RBC makes second life sciences bet this year, backing BDC spinout Amplitude Venture Capital

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Royal Bank of Canada has made its second investment in a Canadian life sciences venture capital fund this year, establishing it as a rare Bay Street institution to make a concerted move to back the flourishing but high-risk domestic sector.

The bank, through its new RBCx platform geared to service innovative Canadian companies, has invested in Amplitude Venture Capital’s inaugural $200-million-plus fund, alongside another Canadian newcomer to the life sciences space, Alberta Enterprise Corp. Other new investors include the venture arm of Alexandria Real Estate Equities, an U.S. specialty property company that develops spaces purpose-built for life sciences companies, and Paris-based Cathay Capital.

The new investors are backing a fund focused on Canadian “precision medicine” startups – companies that develop targeted therapies for specific patients rather than one-drug-fits-all pharmaceuticals.

Amplitude raised three-quarters of its financing last summer, dominated by Quebec institutions that are already heavy investors in the space, notably Fonds de solidarité FTQ, Caisse de dépôt et placement du Québec, the Quebec government’s Investissement Québec arm and Teralys Capital. Other investors that signed on last year include Vancouver City Savings Credit Union and Ontario Capital Growth Corp.

Amplitude’s anchor investor is Business Development Bank of Canada, where Amplitude’s lead partners, Jean-François Pariseau and Dion Madsen, worked before launching Amplitude two years ago as an independent spinout.

During their time at BDC, the duo’s life sciences fund was a top performer, earning a profit of more than $110-million on a $20-million investment in Montreal’s Clementia Pharmaceuticals, which went public in 2017 and was sold in 2019. Other companies backed by the team include Zymeworks Inc. and Repare Therapeutics.

“When we stepped out and said we wanted to raise a $200-million precision medicine fund primarily focused on Canada, that was a pretty big goal and not many people would have believed we could accomplish that,” Mr. Madsen said. “We’ve seen a real maturity of the sector but also a maturity of investors” increasingly willing to back the often-risky sector.

Canadian pension funds are still largely absent, though PSP Investments and Canada Pension Plan Investment Board have dabbled with a handful of biotech investments each, mostly outside Canada.

Mr. Madsen said, historically, the number and scale of life sciences funds and startups in Canada was “too small for many [domestic] institutional investors to dig in … and make a meaningful investment. [That] has changed … Pension funds are large and move a bit more slowly, but the discussions we’ve had are very encouraging about doing something in the future.”

Kristina Williams, president and chief executive officer of Alberta Enterprise, said Amplitude is the first life sciences fund backed by her provincial Crown corporation, which invests in technology-focused funds that finance companies in Alberta. She acknowledged AEC had been “under-indexed” in life sciences, given that such startups represent 14 per cent of the venture capital deal flow in the province.

“So, it was really time to enter that space,” Ms. Williams said. “We’ve had successful life sciences deals in Canada. Now that we’re seeing a lot of successes happening, that will draw more institutional investors to the asset class.”

Anthony Mouchantaf, director of venture capital with RBCx, said while the bank has “dabbled” as a life sciences investor in the past, “what you’re seeing now is a more robust and dedicated thrust in the space” to help commercialize science from Canadian universities and research institutions. The bank earlier this year invested in Toronto-based Lumira Ventures’ fourth fund.

“When an ecosystem does well, [RBC does] well,” said Mr. Mouchantaf, whose division will work with Amplitude to provide banking services to the startups it finances. “The opportunity to deploy capital on the fund investment side to support that ecosystem is just good business sense for us.”

Mr. Mouchantaf said the Amplitude team, which includes life sciences biotech investment veteran Nancy Harrison as a venture partner, “knows the Canadian market better than anyone. They’ve set the ground for a long-lasting franchise.”

Amplitude has already made initial investments in 10 companies – nine in Canada and one co-founded by a Canadian – including Repare, which went public last year on Nasdaq. The group expects to back five or six more companies and invest additional capital in the companies it has already funded.

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