The Quebec government is committing $75-million to fund early stage life-sciences companies in a partnership with the Fonds de solidarité FTQ, one of Canada’s top backers of the booming sector.
The partnership will see two Quebec institutions co-invest $150-million over five years, including $75-million the Fonds previously earmarked for the sector. The Fonds invests $100-million annually in the sector, split between venture-capital funds and companies. It has backed some of Canada’s most promising developers, including Turnstone Biologics Inc., Zymeworks Inc. and Repare Therapeutics Inc. - which last Friday revealed plans to go public on Nasdaq. It was also an early backer of Clementia Pharmaceuticals Inc., which went public in 2017 and was purchased by Ipsen SA last year for US$1-billion.
Quebec is providing funds through its Investissement Québec arm, which has invested close to $235-million in life-sciences funds in the past 15 years.
The timing is good as many of Canada’s venture-capital companies are expected to start raising their next funds within a year, including Lumira Ventures, CTI Life Sciences and Genesys Capital. But because of the pandemic, “we knew perhaps the appetite from [investors] might be lower,” said Didier Leconte, vice-president, investments, life sciences and fund management, with the Fonds. “The focus is to [provide] funds to get through the crisis. This is a sector that needs capital.”
Quebec institutions “have been absolutely fundamental in supporting the ecosystem,” said Peter van der Velden, managing general partner with Lumira, which is preparing to raise a US$200-million fund, its fourth. “Without Quebec funds, firms like ours wouldn’t exist.”
The Canadian biotech sector has thrived in recent years. The Business Development Bank of Canada said its in-house life-sciences venture fund was its strongest performer before it was spun out last year as a standalone company called Amplitude Venture Capital. That is in contrast to the early 2000s, when underfunded early stage drug developers stumbled, Canadian investment companies delivered poor returns, and global pharma giants began pulling research and development operations out of Canada.
But in recent years, advances in science have led to a surge in new companies including developers of “precision” drugs targeted at smaller groups of people prone to severe ailments owing to their genetic makeup. Canadian developers have been able to secure ample funding to bring their treatments through the lengthy drug-trial process. Several have attained $1-billion valuations by going public or selling out.
But while the Fonds, Quebec government, Caisse de dépôt et placement du Québec and Montreal private capital company Teralys Capital have been the biggest backers of the domestic sector, institutions in the rest of Canada have been conspicuously absent. By contrast, U.S. investors have been active here, including Versant Ventures, Sanderling Ventures and OrbiMed, which led a US$105-million investment in Vancouver’s AbCellera Biologics Inc. last month.
“This sector is reviving,” Mr. Leconte said. “This is not the industry that existed in the early 2000s. We do hope this partnership is a signal to other investors that this is a safer place to be and that it triggers their interest. If local institutional investors don’t help finance [domestic companies], they will move away. Everything is here, we have all the inventions and the science. We have a bit of [domestic] capital, but we need more.”
“As the economy gradually restarts and the need to equip Quebec with leading-edge expertise in clinical research and medical technology has become crucial, Investissement Québec plans to support the key life-sciences sector even more,“ Investissement Québec chief executive Guy LeBlanc said in a release.
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