A new Canadian-focused biotech venture fund spun out of Business Development Bank of Canada has raised more than $100-million as it aims to woo reluctant domestic investors to an asset class that has enjoyed one of its strongest years in Canada.
Amplitude Venture Capital, led by former BDC fund managers Jean-François Pariseau and Dion Madsen, said it has secured financing from a handful of Quebec institutions that have been Canada’s most active funders of domestic biotech venture capital. They are Teralys Capital, Caisse de dépôt et placement du Québec, Fonds de solidarité FTQ and the Quebec government’s investing arm, Investissement Québec.
Now, the pair hopes to reach their $200-million target by convincing other investors in Canada and abroad that there are more opportunities like the string of investment successes they’ve had at BDC. “We want to expand and amplify what we are doing,” said Mr. Madsen, who joined BDC in 2013 to co-manage its first dedicated closed-end life sciences fund.
Amplitude’s official launch follows a windfall from one of the pair’s first investments, through BDC earlier this decade, in Montreal-based Clementia Pharmaceuticals Inc. Mr. Pariseau was Clementia’s first funder, which helped founder Clarissa Desjardins secure a licence from Roche Pharmaceuticals to redevelop a failed emphysema drug as a treatment for a rare, debilitating tissue disorder. The company went public in 2017 on the Nasdaq and was sold this year to Paris-based Ipsen Pharma for US$1-billion. BDC’s stake, an investment of less than $20-million, netted the bank a profit of more than $110-million at the time of Clementia’s IPO.
That amounts to the biggest return by any BDC investment ever. Combined with its investments in other Canadian biotech developers that went public in the United States – Zymeworks Inc., Milestone Pharmaceuticals Inc. and Profound Medical Corp. – the BDC health-care fund became “one of the highest performing funds in Canada [of any type], full stop,” said Jérôme Nycz, executive vice-president of BDC Capital.
“Amplitude has great potential to be successful,” Teralys partner Cédric Bisson said. “They’ve done it before, they know what they’re doing, they know how to guide companies and to finance them properly to success.”
But other than Amplitude’s initial backers, Canadian institutions, including pension funds and insurance companies, have been absent from the early-stage biotech sector in Canada, raising questions about how much more the new fund can raise at home. “I think institutional investors here still don’t have the confidence yet to invest locally," Clementia’s Ms. Desjardins said. "I think they should look at the track record of these individuals and at the maturity of the various companies we now have because now we have a bunch of foreigners coming to invest.”
Mr. Madsen said he and Mr. Pariseau “feel pretty confident” they can reach at least $150-million from Canadian backers. But they also plan to target foreign investors, who have increasingly invested in Canada alongside the country’s handful of domestic biotech funds.
Canada’s domestic biotech sector used to consist primarily of small, underfunded early-stage drug developers, many of which struggled or sold out earlier. But the industry has changed. Pharma giants that once might have funded early stage research and development in-house, instead use the money to help selected startups through the lengthy process of getting drugs approved and to market. This way, Big Pharma offloads some of the development costs, at the same time sharing its risk with venture capital funds.
Nowadays, it’s more typical for early-stage Canadian drug developers with promising science to raise $100-million or more in funding rounds to advance their discoveries and then to list on the Nasdaq. Examples this year alone include Fusion Pharmaceuticals of Hamilton, and Amplitude-backed Montreal oncology developer Repare Therapeutics Inc.
The Amplitude spinout is part of a shift by the federal Crown corporation in how it finances Canada’s technology sector. Under the arrangement, Amplitude will continue to manage BDC’s existing biotech venture portfolio. BDC struck a similar deal last year when two BDC venture capitalists left to run their own information technology fund, Framework Venture Partners. BDC is focusing on investing in areas that have had difficulty attracting funding, including women-led startups and clean technology companies.