At the top

Cattle vaccine for E. coli needs political boost Add to ...

Another ground beef recall related to a possible E. coli contamination has again focused attention on how to stop the bacteria from spreading. One solution is an innovative cattle vaccine, developed by Belleville, Ont., company Bioniche Life Sciences Inc., that prevents cows from shedding Escherichia coli in their manure.

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Bioniche founder Graeme McRae, one of the longest serving CEOs in the biotech sector, says the product is poised for a breakout, especially if Ottawa helps pay for its distribution, and if it finally gets approval from U.S. regulators.

But Bioniche is more than the E. coli vaccine – it has a diverse pipeline of human and animal health products, and recently raised $20-million from a U.S. investment fund. Still, profitability is at least a year away.

Why should the government help pay for cattle to be vaccinated against E. coli?

We look at this as a public health vaccine that is given to cows. We believe that the government has to help farmers use the vaccine. Right now, farmers do not have the money. Even though they have the desire to vaccinate, they really can’t afford to.

In Canada, about 26,000 Canadians get this bug and get sick [every year] The annual cost to the Canadian medical system is in excess of $200-million. If we were able to get every bovine animal in Canada vaccinated, it would cost a little under $50-million. So economically it is a no-brainer.





What is the regulatory and manufacturing status of the vaccine?

It is fully approved for sale in Canada. It is available for commercial use today [and]we can make small quantities. If the government decided to implement a program tomorrow, by the time the demand built up we would be able to produce large quantities.

How close are you to getting approval to sell the vaccine in the United States?

Back in 2008 we got a letter from the U.S. Department of Agriculture, saying we were eligible for a conditional licence in the U.S. Since then, they keep putting roadblocks up. The U.S. has still not told us what we need [to do]to get a full licence.

You also make human health treatments and other animal products. How important are they to the company’s prospects?

We are a very diverse company. We will be launching our first product for treating cancer in dogs some time this July or August. We have a [human]bladder cancer project. Our facility in Montreal is making that product for a clinical trial that is ongoing. We are getting ready to do our final clinical studies on a horse vaccine for a very nasty bug that gets into young foals. It has significant market potential.

Why hasn’t Canada done as well as expected in the biotech market?

Canada has had a dismal track record when it comes to commercializing technology. Canada is a world leader in science, but we are an abject failure when it comes to commercializing that science.

I had one senior guy in Ottawa say to me the other day that in his recollection, our bladder cancer program is the first time he could remember, in many generations, that we had a [biotech]technology developed in Canada that’s able to be manufactured in Canada and sold to the world.

What are the consequences of that failure?

It has turned off the investment community. Finding pools of capital gets more difficult every year. We’ve had funds wound up because they couldn’t survive.

You sound pretty discouraged about the scene.

I am. It is very sad. We are a country driven by natural resources and energy, [with]agricultural playing a small role. But we are just not good at biotech. We have put huge amounts of money into incubator facilitators, but nothing is coming out the other end.

What is the role for government in supporting biotech?

The government has to recognize that if you have a Canadian company with a Canadian-developed project, the return to Canada can be enormous. Where we need support is in the later stages. If a company can show it is going to make [a product]in Canada, employ Canadians, create the jobs and create exports, then [the government]should [help]arrange financing. It should not be grants; it should be repayable loans.

Why did you have to get your recent debt financing from outside the country?

It couldn’t be from Canada. To a U.S. fund with a billion dollars, a $20-million [investment]is fairly manageable. [Canada]just doesn’t have funds of that size in the health-care sector.

You can’t be surprised that shareholders have lost some enthusiasm when you have been projecting profits for more than a decade?

In 2000, we [were expecting a path]to registration on our bladder cancer project that was pretty short and defined. Then the rules changed at the [U.S. Food and Drug Administration]on what was required for clinical trials. All of a sudden, where we thought $5-million or $6-million was going to finish that project, [we had to]add 10 years and $50-million or $60-million to it. The blocking of the E. coli vaccine [in the U.S.]has also really shaken us.

Why did you add a listing on the Australian stock exchange?

The Canadian practice is when you run out of supporters in Toronto, you go to Nasdaq. We went to Australia instead. We had a base of shareholders there, some pretty influential people, [and]an operation down there.

Any concerns that Bioniche might be bought by a foreign investor?

We have a lot of government investment in our company now. They have put certain terms and conditions on that support that would make it onerous for a foreign takeover. It could be done, but it would be difficult.

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