Biotechnology Focus April/May 2017

INSIGHTS FOR THE LIFE SCIENCE INDUSTRY

april/may 2017 VOLUME 20, NUMBER 2

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Canadian Healthcare Market 2014-16

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Anniversary

The fire marshall’s report: a search through the embers

INSIDE:

Biotechnology Focus 20th Anniversary special

Publication Mail Registration Number: 40052410

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FEATURES

contents

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Tackling infectious disease Canada’s role in the global effort starts with VIDO-InterVac (By Trenna Brusky)

April/May 2017 – VOLUME 20 – NUMBER 2

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Special Report: Revisiting the Canadian Healthcare Market 2014-16 The fire marshall’s report: a search through the embers (By Tony Pullen)

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Medical cannabis research in Canada The opportunity for cannabis research is here and now, and Canada can lead the way (By Sabrina Ramkellawan)

23 Cell pouch macro encapsulation a solution to rejection in Cell Therapy?

One of the biggest hurdles in effectively treating patients using cell therapy is rejection of the cells introduced into the body by the immune system.

Cell pouch macro-encapsulation could be the solution.

(By Douglas W Loe)

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Anniversary

Biotechnology 20th Anniversary Special:

A combination therapy to treat the world’s worst infectious diseases McMaster researchers discover a drug combination that could transform the way we treat drug-resistant infections (By Ciara McCann)

We look back at past issues from the years 2001 to 2003, highlighting various moments that speak not just of then, but of today as well.

(Compiled by Shawn Lawrence)

DEPARTMENTS 6

Research news

9

Business corner

29

New Products

31 Calendar of events www.biotechnologyfocus.ca

in every issue

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The Last Word With the ability to communicate about much richer raw data sources than ever before, the pharma-related and biotechnology industries must capitalize on the opportunities!

(By Ulrich Krull) April/May 2017 BIOTECHNOLOGY FOCUS 3

PUBLISHER’S note PUBLISHER/ EDITOR-IN-CHIEF SENIOR WRITER CONTRIBUTING WRITERS

Terri Pavelic Shawn Lawrence Ciara McCann

Douglas W Loe Sabrina Ramkellawan Tony Pullen Trenna Brusky Ulrich Krull GRAPHIC DESIGNER

Checking the health of Canada’s healthcare market By all accounts, it can be argued that Canada’s biotechnology sector is among the most vibrant in the world.

Just think about the scores of Canadian startups and universities now engaged in some of the most exciting life sciences projects, the brilliant researchers and experts that are making headlines in their fields, and of course the entrepreneurs and investors braving the risks in order to break new ground.

Unfortunately, says biotechnology professional Tony Pullen, there is not much by way of an effective index to measure these market activities. The closest we have is the S&P/ TSX Healthcare Index, according to Pullen who has been involved in the investment business since the 1980s.

Pullen provides us with a special report on the Canadian healthcare market. His article, The Fire Marshall’s Report: A search through the embers, traces the developments in the local healthcare market from 2014 to 2016.

The world is watching Canada. That’s because we are among the few developed countries to come up with a federal legislation on the legalization of both medical and recreational use of cannabis, according to Sabrina Ramkellawan.

The vice-president of the Clinical Research Association of Canada looks into the opportunities for Cannabis research in the country.

Ramkellawan reasons out that unlike other countries, Canada considers cannabis a Schedule II drug and cannabis is currently accessible for medical use. This makes its clinical use easier here than in other jurisdictions. But, she says, there are several reasons why there is a lack of Canadian clinical trials in the area.

We’d also like you to check out the article by Dr. Douglas Loe. The healthcare analyst for Echelon Wealth Partners, discusses cell pouch macro-encapsulation as a solution to rejection in cell therapy.

We also have an excellent article on Canada’s Vaccine and Infectious Disease Organization-International Vaccine Centre, and another piece on a new drug therapy that could threat the world’s worst infectious diseases.

If you’re in a nostalgic mood, I’d like to invite you to peruse our Biotechnology Focus 20th anniversary spread. This edition’s compilation by Shawn Lawrence covers years four through six of Biotechnology Focus.

Ulrich Krull, professor of analytical chemistry and biotechnology chair at AstraZaneca, takes us for a dip into the biotech possibilities of deep learning, machine learning and artificial intelligence. These trends have been making headlines in the world of technology, but in his Last Word article, Krull suggests AI, machines learning and deep learning can have a critical impact in biotechnology as well.

I hope you enjoy what we have in store for you in this issue.

4 BIOTECHNOLOGY FOCUS April/May 2017

CONTROLLER MARKETING MANAGER

Elena Pankova John R. Jones Mary Malofy

CIRCULATION DIRECTOR Mary Labao circulation@promotivemedia.ca Tel: 905-841-7389

EDITORIAL ADVISORY BOARD Christine Beyaert, Roche Canada; Pierre Bourassa, IRAP, Montréal; Murray McLaughlin, Sustainable Chemistry Alliance; Ulli Krull, UTM; John Kelly, KeliRo Company Inc.; Peter Pekos, Dalton Pharma Services; Robert Foldes, Viteava Pharmaceuticals Inc.; Gail Garland, OBIO; Barry Gee, CDRD; Bonnie Kuehl, Scientific Insights Consulting Group Inc.; Raphael Hofstein, MaRS Innovation; Roberto Bellini, Bellus Health; Peter van der Velden, Lumira Capital; Albert Friesen, Medicure Inc.; Ali Tehrani, Zymeworks Inc.; Dr. Jason Field, Life Sciences Ontario; Andrew Casey, BIOTECanada

Biotechnology Focus is published 6 times per year by Promotive Communications Inc. 1-226 Edward Street, Aurora, ON L4G 3S8, Phone 905-727-3875 Fax 905-727-4428 www.biotechnologyfocus.ca E-mail: biotechnology_focus@promotive.net Subscription rate in Canada $35/year; USA $60/year; other countries $100/year. All rights reserved. No part of this publication may be reproduced without written consent. Publications Mail Registration Number: 40052410 Return undeliverable Canadian addresses to: circulation department – 1-226 Edward Street, Aurora, ON L4G 3S8 National Library of Canada ISSN 1486-3138 All opinions expressed herein are those of the contributors and do not necessarily reflect the views of the publisher or any person or organization associated with the magazine.

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PUT YOUR MONEY WHERE THE MIRACLES ARE.

GREER 6 YEARS OLD

Greer’s remarkable recovery from a horseback riding accident was helped by community donations. Children’s Miracle Network® dollars provided a private PICU room and also purchased the pediatric CT scanner which analyzed her traumatic brain injury. Showing no fear of the animal that crushed the right side of her face, Greer is happy to be “back in the saddle” and now wears a special helmet for added safety during her weekly riding lessons.

Children’s Miracle Network raises funds and awareness for 170 member hospitals, 14 of which are in Canada. Donations stay local to fund critical treatments and healthcare services, pediatric medical equipment and research. Its various fundraising partners and programs support the nonprofit’s mission to save and improve the lives of as many children as possible. Find out why children’s hospitals need community support, find your member hospital and learn how you can Put Your Money Where the Miracles Are, at childrensmiraclenetwork.ca and facebook.com/CMNHospitals.

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R&D news Gairdner Foundation names its 2017 award winners Two Canadians among the honorees 2017 Canada Gairdner Awards Announcement featuring (L to R): Dr. Joe Goldstein (Lasker Foundation), Dr. Antoine M. Hakim (2017 Canada Gairdner Wightman Awardee/University of Ottawa), Minister Reza Moridi (Minister of Research, Innovation and Science), Dr. Janet Rossant (Gairdner Foundation) and Dr. Lewis Kay (2017 Canada Gairdner International Awardee/University of Toronto/ The Hospital for Sick Children) (CNW Group/Gairdner Foundation)

TORONTO, ON – On March 28, the Gairdner Foundation announced its Canada Gairdner Award winners for 2017. In all seven international recipients were named with two Canadian researchers, Dr. Antoine Hakim, a professor emeritus of neurology at the University of Ottawa, and Dr. Lewis Kay, a senior scientist in molecular medicine at Toronto’s Hospital for Sick Children, among this year’s crop of champions.

Dr. Hakim took home the 2017 Canada Gairdner Wightman Award, given to a Canadian who has demonstrated outstanding leadership in medicine and medical science throughout his or her career. He has led efforts to set up the Canadian Stroke Network and then partnered with the Heart and Stroke Foundation and other organizations to develop the Canadian Stroke Strategy. The other Canadian winner, Dr. Kay, snagged one of the five Gairdner international award prizes. He was honoured for his work in the field of biomolecular nuclear magnetic resonance (NMR) spectroscopy, having developed methods used to “visualize” protein molecules. These methods have shed light on how molecules involved in neurodegeneration can form abnormal structures that ultimately lead to disease.

The four other recipients of a Canada Gairdner International Award included: • Dr. Akira Endo, for the first discovery and development of statins, a class of drugs with remarkable cholesterol-lowering properties that have revolutionized the prevention and treatment of coronary heart disease (CHD); 6 BIOTECHNOLOGY FOCUS April/May 2017

• Dr. David Julius, for determining the molecular basis of somatosensation- or how we sense heat, cold and pain; • Dr. Rino Rappuoli, for pioneering the genomic approach, known as reverse vaccinology, used to develop a vaccine against meningococcus B which has saved many lives worldwide; And • Dr. Huda Y. Zoghbi, for the discovery of the genetic basis of Rett syndrome and its implications for autism spectrum disorders.

The 2017 John Dirks Canada Gairdner Global Health Award went to Dr. Cesar Victora, professor emeritus at the Federal University of Pelotas in Brazil, for a scientific advancement that has made a significant impact on health in the developing world. The award is named after Canadian Dr. John Dirks, who held the roles of president and scientific di-

rector of the Gairdner Foundation from 1993 till his retirement on May 4, 2016. His current standing with the Gairdner Foundation is president & scientific director emeritus.

Since 1959, more than 360 winners from 30 countries have been recognized by the Gairdner Foundation for their innovative work. The Gairdner’s have also been nicknamed as the “baby Nobels”, because 84 past winners have gone on to win Nobel Prizes in physiology or medicine.

Each prize carries with it a $100,000 honorarium. They will be presented at a special gala dinner to be held on Oct. 26.

To see this story online visit http://biotechnologyfocus.ca/gairdnerfoundation-names-its-2017-award-winners-two-canadians-among-the-honorees/

Construction of EspaceLabz begins in Sherbrooke science park - EspaceLabz to be a multi-tenant centre for young companies in the life sciences SHERBROOKE, QC – The shovels are in the ground as Sherbrooke Innopole and its partners have officially started construction a new multi-tenant centre for young life science companies called EspaceLabz.

Some 60 guests from the business community and the institutional sector were present for the unveiling of the building’s model and logo, at which the identities of the first tenants who will move in during the

summer were also revealed.

The building, to be built in the Sherbrooke Science Park, will cover 20 000 sq. ft. over two floors and contain offices of various dimensions, private and shared laboratories, with a range of specialized equipment. The model also includes common areas, like a conference room and lounge area.

The project is backed by $5.5 million in investments, and its business plan fore-

R&D news casts the creation of 60 jobs within the next five years. It is the result of the partnership among the City of Sherbrooke, the Comité de promotion industrielle de Brompton (CPIB – Brompton’s industrial promotion committee) – which will both own and manage the centre, the Comité de promotion industrielle de Sherbrooke (CPIS – Sherbrooke’s industrial promotion committee) – which will be in charge of managing the building’s construction and has contributed financially, and Sherbrooke Innopole.

Sherbrooke Mayor Bernard Sévigny highlighted the importance of this infrastructure: “We are fortunate to be a university city with a tremendous potential for the creation of technological businesses, however, we must provide the environment and conditions to foster their development here,” he explained. “The City of Sherbrooke is proud to support this project, as it is an essential tool for economic development and the retention of start-ups in the Life Sciences sector.”

Pierre Tremblay, president of the board of directors at Sherbrooke Innopole, went further by underlining how EspaceLabz will enhance the vitality of the Science Park.

“With ACET providing support and tools to young entrepreneurs, and the Faculty of Medicine and Health Sciences at the Université de Sherbrooke hosting them during the early stages of their businesses, EspaceLabz will be the finishing touch in the continuum of transforming research and knowledge into businesses,” he said.

Th multi-tenaent centre will be located right next to biopharmaceutical company Charles River. Additionally, EspaceLabz has been able to rely on the support of several partners for the acquisition of its equipment, including VWR International, which has been collaborating closely with the project since its inception to help get the laboratories up and running.

The multinational will also occupy premises in the building and its equipment will be available for use by other centre tenants.

In addition to VWR and Sherbrooke Innopole, which will use a small office, five SMEs have confirmed their intention to move into EspaceLabz, including Immune Biosolutions.

“This is a historic turning point for our company,” noted Immune Biosolutions President Frédéric Leduc. “Given our recent accomplishments worldwide, our current facilities cannot sustain the growth of our operations.”

Immune Biosolutions, which makes antibodies using hens’ eggs, employs 15 people, and will occupy a large part of the building’s ground floor. The company is planning

to move there in the summer, as soon as construction of the building is completed.

The other tenants will gradually move in over the following months.

To see this story online visit http://biotechnologyfocus.ca/construction-of-espacelabz-begins-in-sherbrookescience-park/

Celebrating science, innovation and solutions September 20 – 27, 2017

globalbiotechweek.ca #GBW2017

April/May 2017 BIOTECHNOLOGY FOCUS 7

R&D news

Canadian collaboration to accelerate development of cancer treatments - NRC and CCAB to invest over $1M to advance innovative therapies first discovered at UofT

Montreal, QC, and Toronto, ON – An innovative collaboration between government, industry and academia is aiming to accelerate the development of cancer treatments in Canada.

Through the partnership, the National Research Council of Canada (NRC) and the Toronto-based Centre for the Commercialization of Antibodies and Biologics (CCAB).

The CCAB is a business development and commercialization engine whose mission is to translate UofT’s portfolio of early stage biologics into high-value assets and products. The NRC and CCAB have already over the past year put in place over $1 million in collaborative agreements to produce and test therapeutic antibodies discovered at the University of Toronto (U of T).

According to both the NRC and CCAB, the thinking behind this partnership is that cancer treatment in general is evolving rapidly toward more effective molecules, including single-domain and bi-specific antibodies, antibody-drug conjugates, and immunotherapies. These medicines, also called biologics, are able to specifically target cancer cells and in some cases, recruit the body’s immune system to help destroy them. To this purpose, CCAB has partnered with NRC to biomanufacture and test hundreds of antibodies.

By identify the most promising antibodies, the parties hope to increase their value by generating data that effectively de-risks each asset. CCAB’s says its objective is to then licence lead antibody candidates to seed newly formed Canadian biotechnology companies. These new Canadian start-ups will, in turn, advance these molecules toward clinical trials in patients.

“Harnessing the inventive power of our top 8 BIOTECHNOLOGY FOCUS April/May 2017

Canadian scientists and translating discoveries into products that benefit Canadians is a priority for the CCAB,” said Ivan Waissbluth, director of Business Development, Centre for the Commercialization of Antibodies and Biologics. “We are excited about our collaboration with the NRC and the commercial value it creates for the Canadian biotechnology industry.”

“The University of Toronto is proud to see the impact that CCAB is having in driving antibody development in Canada,” adds Vivek Goel, vice-president Research and Innovation, University of Toronto. “Bridging the strengths of our discovery platform, the Toronto Recombinant Antibody Centre (TRAC), to the established capabilities at the NRC is a key factor in advancing therapeutics.”

These capabilities include NRC’s three programs in Human Health Therapeutics: 1. Biologics and Biomanufacturing: producing biologics, testing their ability to fight solid tumours, and determining their biomanufacturability; 2. Therapeutics Beyond Brain Barriers: determining if specific antibodies are able to cross the blood-brain barrier, target and fight brain cancer; 3. Vaccines and Immunotherapeutics: determining if specific antibodies are able to modulate the immune system so that it finds and destroys cancer cells.

New partnership to accelerate development of treatments for neurological diseases

“It is very gratifying to deploy NRC’s biologics expertise, which is over 20 years in the making, to projects that may revolutionize the treatment of cancer,” commented Roman Szumski, vice-president of Life Sciences, NRC. “We are thrilled to be working with the Centre for the Commercialization of Antibodies and Biologics on accelerating the development of innovative medicines, to improve health outcomes for Canadians.”

Several biotechnology companies are already participating and benefiting from these programs.

Three leading players in Canada’s health sciences sector are joining forces to create a novel drug development platform that will help advance new therapeutics for some of the most debilitating conditions such as amyotrophic lateral sclerosis (ALS) and Parkinson’s disease.

The initiative, under the banner of ‘NeuroCDRD’, is jointly led by The Centre for Drug Research and Development (CDRD), the Montreal Neurological Institute and Hospital at McGill University (MNI), and Merck. Its initial focus is the creation of a high-content hiPSC (human-induced pluripotent stem cell) screening platform that will help researchers better model neurological disease.

As Gordon McCauley, president and CEO of CDRD explains this collaborative initiative not only combines the cutting-edge science of academia, but will also benefit from CDRD’s translational abilities and the commercial resources of a top industry partner like Merck.

“By working together, we are a catalyst for Canadian life sciences leading the world,” he said.

Development of new drugs for neurological diseases has long been hampered by the lack of predictive humanized models, and many treatments that have looked promising in animal studies have in turn failed in subsequent human clinical trials. To mitigate this challenge, the collaborating partners will use the MNI’s renowned hiPSC platform and bring together experts from MNI’s neurological and CDRD’s drug screening and assay development teams to develop a new generation of disease-specific research models using patient-derived hiPSCs. The idea is to significantly reduce research timelines and costs, making it possible to develop future hiPSC models for neurological diseases with smaller patient populations.

To see this story online visit http://biotechnologyfocus.ca/http:// biotechnologyfocus.ca/canadiancollaboration-to-accelerate-developmentof-cancer-treatments/

To see this story online visit http://biotechnologyfocus.ca/http:// biotechnologyfocus.ca/new-partnership-to-accelerate-development-oftreatments-for-neurological-diseases/

BUSINESS corner Zymeworks files for $75 million U.S. IPO Merck and Daiichi Sankyo. Also, in January, the company opened a new state-of-the-art, 10,000 square foot laboratory facility in Vancouver, BC..

Citigroup Global Markets Inc., Barclays Capital Inc. and Wells Fargo Securities, LLC are acting as joint book-running managers

for the offering. Cannacord Genuity Inc. is acting as a lead manager. Cormark Securities (USA) Limited is acting as a co-manager.

To see this story online visit http://biotechnologyfocus.ca/zymeworks-files-for-75-million-u-s-ipo/

FACIT invests $3 million into Propellon Therapeutics VANCOUVER, BC – Canadian biopharmaceutical company Zymeworks reports that it has filed with the U.S. Securities and Exchange Commission for an initial public offering (IPO).

The company says it has also filed a preliminary prospectus with the securities regulatory authorities in each of the provinces and territories of Canada for the proposed initial public offering of its common shares.

The number of common shares to be sold and the price range for the proposed offering have not yet been determined. Zymeworks has applied to list its common shares on the New York Stock Exchange and intends to apply to list its common shares on the Toronto Stock Exchange, under the ticker symbol “ZYME” for both exchanges.

The clinical-stage biopharmaceutical company’s pipeline includes a group of next-generation multi-functional biotherapeutics for the treatment of cancer.

Zymeworks’ lead product, ZW25 is currently being evaluated in an adaptive Phase 1 clinical trial in the U.S., based on the company’s Azymetric platform. It is a bispecific antibody that can simultaneously bind two non-overlapping epitopes, known as biparatopic binding, of HER2 resulting in dual HER2 signal blockade, increased binding and removal of HER2 protein from the cell surface, and enhanced effector function. These combined mechanisms of action have led to significant anti-tumor activity in preclinical models. The company also has ZW33, a drug-conjugated version of ZW25, currently in development in preparation for an IND filing in early 2017.

Additionally, the company has built a strong industry reputation through a number of big biopharma partnering deals for the use of its Azymetric drug development platform. Partners include industry heavyweights Eli Lilly, Celgene, GlaxoSmithKline,

TORONTO, ON – The Fight Against Cancer Innovation Trust (FACIT) has made a seed stage investment of $3 million into Propellon Therapeutics.

The company is a start-up created by FACIT focused on developing a portfolio of WDR5-targeted anti-cancer therapeutics.

The WDR5 protein is considered essential for assembly of methyltransferase complexes and proper histone modification.

Its over expression leads to deregulation of epigenetic mechanisms and thus has been implicated in various cancers correlatingwith poor patient survival.

FACIT’s investment, combined with nondilutive capital, will be used towards helping Propellon accelerate its nomination of a candidate drug. It will be used also to help the company better position itself for future financings, strategic partnerships, and eventually conducting clinical trials in patients with haematological cancers.

“Since forming the company, significant progress has been made towards identification of a clinical candidate,” said Jeff Courtney, president of FACIT. “Our investment will further accelerate the ad-

vancement of this exciting first-in-class therapeutic and is a critical step in FACIT’s strategy to support early-stage oncology innovations in the Province.”

“Our partnership with the Drug Discovery team at the Ontario Institute for Cancer Research has yielded substantial progress toward a breakthrough epigenetic therapy for haematological malignancies,” adds Dr. David O’Neill, president of Propellon. “Propellon has entered strategic discussions to further advance our promising lead program and the company through a Series A financing round. This timely seed investment allows the company to maintain development momentum and select the best partners for bringing this important therapy to patients in need.”

Propellon’s WDR5 inhibitor platform arises from discoveries, research and innovations originating from OICR. To see this story online visit http://biotechnologyfocus.ca/facitinvests-3-million-into-propellon-therapeutics/

April/May 2017 BIOTECHNOLOGY FOCUS 9

BUSINESS corner Aurinia Pharma closes US$173.1 million public offering of common shares

VICTORIA, BC – Clinical-stage drug developer Aurinia Pharmaceuticals reports it has closed a secondary public offering for gross proceeds of approximately US$173.1 million.

As part of the offering the company sold 25,645,000 common shares, including 3,345,000 common shares pursuant to the

full exercise of the underwriters’ option to purchase additional common shares, at a public offering price of US$6.75 per share One day prior to the initial announcement of the public offering on March 14, Aurinia’s stock had hit an all-time high of $10.50 per share. In response Canada’s Motley Fool reported that by offering its shares at $6.75 the next day, new investors received a 36 percent discount.

“While it may seem as if investors are getting a raw deal, it should be noted that the stock began 2017 at just $2 per share,” Maxx Chatsko at the Motley Fool said.

Chatsko further commented that “there are only 53.45 million shares outstanding today, and the company ended 2016 with less than $40 million in cash. In other words, while the number of shares will be diluted by 41.7 per cent, the company will

more than quadruple its cash.”

The Victoria-based company intends to use the cash to initiate a Phase 3 trial for its lead drug candidate, voclosporin, in treating lupus nephritis. The trial will commence in the second quarter.

The drug successfully went through a positive 48-week data Phase 2b trial in 2016 and 2017, and seems on track to becoming the first drug to demonstrate a clear benefit for the disease.

Leerink Partners LLC and Cantor Fitzgerald & Co. (collectively, the “Underwriters”) acted as joint book-running managers for the Offering.

To see this story online visit http://biotechnologyfocus.ca/auriniaphramceuticals-prices-a-us150-5-millionpublic-offering-of-common-shares/

BELLUS Health sells Thallion Pharmaceuticals subsidiary to Taro Pharmaceuticals LAVAL, QC – BELLUS Health Inc. reports it has entered into a share purchase agreement with Taro Pharmaceuticals Inc. (Taro) for the sale of its wholly-owned subsidiary Thallion Pharmaceuticals Inc. as well as the rights to the drug candidate Shigamab™.

According to Bellus, the asset, Shigamab™, is a monoclonal antibody therapy being developed for the treatment of Hemolytic Uremic Syndrome caused by Shiga toxin-producing E. coli (STEC) (sHUS), a rare disease which principally affects the kidneys and often leads to acute dialysis, and in certain cases chronic kidney disease and death, primarily in children.

Pursuant to the sale, Taro is acquiring all issued and outstanding shares of Thallion for a potential total consideration of CA$2.7 million, consisting of an upfront payment of CA$2.3 million and a potential future payment of CA$0.4 million contingent upon the completion of a pre-established milestone event, expected to occur within 24 months of the closing of the transaction. Additionally, BELLUS Health will receive a portion of certain post-approval revenues related to the Shigamab™ program.

10 BIOTECHNOLOGY FOCUS April/May 2017

“This transaction supports the further development of Shigamab™ and allows us to focus our efforts on the rest of our pipeline including the recently in-licensed BLU-5937, a drug candidate for chronic cough,” said Roberto Bellini, president and CEO of BELLUS Health.

“The upfront proceeds from this transac-

tion also meaningfully extend our cash runway to Q4 2018.”

To see this story online visit http://biotechnologyfocus.ca/ bellus-health-sells-thallionpharmaceuticals-subsidiaryto-taro-pharmaceuticals/

infectious diseases

| By Trenna Brusky

Tackling infectious diseases:

Canada’s role in the global effort

Every year infectious diseases emerge that threaten the health of people and animals, and impact the global economy.

I

t is estimated that three diseases emerge annually, and every three years one of them will lead to a larger epidemic.

Outbreaks of pathogens like tuberculosis, Zika virus, and Middle East respiratory syndrome coronavirus (MERS-CoV) regularly make headlines. And the threat of antibioticresistant superbugs is so great the World Health Organization has released a list of 12 families of bacteria that urgently need new antibiotics.1 All of this underlines the need to get ahead of these infectious diseases so that we can limit their impact.

To strengthen Canada’s role in responding to infectious diseases worldwide, the Vaccine and Infectious Disease Organization-International Vaccine Centre (VIDO-InterVac) at the University of Saskatchewan works with international partners to study human and animal pathogens and develop solutions.

VIDO-InterVac is home to one of the largest and most advanced containment level 3 (CL3) research laboratories in the world – A clear advantage when you consider that most emerging infectious diseases are classified as risk group 3 or higher. Working with these diseases requires complex containment infrastructure, biosafety practices, and training to ensure the safety of researchers and the surrounding community.

An animal care technician with a piglet

A veterinarian in high containment with a lama One of VIDO-InterVac’s unique assets is the CL3 large-animal research capacity, which has helped them become an international leader in large animal model development for emerging infectious diseases.

These models are used to mimic the disease in humans and animals, and are extremely important to infectious disease research.

Not only do they allow researchers to better understand how pathogens cause disease, but they are also used to test the safety and effectiveness of new vaccines and drugs.

The development of human and animal vaccines, and other anti-infective medicines such as antibiotics, rely on the use of animal models. Although no single animal model can provide all the information required to advance new vaccines and drugs through preclinical development, research has shown large models have advantages: • They are ideal for the evaluating the effectiveness of vaccines against pathogens in their natural animal hosts • Large animal models more accurately predict vaccine outcomes in humans.2 As part of the global effort to combat pathogens like MERS-CoV, Zika virus, and tuberculosis, VIDO-InterVac has developed unique largeanimal models that will ensure global health innovations can be rapidly developed and tested.

Alpaca model for MERS-CoV makes it easier to test and advance vaccines and antiinfectives in development First identified in Saudi Arabia in 2012, Middle East respiratory syndrome (MERS) is a zoonotic (spread from animals to humans) viral respiratory disease. It is the second highly pathogenic coronavirus to be spread from animals to humans in recent years—the first was severe acute respiratory syndrome coronavirus (SARS), which was first reported in 2003.

To date, MERS has resulted in 1,936 confirmed cases and 684 deaths.3 Although the majority of cases have occurred in Saudi AraApril/May 2017 BIOTECHNOLOGY FOCUS 11

infectious diseases bia, MERS-CoV is considered a global threat.

One single case in the Republic of Korea (a male infected in the Middle East), resulted in 186 confirmed cases, more than 16,000 people quarantined, and over 35 deaths.

In an effort to protect against this virus, VIDO-InterVac focused on developing an animal model and a vaccine for MERS. Although camels are the natural host for the virus, they are not ideal animals to work with in a high containment laboratory in the middle of Saskatchewan. Not only are they difficult to come by and expensive to acquire, their size and temperament also make them difficult to handle.

Because of this, VIDO-InterVac focused efforts on establishing an alpaca model. As members of the same animal family as camels, alpacas can be naturally infected with the virus and are more readily attainable in Saskatchewan. This new model makes it easier to test and advance the vaccines and anti-infectives in development.

VIDO-InterVac scientists aim to develop a vaccine for camels and will be testing promising candidates in alpacas this year. This is the first step in determining the safety and efficacy of these vaccines that will ultimately be tested in the field in Saudi Aribia.

Swine model for Zika virus will be used to study how the infection progresses and how it affects brain development Although Zika virus (ZIKV) was identified in humans in the 1947, the virus only recently became a significant public health concern.

Primarily spread by mosquitos, but also transmitted sexually, ZIKV has been connected to congenital brain abnormalities, including microcephaly, in babies born to infected mothers. Zika has also been linked to Guillain-Barre syndrome, an autoimmune disorder that causes the body’s immune system to attack part of the peripheral nervous system and can lead to paralysis.

Currently there is no vaccine or therapy available to combat the infection. As potential new human vaccines are developed, having an effective animal model for preclinical testing will reduce risk and ensure effective solutions reach the market faster. Preliminary research at VIDO-InterVac found that fetal pigs and piglets are susceptible to ZIKV infection, which led to a world-first—the development of a swine model that mimics the infection in humans.

Scientists at VIDO-InterVac will now use this model to study how the infection progresses and how it affects brain development—knowledge that could point to new drug and vaccine targets. Additionally, in support of international efforts, the swine model was made available 12 BIOTECHNOLOGY FOCUS April/May 2017

Confirmed global cases of MERS-CoV

Source: http://www.who.int/emergencies/mers-cov/en/

to partners so that they could assess vaccines and drugs currently in development.

means they will be ready for clinical trials a lot sooner.

Developing new solutions for human and bovine Tuberculosis

Canada’s role in the global effort to protect against future epidemics

Tuberculosis (TB) is caused by Mycobacterium tuberculosis and is spread through the air from person to person. It is a disease that most Canadians assumed had been eradicated in the 1950s; instead it has become the deadliest infectious disease in the world. In 2015 alone, there were 10.4 million new cases of the disease and 1.8 million deaths.4 A similar pathogen in cattle that causes bovine TB (which can also infect humans) is an important trade issue for Canada. Confirmed cases can lead to significant economic losses for the agriculture sector, as was recently witnessed on the prairies. Although the investigation is ongoing, the Canadian Food Inspection Agency quarantined 43 premises in Alberta and Saskatchewan, and destroyed approximately 10,500 animals.5 With its partners, VIDO-InterVac is engaged in research to better understand how human and bovine TB cause disease in order to develop new vaccines, drugs and diagnostic tools. VIDO-InterVac’s expertise in animal health research make it one of only a few organizations in the world that can conduct this type of research.

Work currently underway includes the development of a novel swine model for human TB infection and transmission that more closely resembles the disease in humans.

This model will accelerate the development of new TB vaccines and therapies, which

Infectious diseases are a never-ending threat, especially in an era of growing antimicrobial resistance. International collaboration and diligence will ensure we continue to improve our understanding of how these pathogens cause disease and to develop solutions that will protect health. Canada has an important role to play in this global effort, and exciting research advances are occurring for MERSCoV, Zika virus, and tuberculosis that can be used to protect against future epidemics.

References 1. http://www.who.int/mediacentre/ news/releases/2017/bacteria-antibiotics-needed/en/ 2. ILAR Journal, 2015, Vol.65, No.1, 5362 ‘Large Animal Models for Vaccine Development and Testing’ p.53 3. http://www.who.int/emergencies/ mers-cov/en/ 4. http://who.int/mediacentre/factsheets/fs104/en/ 5. http://www.inspection.gc.ca/ animals/terrestrial-animals/diseases/ reportable/tuberculosis/investigation-alberta-and-saskatchewan/ eng/1477438380160/1477438380659 To see this story online visit www.biotechnologyfocus.ca/tacklinginfectious-diseases-canadas-role-in-theglobal-effort

| by Tony Pullen

Canadian Health Care Market Special Report

Revisiting the Canadian Healthcare market, 2014-2016

The Fire Marshall’s Report: a search through the embers In memory of my dear friend and colleague Dr. Ezra Lwowski, my biotech mentor and muse for thirty years.

S

ince 2014 I have written two commentaries on the state of Canadian public life science companies. By way of introduction to new readers, I have been involved in the investment business my entire career and back in the mid 80s, I became intrigued by the life science space which was nascent at the time in Canada, for all the right reasons. I was compelled by the idea that we were at the dawn of a new age of discovery, and, as an investment banker, the likely demand for capital to support this emerging sector. That was back in 1985. My last commentary for Biotechnology Focus was two years ago. It was a sequel to a piece I had written the previous year about the hope that the post 2009 resurgence in U.S. biotechnology stocks could spill over into Canada. My conclusion then was that expectation was “much ado about nothing”.

That hope had been driven by the dramatic 150 per cent surge in the Nasdaq Biotech Index (NBI) between late 2011 to year-end 2013. For most of the previous decade, the index had been largely range bound in the aftermath of the great human genome inspired rush into the sector after 2000. At that time, both retail and institutional investors piled in to anything resembling a biotech stock determined not to miss out on the potential of this next great industry of the future. From year-end 2013 to its peak in July 2015, the

index almost doubled again as conviction and capital poured into the space. That NBI peak of 4162 was four times the level it launched from in 2012, and 10 times its level after the “tech wreck”. During that same period, even the S&P Healthcare Index, dominated by the big pharmaceutical companies, advanced 75 per cent from year-end 2012 to 2014. That index has been unchanged since.

Unfortunately, an index to measure the sector in Canada doesn’t exist, as most healthcare companies in Canada are individually too small. The closest comparable, the S&P/TSX Healthcare Index, merely mimicked the rise and near demise of now beleaguered Valeant Pharma, which in spite of its collapse still remains its largest constituent. The other life science participants in the index are Prometic Life Sciences and Knight Therapeutics, along with two, hardly relevant, retirement home companies, Chartwell and Extendicare. The former represent the only other $2- billion dollar plus survivors of the conflagration. Presumably, they will soon be joined by Canopy Growth with its $2 billion market cap, courtesy of its recent merger with its next largest competitor, and it’s new, cheeky, stock symbol WEED. Unfortunately, the S&P/TSX designates marijuana producers as “Life Science” companies, but more on this later.

Last year I chose not to report on developments in the sector in 2015 because frankly,

I felt I had answered the original question-namely the potential for a “biotech boom” in Canada. Unlike 2014, when the Valeant inspired interest in specialty pharma, the shortlived inversion mania, the Ebola crisis and the excitement about CAR-T technology caused a resurgence of prospects for Canadian life science companies, 2015 became a year of extreme crosswinds. Certainly the U.S. biotech sector raced into 2015 with the tailwind of a record year of fund raising, share price performance, partnering and M&A activity.

During each of the intervening years, despite persistent volatility, the U.S. capital markets managed to raise approximately $5 billion for the sector, twice the amount of 2014, despite the frequent opening and closing of the financing “window”. Merger and acquisition activity, both attempted and consummated, reached into the hundreds of billions and the FDA played its part by approving a record breaking 45 new drugs in 2015. This surpassed the previous record of 41 during 2014, which in turn was 52 per cent higher than 2013.

All this exuberance began to subside after the July peak in the Nasdaq Biotech Index at 4162, but not before some eye popping IPOs April/May 2017 BIOTECHNOLOGY FOCUS 13

Canadian Health Care Market Special Report which proved once again that in U.S. capital markets, nothing succeeds like excess! One example was the IPO of Nantkwest in August whereby the famous biotech entrepreneur Patrick Soon-Shiong (one of Prometic’s largest shareholders) launched the company with a $200 million raise and a post money market cap of $2 billion. This valued his estimated $77 million earlier investment in the company at $1.1 billion. Today, it trades at $300 million, not much above its remaining cash.

One of the wildest rides was experienced by Canada’s Aquinox Pharmaceuticals. The company had gone public in a “straight to Nasdaq” offering in March 2014 successfully raising $52 million against a valuation of $65 million at $11 a share. The share price had experienced a fairly bumpy ride until the company released disappointing trial results for its lead product, AQX-1125. The stock price immediately plunged 72 per cent to $1.50, at which point its market cap reached $16 million versus its remaining cash position of $29 million. This was an experience all too familiar for Canadian biotech companies. However, in a matter of weeks, the Company disclosed positive secondary end points from the same trial that unleashed a spectacular 2000 per cent advance peaking at $22 per share before settling back in the high teens. The company quickly raised $98 million and by year-end was selected for inclusion in the Nasdaq Biotechnology Index.

Later in 2016, it came back to the market for another $75 million and finished 2016 with a $520 million market cap, 32x above the 2015 low. Now that’s volatility! However, the cracks were beginning to show as the bizarre Martin Shkreli scandal burst upon the scene and pharma price gouging leapt into the discourse of the Presidential campaign. Almost immediately the markets froze and activity ground to a halt. Shkreli quickly became the media villain for all that was wrong with drug pricing.

The capital markets opened 2016 with another dramatic set back reminiscent of the “China slowdown” meltdown of late August 2015. This time the catalyst was a collapse in oil prices which shut down the IPO market completely on both sides of the border. Against this backdrop, the Nasdaq Biotech Index extended its retracement from the July 2015 peak to 1400 points or 36per cent. In the subsequent market turmoil, the Index was left behind managing only a meagre 3 per cent recovery by year-end and registering a 23 per cent decline for 2016 as a whole, the first decline since 2008. From the heady pace of the previous two years, the IPO market dried up with only $450 million raised in Q4. As if in sympathy, even FDA approvals dropped in half to 22. At year-end 2016, I decided to fully revisit the life science space in Canada. As a base, I reviewed the 96 14 BIOTECHNOLOGY FOCUS April/May 2017

companies I listed in my year-end 2014 S&P 500 P/E Ratio (T12M) commentary. They had an aggregate market capitalization 24 of $78.4 billion. De22 spite the gradual erosion of the extended 20 biotech boom south 18 of the border, their 16 aggregate valuation ended 2015 at $76.8 14 billion. This total 12 comparison is positively distorted by the 10 2012 2014 2016 $16.6 billion United Health purchase of Catamaran mid-year. a turbulent early capital market history with After deducting Catamaran from both year-end numerous near death experiences as well as totals, the remaining aggregate value declined management and name changes. Subsequent 10 per cent from $66 billion to $60.2 billion. reversals marginalized the share price during While this is more reflective of the second half the late 90s. From its protracted survival lows of decline in the Nasdaq Biotech index of 15 per $1 per share, adjusted for offsetting consolidacent, the main contributor was the initial roll off tions and splits during its history, its acquisition from Valeant. By year-end 2016, the real story at US$61.50 is a remarkable success story by became a jaw dropping 71per cent collapse to any measure. It is unfortunate that this success $17.5 billion with 27 per cent of the decline athas not garnered the attention it deserves. Catatributed to the plunge in Valeant. maran, like Valeant, successfully followed the As previous readers may remember, Valeant path, hoped for by all Canadian non-resource and Catamaran were valued at $3 billion and or financial companies, of migrating over the $400 million respectively back in 2006, then border to the sunny slopes of Nasdaq. By the known as Biovail and SXC Health Solutions. time of its acquisition, it had largely lost its From that point, both companies went on to Canadian identity. achieve combined worth of $140 billion by In my previous commentaries, I have fomid 2015. It is hard to imagine such profound cussed particular attention on the companies sector success not spreading out through with market capitalizations of $200 million bethe remaining companies in the same space cause it is an important valuation threshold. At as would be the case in our resource secleast this used to be the case when there was tors. Part of the answer is that the Canadian broader investor interest for smaller cap comcapital markets can no longer support such panies in Canada. Tables 1, 2 and 3 track the heady valuations for companies outside the evolution and decline of the companies meetcore resource or financial sectors. The gains ing this benchmark over the past two years. for Valeant came from its acquisition binge Table 1 shows the population at year-end fuelled by massive capital from Wall Street.

2014 with their corresponding values in 2016.

Fortunately, that meant that the bulk of the Table 2 shows the list at year-end 2015. The capital market fallout was also in the U.S. That population expanded to 16 with the inclusion said, Valeant, became yet another example of of Aquinox, CRH Medical, a Canadian company’s market capitalization Cynapsus, Merus, Patient Home Monitoring briefly exceeding that of the largest bank of and Cardiome. Cipher, Transition and Xenon the day, only to collapse into ignominy, as dropped below the benchmark. Table 3 shows with RIM 10 years ago and Nortel before that. I the few companies remaining above $200 even remember the fate of an earlier Canadian million following the 2016 bonfire. All three success story, Dome Petroleum. At that time it tables necessarily include Medical Facilities and rose to eclipse the value of all five Canadian Nobilis Health by market cap although they are banks, as did Nortel at its peak, only to suffer operators of healthcare facilities and not scia similar fate. ence-based companies. (Nobilis delisted as of As for Catamaran, its acquisition closed year-end from the TSX.) The list also includes the book on the biggest success story in the Cynapsus and QHR Technologies because history of the Canadian medical technology both companies were acquired during the year sector representing Canada’s biggest techfor a combined $1.15 billion versus their 2015 nology win by acquisition ever. Founded in and 2014 year-end valuations of $329 million Milton, ON as Systems Xcellence, it survived

Canadian Health Care Market Special Report and $150 respectively. Now for the bad news, Concordia, Neovasc, Arbutus(formerly Tekmira), Merus, Patient Home and Cardiome all fell from the 2015 list with a combined 81 per cent ($3.5 billion) meltdown, 78 per cent of which attributable to Concordia. As mentioned earlier, Acquinox and Aralez (formerly Tribute), only made the list by virtue of financing and merger efforts. Bottom line, very little remained of the 2015 list.

The Concordia saga is a story in itself. Back in 2015 I commented as follows: “This launch of Concordia in late 2013 couldn’t have been better timed to capitalize on the disappearance of Paladin and three other of Canada’s larger healthcare players early in 2014. The acquisitions of Patheon, Cangene and Nordion, along with Paladin, freed up an aggregate of $5.5 billion of liquidity, almost 10% of the value of the total sector at year end 2013, to be reinvested. In other words, this elegant combination of the right business plan, the right market cap and just the right amount of available liquidity was a perfect recipe to harvest the potential institutional interest to play the next version of either predecessor company.”

The two predecessor companies I reference in the quote are Paladin and Valeant.

What a “harvest” it was! Concordia, in two short years became the quintessential fiasco for the pharmaceutical roll-up model. From its initial $35 million equity raise and public listing in late 2013, the company went on an acquisition tear and quickly reached $1 billion market cap status. It then proceeded to raise another $1 billion in equity and debt for additional, larger acquisitions all while its share price raced to $110 and a peak valuation of $4 billion. It then bet this entire value on a massive acquisition of an entire privately-held UK company called Amdipharm Mercury.

The resulting effort to raise another billion to finance the acquisition collided with the unfolding anti-pharma drama with such mutual velocity the whole effort imploded as soon as the acquisition closed. The attempt to complete this colossal financing became an exercise of catching a falling knife. The share price plunged 70 per cent in a matter of days, eventually wiping out most of its market value.

In spite of the fire over the past two years, only three companies actually failed: Imris, Diagnocure and Biosign. On the other hand, besides Catamaran, Cynapsus and QHR, an additional five were acquired. Another medical technology company, Medworxx, was acquired in 2015 followed in 2016 by the acquisitions of Transition Therapeutics, Prism Medical, Telesta Therapeutics and Response Biomedical. The latter four companies have been around for years and were quietly sub-

The acquisitions of Patheon, Cangene and Nordion, along with Paladin, freed up an aggregate of $5.5 billion of liquidity, almost 10% of the value of the total sector at year end 2013, to be reinvested.

sumed. Reciting their names is reminiscent of the list of recently departed Academy members honoured on Oscar night. There were also a number of name changes and mergers: QLT became Novelion Therapeutics, Trimel became Acerus (mainly to shed its Eugene Melnyk history), Tribute merged into Aralez Pharmaceuticals, Amorfix became Promis Neurosciences, Miraculins became Luminor and Nightingale Informatix became Nexia Health Technologies.

For Acerus, everything that could go wrong has. I had high expectations for its innovative testosterone delivery technology addressing human sexual health, ever since its lead product, Natesto, was approved by the FDA and because its female equivalent, Tefina, was making clinical progress (now stalled). The testosterone replacement category, which had been growing and gaining for a number of years, completely reversed due to ischemic concerns in the target population. Despite its novelty, the resulting head winds were insurmountable and the initial product launch failed. The company continues to pivot toward a more specialty pharma profile but traction is slow.

Poking through the embers further, by eliminating all the large market cap companies listed in Table 1 at year-end 2014, leaves the remaining 82 with a total of only $3.5 billion which was the basis for my “much ado about nothing” conclusion; not enough market value to attract attention. These companies ended 2015 at $4.2 billion collectively, up 20 per centThe “flares” from the acquisitions of Cynapsus and QHR, added a further 30per cent of value to $5.5 billion in 2016 despite all the volatility overhead. Without those, the remaining 74 companies finished the year worth $4.2 billion. The problem is the resulting average of $56 million still leaves the endemic

problem for Canadian biotech, lack of critical mass. There are simply too many companies scrounging for too few dollars. In each of the past two years, the 96 Canadian companies--apart from the $3 billion raised and blown

by Valeant and Concordia--- were drip fed $1 billion. Moreover, $400 million of last year’s total was raised by Knight Therapeutics, but more on that shortly.

In my last report, I described the earlier history of Cynapsus as Cannasat Therapeutics, and its effort to capitalize on the potential of medicinal marijuana. I feared the early rush into the area was nothing more than “a promotional binge for which there cannot be a happy outcome”, and would draw money away from the cash starved Canadian biotech sector. What a binge it has turned out to be!

Since then the current rush into this space is rapidly creating all the classic characteristics of a bubble and drawing capital away from more productive needs in the life sciences. I have found over 20 public companies now worth over $5 billion collectively and growing which is now more than the collective market cap of the remaining 74 “life science” companies remaining from my 2014 list. Since then, 33 true life science companies have been listed or gone public over the past two years. Their combined market capitalization is slightly under $1 billion, only a fraction of the rush into the marijuana space. Five of these new additions, Helius Medical, VBI Vaccines, Biosyent, CohBar and Essa Pharma account for two thirds of this total which means the average capitalization for the remaining 28 is only $12 million, barely enough to justify being public.

One wonders how many more people with enclosable farming space are out there chasing the magical licences that are being dispensed by a Government, which now has its hands full of other crises, still trying to develop a regulatory framework for this controversial business. I have no idea what the ultimate market opportunity is but I have to believe medicinal consumers are already being well served. I can only imagine how easy it must be to get a prescription. Reviewing the list of entities on the Canadian Securities Exchange, I could almost smell the aroma. Every second “news blast” from Stockhouse seems to be for another indispensable factoid from the space, now rivalling the frequency from junior miners. In the recent release of the TSX Venture 50, half of the “Cleantech and Life Science” April/May 2017 BIOTECHNOLOGY FOCUS 15

Canadian Health Care Market Special Report Table 1

Table 2

#

Company Name

Mkt. Cap (M) 2014

Mkt. Cap (M) 2016

1

Valeant Pharmaceu cals

55,483.06

6,642.99

2

Catamaran Corp

12,474.28

3

Concordia Interna onal

1,349.26

145.61

4

Novadaq Technologies Inc

1,073.64

5

Prome c Life Sciences Inc

6

Knight Therapeu cs Inc

8

Medical Facili es Corp

576.53

545.48

7

Cipher Pharmaceu cals

429.43

128.91

9

Neovasc Inc

413.93

182.55

10

Arbutus Biopharma Corp

393.89

11

Xenon Pharmaceu cals

12

Table 3

#

Company Name

Mkt. Cap (M) 2015

1

Valeant Pharmaceu cals

47,425.55

2

Catamaran Corp

16,384.00

545.11

3

Concordia Interna onal Corp

2,883.14

1,041.61

1,388.99

4

Prome c Life Sciences Inc

1,952.48

628.43

1,518.68

5

Novadaq Technologies Inc

6

Knight Therapeu cs Inc

8

180.72

311.51

Transi on Therapeu cs

13

Novelion Therapeu cs

14

Nobilis Health Corp

Total

#

Company Name

Mkt. Cap (M) 2016

1

Valeant Pharmaceu cals

6,642.99

2

Knight Therapeu cs

1,518.68

3

Prome c Life Sciences

1,388.99

996.97

4

Medical Facili es Corp

545.48

798.64

5

Novadaq Technologies

545.11

Medical Facili es Corp

448.55

6

CRH Medical Corp

521.50

7

Neovasc Inc

416.70

8

Aquinox Pharmaceu cals

520.13

185.02

9

Arbutus Biopharma Corp

335.79

275.75

42.05

10

Aquinox Pharmaceu cals Inc

297.03

7

Cynapsus Therapeu cs

841.00

238.40

209.86

11

CRH Medical Corp

Aralez Pharmaceu cals

378.01

206.77

222.01

291.00

9

12

Cynapsus Therapeu cs Inc

261.56

10

Nobilis Health Corp

222.01

74,896.51

11,937.97

13

Nobilis Health Corp

261.44

11

Novelion Therapeu cs

209.86

14

Merus Labs Interna onal

233.25

Total

15

Pa ent Home Monitoring

219.98

16

Cardiome Pharma Corp

performers--not sure why they are lumped together-- were marijuana producers. Only Ceapro, which ironically is a company based on turning natural ingredients into medicinal products, managed to represent the conventional life sciences. From what I am hearing about the growing IPO calendar for anything remotely resembling an marijuana company, this number will probably double again before some reality check for the industry creates an unwinding similar to that of the spec pharma space last year. It has all the makings of a future barnfire!

When I was introduced to Cannasat a full ten years ago, it was struggling to sustain its mission to create a sublingual method of delivering the pain mitigating elements of cannabis. Sound familiar? In order to move the project forward it was constantly raising “friends and family” rounds in and around .10 per share and sub $10 million of market cap, as so many life science companies are still doing today. I was instrumental in convincing Cannasat’s then CEO that his capital requirements would be unsustainable in the aftermath of the 2008/09 market crash. In late 2009, I introduced him to a veteran biotech CEO who had just completed the sale of his previous biotech company. The new CEO, Anthony Giovinazzo, began the process of repurposing and renaming the company.

He soldiered on with a new drug candidate, APL-130277, using a similar, sublingual, approach to delivering an existing Parkinson’s drug more effectively with the aim of massively expanding the market. The struggle for capital continued for the next three years and the experience prompted Anthony to share these comments with me about the hope for a recovery in the sector in late 2013: “Of course I believe that Cynapsus has an exit value potential of $300 to $500 million in three years’ time, when we have eliminated the clinical and regulatory risk. What we suf16 BIOTECHNOLOGY FOCUS April/May 2017

Total

218.95 73,425.04

fer is a Canadian listing and lack of support within Canada. Like many others our only choice is to become much more American focussed. I do not think what you are seeing is a ray of hope for a new dawning. But the last deep breath before a death bell rings.”

It turns out that $300 to $500 million was a profound prophecy! He did become “American focussed” and crossed the border after cobbling together $10 million to initiate his product development. As clinical credibility for APL-130277 grew, he executed a rapid series of financings totalling $100 million during 2014 and 2015. That capital plus further clinical success and fast track designation by the FDA, triggered an $840 million takeover offer from Sunovion Pharma last fall. The headline number gained a lot of attention, but between the share consolidations and the late stage dilution, the actual return was more muted for the longer term Cannasat shareholders. I estimate the US$40.50 takeout price was equivalent to only 3 to 4x for the investors of ten years ago.

Not a great time value for return on money, but a win all the same. I also suspect that those later-stage US investors proved to be a mixed blessing for the Company by promoting this liquidity event too early for ultimate shareholder benefit.

The takeover of QHR was an amazing outcome for a quirky, little software company from Kamloops BC, both in terms of the price and the purchaser. I first met its tenacious CEO, Al Hildebrandt, ten years ago during his many trips east to find money to support his electronic medical record dreams. An ex police and fireman, he was about as far away from your archetypical software CEO as you could find. He kept showing up with regularity, each

13,333.75

time with more revenues for his tiny company.

I decided that if he had been so successful in growing the company from nothing, what might he achieve with some growth capital? A subsequent financing of $10 million at .65 per share and Mr. Hildebrandt’s tenacity paid off last year, though without him at the helm, as Loblaws bought the company for $170 million or $3.10 per share.

Our two remaining +$1 billion companies, still standing in the structure, at year-end 2016 are Knight Therapeutics and Prometic Life Sciences, the latter still being my longer term favourite Canadian biotech company. While Knight has grown to $1.5 billion by constantly raising capital, Prometic has done so by consuming capital to pursue its growing clinical needs. Knight’s share price has increased 75 per cent since inception in early 2014, after the Endo acquisition and inversion for Paladin Labs, but has built its cash resources by 10 times to reach $750 million by December 2016. It has certainly been a willing and opportunistic banker for a sector that is otherwise unbankable, but one has to wonder what the true objective of this cash hoard is. Prometic raised almost $150 million over the past two years as it regained Canadian institutional investor support following years of barely surviving. In support of its cash needs, it launched an opportunistic takeover of struggling Telesta Therapeutics, and its $34 million in cash, last summer. (Telesta, previously known as Bioniche, has been around the Canadian biotech scene as long as I can remember.) The proposed share exchange had an uncertain closing value which immediately invited arbitrage activity by hedge funds. Once the deal closed, with a share exchange value of $2.98, the stock came under intense pressure from an obviously well planned attack of short selling. The share price was cut in half by December 15th.

Canadian Health Care Market Special Report

Of course I believe that Cynapsus has an exit value potential of $300 to $500 million in three years’ time, when we have eliminated the clinical and regulatory risk. What we suffer is a Canadian listing and lack of support within Canada. — Anthony Giovinazzo

$

$ $

Initiated by rumours of insider selling in early December, the accelerant was the posting of a spurious blog on Seeking Alpha’s website under the sinister pseudonym BlackMamba.

Entitled “Time is up for this Biotech ProMotion”, the blog used the Company’s volatile capital market history to sinister advantage casting aspersions on its drug development efforts that, in reality, have been no different than those of any other biotech company. It then went on to insinuate that no competitive advantage exists for its patented PPPS system by using a series of baseless allegations and half-truths. As the selling became exhausted, the shares finally found concerted support at $1.50, just under $1 billion of market cap. This support just as quickly chased the price back through $2 a share on the last three trading days of the year, on enormous volume, a time when most investors had closed their books.

The short selling pressure appears to have abated just as quickly, but a hauntingly large $40 to 50 million short position remains to be resolved, the bulk of it in the U.S. Clearly this is not the U.S. investor attention usually hoped for by Canadian companies. While it is less than 10 per cent of the total shares outstanding, it will represent a potentially ignitable force for the share price as the company delivers more results from its many assets.

Table 4 (insert link on online story) shows the rankings by individual share price performance over the two years. Table 5 (insert link on online story) shows the rankings at year-end by market capitalization.) As was the case in 2014, the top performances were more a function of “low altitude” advances by companies with negligible market caps than the hoped for upward trajectory fuelled by clinical successes of which there were none.

One example is GeneNews with an almost 1,000 per cent gain in 2016, after almost disappearing in 2015. Previously known as Chondrogene, this gain was mainly due to the company’s continuing ability to survive after ten years of struggle for adoption of its “bleeding” edge diagnostic screening technology for early stage detection of cancer. While the case for its technology is indisputable, its history is a negative testament as to how difficult it is for adoption of diagnostic innovation.

Dramatic gains, from virtually zero, accounted for eight of the 15 companies that gained more than 100 per cent. Three more, Response Biomedical, Cynapsus and QHR Technologies resulted from their takeovers discussed earlier. Ceapro, +350 per cent, Medicure, +143 per cent and Centric, +132 per cent were the only companies with +$100 million market caps in the rest of this group.

Ceapro, which has been around forever, developing a growing portfolio of healthcare

products based on natural sources has finally achieved substantial revenue and profit under the leadership of Gilles Gagnon who took over as CEO in 2008. Similarly, Medicure has achieved a remarkable turnaround since its collapse in early 2008 when its lead product, MC-1, failed a Phase 3 trial. The previous year, in a risk mitigating move, it had acquired the rights to Aggrastat, a clot busting drug to treat coronary patients which has become a ten year “overnight” success now driving revenues from roughly $2 million in 2013 to $30 million with associated earnings growth and a new acquisition program. It has quietly become a spec pharma success story seemingly from nowhere.

There were 25 companies that “flamed out” by 50 per cent or more during the period with three by more than 75 per cent: Revive Therapeutics, Vanc Pharma, Valeant and Concordia, the latter three reflecting the collapse of interest as “Specialty” Pharma became “Speculative” Pharma. Tiny Vanc Pharma, after a brief flurry in early 2015 to a peak of $2.41, fell 75 per cent over the period but 90 per cent from its peak.

Other specialty pharma casualties were Merus Labs down 33 per cent over the two years and 66 per cent from its June 2015 peak. It finished 2016 with a $136 million market cap but only because it was able to raise $87 million during the period. Cipher Pharma after a brief flurry of credibility under new management, now gone, fell 73 per cent from its peak at year-end 2014.

In early 2016 a new specialty pharma called Aralez was formed by merging the Tribute Pharmaceuticals with a U.S. company called Pozen Inc. in an incredibly complicated transaction whereby the shareholders of Tribute

retained 36 per cent of the merged company.

The intent of the deal was to create a formidable product portfolio backed by a US$350 million committed war chest from a syndicate of healthcare investors. One can only imagine the difficulties of riding this deal through all the subsequent capital market cross currents. From an $8 per share peak last September, the share price has been cut in half so far in 2017. The term speculative pharma could also be applied to, the ironically named, “Revive” Therapeutics that has been trying for three years to develop a small pipeline of repurposed drugs. In early 2017, in a move I can only describe as opportunistic desperation, it announced a new initiative to hitch itself to the cannabis craze by announcing a program to investigate efficacy potential for cannabinoid derivatives in liver cancer. Words fail me.

In my last report, I stated, “Among the companies with plus $200 million valuations I believe Prometic Life Sciences will continue its upward revaluation as its multifaceted assets gain more attention from US investors. With the capital raised in 2013 and 2014 (and during 2015, 2016 and just last month) it will be able to fully exploit its plasma based orphan drug assets while PBI-4050 should make steady progress in the clinic.” Notwithstanding the vicious short selling campaign and the related criticisms, I am sticking with that conviction.

Knight Therapeutics continues to benefit from the Paladin Labs halo effect of two years ago but only in building its cash position. Back then I predicted it would be a “must own” for Canadian institutional investors and I expect that to continue as it represents a call on how that cash will be deployed.

Below the $200 million threshold and above $100 million, my unfortunate prediction that Trimel and Titan Medical would “have a breakout year in 2015” was offset by my same prediction for Cynapsus which was acquired for 10x its 2014 price. This year, I would highlight Medicure and Ceapro because I believe their revenue momentum appears to be dialled in and I expect both to dramatically broaden their scope of activities. I also like Aurinia Pharmaceuticals, a company created three years ago through an RTO with Isotechnika, due to the rapidly developing potential for its new Lupus drug candidate, Voclosporin. The stock has been seriously undervalued by conApril/May 2017 BIOTECHNOLOGY FOCUS 17

Canadian Health Care Market Special Report fusion over reported mortality associated with its clinical trial program. I also still like Arbutus for which I had enormous hope two years.

Its creation from the merger of Tekmira and OnCore Biopharma was intended to extend their respective technologies deeper into the hepatitis B space to chase the same opportunity that had created the blockbuster drug Sovaldi. So far not much has resulted from this creative merger but I believe, if there is an still “explosive ember” in the list, this is it.

Below the $100 million threshold I continue to like Immunovaccine, because, as I said two years ago, its technology “represents one of the few generalized approaches to cancer therapy I have seen relative to the more recent focus on personalized targeting.” Since then the company has created vectors into numerous areas of relevance, from various cancer indications to additional vaccine needs, including the recent Zika panic. I also believe Critical Outcome’s stubborn determination to drive its lead product Coti-2 forward in the clinic could defy the odds of single product success.

The other long shot in this bracket is Spectral Medical that was the one Canadian company that might have delivered a Phase 3 success last year. For perspective, my comments in my last report bear repeating; “As for Spectral, one of the early stock market successes in Canada, its potential stems as much from years of capital market neglect as from the promise of its technology. Its stock price rose spectacularly in the early 1980s, almost reaching $1 billion in market value, on the strength of early excitement about its “point of care” cardiac diagnostic panel invention. Nothing of much value resulted from this early technology. A management change over ten years ago set the company on a new long and painfully dilutive path (again, based on the old model) to what may finally become a huge win for its long suffering shareholders. Ironically, its current technology marries a well-established Japanese filtering device to—you guessed it—a point-of-care diagnostic, albeit in the vastly more challenging area of septic shock. Sepsis remains one of health care’s most profound problems. If its current phase 3 Euphrates trial on which management has “bet the company” succeeds in 2014, the share price win will be in multiples.”

That “long and painfully dilutive path” must continue unfortunately. In early October, its trial failed to achieve its end point and the share price plunged 88 per cent. The company had raised an additional $10 million, mainly from its two major shareholders, early in the year of which $7 million remained prior to the results. News of the miss was virtually buried in one of the most positive/negative press releases I have ever read. What was curious 18 BIOTECHNOLOGY FOCUS April/May 2017

was, that in the week prior, there had been a mysterious 60 per cent run up in the share price apparently fuelled by a series of investor meetings prior to the release of the results. If the company can now prevail on the FDA to still approve the device and its companion diagnostic, it will be the “longest ball” in the history of healthcare.

The Spectral reversal, after so many years of effort, is an example of the question of sustainability which constantly looms over the life science space in Canada. Only three companies disappeared or went into liquidation which, given the tenuous nature of capital market support, is truly surprising. The three, Diagnocure, Imris and Biosign, all failed after prolonged and heavily financed attempts to bring innovative diagnostic and imaging technologies to market. On the plus side, Catamaran, Cynapsus, QHR, Prism and Medworxx were acquired by opportunistic purchasers who were prepared to pay a substantial premium.

Transition Therapeutics, Telesta and Response Biomedical were “taken under” by new owners for fractions of their historical values after spending millions attempting to advance their various assets. All 11 companies had been around for, in most cases, 20 years.

This leads me to “triage” the remaining companies on the list. I believe only 24 companies still have substantial potential based on their technologies or clinical candidates. Another 19 companies are more or less sustainable by virtue of actual product sales. This leaves 40 companies that are, in my view at least, well past their “best before” date, like stale milk in the fridge. For these companies, if their clinical or operational assets were of any real currency they would have either succeeded or have been acquired by now. For the new total universe of 117 life science companies, referred to earlier, 33 have market caps below $10 million.

Also, there are 54 trading at less than $0.30 per

share, 40 are trading at less than $0.20 per share and 21 below $0.10 per share. I reiterate what I said in 2015 about the money being sucked into the marijuana space, this is “money the cash starved real biotech companies could put to much better use.” All of this “debris” is a very weak foundation from which to rebuild a capital market structure. It goes without saying that this is a truly unfortunate condition for the public face of an industry for which there is so much hope and need, particularly given the billions Canada invests in scientific research.

Below $50 million, there were 50 companies at year-end, almost the same number below this benchmark two years ago. From that group, five were taken over as discussed earlier: Prism Medical, Telesta Therapeutics, Medworxx Solutions and Response Biomedical, while Diagnocure and Biosign failed. More importantly, there were huge percentage recoveries: Theratechnologies, 789 per cent, Medicure, 565 per cent and Sophiris, formerly Victoria based Protox Therapeutics, 418 per cent, Resverlogix, 311 per cent and Ceapro, 233 Per cent. The reasons for the Medicure and Ceapro successes were discussed earlier. Sophiris, Theratechnologies and Resverlogix were also “rose from the ashes” situations caused by positive clinical news. Quest Pharma, Diamedica and Medx were also up over 300 per cent. These eight wins plus nine more companies which advanced more than 100 per cent since 2014, means 17, or 32 per cent, of that list doubled or more.

What is the potential for these types of fireworks from the companies below $50 million today? With apologies for the mixed metaphor, I found four “potential hot spots” among these embers: Avivagen, Antibe Therapeutics, Diamedica Therapeutics and LED Medical Diagnostics.

Avivagen, with a year-end market cap of $36 million, has spent the past four years perfecting and patenting a product that has the potential to replace the current excessive use of antibiotics in animal feed. This use has finally reached global attention as an enormous factor driving antibiotic resistance in humans. Last year the company began its drive to commercialize its lead product, OxC-beta, which caused a 300

$

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Canadian Health Care Market Special Report per cent gain in its share price. Unfortunately the pace of adoption in its targeted markets in the Far East failed to meet expectations for early adoption resulting in erosion in its share price and a change in management. I believe the potential for Avivagen, if OxC-beta is successfully adopted as the standard for this need, is massive.

Antibe Therapeutics, with a year-end market cap of $19 million, is targeting an equally large opportunity addressing the growing crisis in pain management, an $80 billion industry. It is driving a novel technology into the clinic which has the potential to address the therapeutic pain gap that resides between conventional NSAIDs, which most use daily, and opioids, which are very much in the headlines, for all the wrong reasons, and are only used in extreme circumstances. The surge of interest in medical marijuana is actually, by inference, the result of the complete failure by major pharma to find a therapeutic agent to address this gap by safe, effective and easily deliverable pharmaceuticals. Antibe’s family of pain medications under development are based on an interesting adaptation of Naproxen, the world’s most popular NSAID, with a gaseous mediator, hydrogen sulphide. This conjugate could address the gastrointestinal risks that limit the ability of NSAIDs to drug this historical “gap’. If it works, it’s worth billions.

Diamedica Therapeutics, with a market cap of $20 million, survived a clinical setback for its original target in the crowded diabetes space in late 2014. Since then, it has been reinventing itself by de-risking and refocusing its lead candidate DM-199 on a number of new indications. Recent validation from a significant investment last year by China’s Fosun Pharmaceuticals and Koreas’s SK Group has gone largely unnoticed. The investment reflects the significant potential for its lead product as a recombinant alternative to an existing, but controversially sourced, drug already generating sales in the $100’s of millions in the Far East. LED Medical Diagnostics, with a year-end market cap of $6 million, was transformed at the year-end by a $13.5 million funding to support a proposed acquisition of Apteryx, a private company providing custom software development to the dental market place. The potential synergies expected from this business combination should accelerate sales of its oral diagnostic system and become enormously accretive in 2017.

My three remaining favourites have all continued to suffer “failure to launch” both prior to two years ago and throughout 2015-16. Back then CNS Response, now Mynd Analytics, Medifocus and Ventripoint all shared similar characteristics as follows: “These companies

A management change over ten years ago set the company on a new long and painfully dilutive path (again, based on the old model) to what may finally become a huge win for its long suffering shareholders.

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all carry the three attributes I look for most in healthcare investing; having little or no regulatory risk, addressing unmet medical needs and having high, therapeutic type, margins.”

In spite of these advantages the capital market experience for all three over the past two years has been disastrous. Mynd Analytics survives only through continued investment by its board of directors. It also incurred, yet another crushing share consolidation, this time one for 200. Its only Canadian connection is the recent initiation of a POC trial by the Canadian Armed Forces in Ottawa. Medifocus, under new management, only survived by slashing its costs while maintaining its revenues from its market proven BPH treatment system, Prolieve, at a US$4 million annual rate. Still capital constrained it, at least, reached profitability in the December quarter. Fortunately, Ventripoint, at time of writing, has “flared up” in spectacular fashion allowing for a sudden, positive recapitalization of the company. The announcement that Health Canada approved its new VMS machine launched a massive one day surge in its share price, from .10 to .92 on massive volume. In the two weeks following, over 150 million shares changed hands at an average price of .46, $69 million of trading volume at 4x the price it launched from. The activity allowed the company to completely refresh its ownership, clean up its balance sheet then raise $4 million through new equity and the exercise of warrants. This new capital will allow it to

begin sales of its revamped machine which extends its novel imaging capability to all four chambers of the heart, a need for which there is immediate demand. Hopefully, this is a harbinger of things to come from this forgotten sector of Canada’s capital market.

There are promising signs emerging in the private equity markets. The Harper Government’s VCAP program, initiated in 2013, is finally showing results. According to the Canadian Venture Capital Association’s year-end review for 2016, venture investment reached $3.2 billion last year with $730 million invested in 103 life science deals. Three of these, Quebec based Dalcor Pharmaceuticals, BC’s Zymeworks and Ontario-based Turnstone Biologics, accounted for $270 million of this total.

In addition, Toronto’s Highland Therapeutics recently secured US$200 million of venture debt from Wall Street to bank the launch of its very novel ADHD treatment waiting final FDA approval. The size of this commitment implies the potential for a substantial equity win. My fervent hope is that the so-called Trump rally will continue to provide the “framework” to sustain the resurgence in equities which, in turn, will trickle down to allow new winners to emerge and help the sector “rebuild” in 2017.

To see this story online visit www.biotechnologyfocus.ca/ revisiting-the-canadian-healthcaremarket-2014-2016/ April/May 2017 BIOTECHNOLOGY FOCUS 19

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Clinical Trials

| By Sabrina Ramkellawan

The opportunity for cannabis research is here and now,

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and Canada can lead the way

he world is watching as Canada holds centre stage as the one of the first developed countries to develop federal legislation for the legalization of both medical and recreational cannabis, which is targeted to be unveiled by July 2018.

This will end nearly a century of the prohibition of recreational cannabis. Canada already has federal approval for the use of medical cannabis under Access to Cannabis for Medical Purposes Regulations (ACMPR). Along with legalization, Canada has the potential to be the global leader in medical cannabis research. In addition to the regulatory landscape, Canada has other advantages that have created the ideal environment for conducting medical cannabis research.

Top five reasons for conducting cannabis research in Canada: Unlike many other countries, cannabis is considered a Schedule II drug in Canada, and is currently accessible for medical purposes, in many cases making the investigation of its clinical use easier from a regulatory approval perspective. In the US for example, cannabis is considered a Schedule I drug (falling within the same schedule as drugs such as heroin), making access for research purposes very difficult. Furthermore, research in Canada is not limited in terms of the type of plant that can be used in clinical research, whereas in the US for example, it must be obtained from a single approved supplier, the quality of which has recently come into question.

Canadian licensed cannabis producers are held to high standards of production

by Health Canada, many of which have implemented production practices similar to those in the pharmaceutical industry. This allows for some of the safest and highest quality cannabis products being available for testing in clinical trials. Much of the previous research that has been conducted has investigated the effects of smoked cannabis or cannabisinfused edible products, and evidence pertaining to the pharmacokinetic profile, safety, and tolerability of controlled doses of physiologically active components of the cannabis

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plant is not accurately demonstrated in those studies. The use of high quality products with consistent and known concentrations of key components will allow some of these current knowledge gaps to be filled.

Cannabis is becoming more widely accepted by physicians and patients in Canada, resulting in an increased willingness to participate in clinical research. Medical Cannabis has been accessible in Canada since 2001, and since 2014 it has been available for purchase through Health Canada licensed producers, under the order of a physician. This has resulted in an increased understanding of the potential medical benefits of this drug amongst Canadians, and a slow but growing adoption of its use in regular clinical practice. This has created an environment in which many physicians, researchers, institutions, and patients are ready and willing to be involved in research so that they can contribute to the body of evidence needed to validate its medical use.

Canada is recognized as a leader in research and an ideal location for conducting clinical trials. Canada has many well-established research organizations, and

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academic research-focused hospitals and institutions with which recognized research scientists and professionals are affiliated.

Many of these centres are becoming familiar with cannabis research and are developing validated methods for measuring its active ingredients and their metabolites, in the plant as well as in vivo, as well as establishing the most appropriate study designs for measuring these products’ safety and efficacy. Canada also has a highly diverse ethnic demographic population which makes for an ideal population to conduct research studies.

Legalization alone will create the urgent need for more research to answer questions such as the impact of cannabis use on driving, and risks associated with the use of cannabis in younger and more vulnerable populations. In addition to this, it will create the need for the use of cannabis for medical purposes to be further validated so that there will remain a clear differentiation between medical and recreational products, and physicians can continue to become more confident in prescribing cannabis based medicines in their practices.

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April/May 2017 BIOTECHNOLOGY FOCUS 21

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Clinical Trials Table1: Medical Conditions that may benefit from Medical Cannabis ADD/ADHD Alzheimer’s Disease Anxiety Arthritis Auto Accidents Brain Injury Cancer Chronic Pain Colitis

Concussions Crohn’s Depression Eating Disorders Epilepsy Fibromyalgia Glaucoma Headache & Migraine HIV/AIDS Insomnia

Although cannabis is legally accessible for medical purposes in Canada, it is not currently recognized by Health Canada as an “approved” medication. Amongst the reasons for this state of affairs is the fact that it has not yet undergone the rigours of clinical trials that other prescription drugs on the market have. As a result, cannabis products have generally not been assigned a Drug Identification Number (DIN), which have typically been made accessible to patients through traditional pharmacies, or been made eligible for insurance coverage through many public or private insurers. All stakeholders recognize that formal, robust, and well-controlled clinical trials are needed to validate cannabis based medicines which will eventually contribute to their formal regulatory approval and an increase in accessibility.

There are a few key reasons that have likely contributed to the lack of clinical trial conduct thus far, including: Lack of funding. Clinical trials are extremely costly to conduct. Prior to the commercialization of the cannabis industry, there was a lack of public funding made available for cannabis research. It is likely that now both private and public funding will contribute to the advancement of clinical research in this field.

Medical cannabis already approved for use. Because government regulations allowed licensed companies to produce and sell medical cannabis without first requiring scientific validation, many organizations have not demonstrated motivation to invest in clinical trials. This landscape may change when regulations allow access to cannabis for recreational purposes.

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Irritable Bowel Syndrome Multiple Sclerosis Muscle Spasms Nausea & Vomiting Neuropathic Pain Osteoarthritis Parkinson’s

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Post-Traumatic Stress Disorder Rheumatoid Arthritis Sexual Dysfunction Spinal Cord Injury Wasting Syndrome

Lack of clear guidance for research prioritization. Cannabis is currently prescribed for a wide range of indications, many of which are supported by extensive anecdotal evidence. Without clear guidance on where further research should be prioritized, it is challenging for organizations to determine the most appropriate areas and initiatives in which to invest.

Some companies in Canada have committed to investing significant funds into the advancement of clinical research. MedReleaf, one of Canada’s first and largest Licensed Producers, is one of the few companies that has demonstrated its strong commitment to clinical research. They are taking advantage of Canada’s legal and regulatory landscape, and contributing to the development and validation of innovative cannabis based therapies.

MedReleaf has received approval from Health Canada to conduct their first clinical trial which is now underway, and expected to be completed in the spring of 2017. The study looks at the pharmacokinetics of a capsule product which is currently being prescribed to patients by a number of physicians across Canada.

Products on today’s market currently do not have any information available with regards to pharmacokinetic profiles, which makes it challenging for health care providers to understand and educate patients on their optimal use (i.e. dosing regimen). The results of this trial are expected to begin to fill some of the gaps, and provide this much-needed information to patients and healthcare providers responsible for their care.

Research in this field has only begun to scratch the surface in terms of understanding the medical potential of this plant. Medical cannabis plants contain more than 100 dif-

ferent chemical compounds, many of which are known to be associated with a range of different physiological effects. More research is needed to better understand how these compounds work, both on their own and in synergy with the entourage of other compounds. Unlike pharmaceutical drugs that typically target only one medical condition, medical cannabis has been shown to benefit a wide variety of medical conditions and symptoms. Therefore, clinical research investigating the indication-specific efficacy of cannabis in larger patient populations is needed to validate its use in various therapeutic areas.

It is an exciting time for research in the evolving cannabis industry and Canada is leading the way for the rest of the world to follow with both medical and recreational legalization. The door is wide open for much needed clinical research on cannabinoid based medicine with companies such as MedReleaf leading the way. The best medical care is based on evidence and there is currently not enough conclusive or substantial evidence supporting the utility of cannabis for many of the conditions for which it is currently prescribed. This lack of evidence is an invitation to researchers, scientists, physicians, health care providers, licensed cannabis producers, government agencies and most importantly, patients to be part of shaping the future of this industry and leading the way for validating the use of cannabis as a medicine.

References: 1. A Framework for the Legalization and Regulation of Cannabis in Canada: http:// healthycanadians.gc.ca/task-force-marijuana-groupe-etude/framework-cadre/ alt/framework-cadre-eng.pdf 2. ACMPR Regulations: http://laws.justice. gc.ca/PDF/SOR-2016-230.pdf 3. Article in “The Cannabist: http://www. thecannabist.co/2017/03/31/medicalmarijuana-ptsd-study-johns-hopkinsmaps/76491/ Sabrina Ramkellawan has 15+ years of experience conducting phase I-IV clinical trials for pharmaceutical and biotech companies.

She is currently involved in a number of medical cannabis clinical trials and speaking engagements on this topic. She is a Clinical Research Consultant, Vice President of the Clinical Research Association of Canada, and the Co-Founder of the Canadian Institute for Medical Advancement.

To see this story online visit www.biotechnologyfocus.ca/theopportunity-for-cannabis-research-is-hereand-now-and-canada-can-lead-the-way

| By Douglas W Loe

Cell pouch macro-encapsulation offers solution to rejection in

Cell Therapy Cell therapy represents one of the most promising approaches to treating disease. A great range of cells can serve in cell therapy including blood and bone marrow cells, mature and immature solid tissue cells, adult stem cells1 and, most controversially, embryonic stem cells. One of the biggest hurdles, however, in effectively treating patients using cell therapy is rejection of the cells introduced into the body by the immune system. Immune system suppression is one way to solve this problem, but it increases the patient’s vulnerability to infection and disease.

Diabetes Research

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lternatively, researchers have begun exploring encapsulation strategies. As authors Song and Roy in Biotechnology and Bioengineering explain, encapsulated islet cells within a semipermeable membrane would not be vulnerable to the immune system’s response.

The membrane would allow for the exchange of nutrients and small molecules (such as glucose and insulin) between the encapsulated islets and the external environment, creating an artificial pancreas. There are two forms of encapsulation – microencapsulation and macroencapsulation.

Microencapsulation Song and Roy define microencapsulation ranging 400-800μm in diameter as a sphere surrounding the islet, that relies on diffusive nutrient transport and only requires minor surgery for implantation. In animal studies, implantation sites have typically involved the peritoneal cavity or under the renal capsule.

The membrane deployed for encapsulation should be non-cytotoxic in nature, and may be made with alginate (derived from brown algae) which is typically described as a material used for microencapsulation. In one recent study, Vegas and colleagues demonstrated in Nature Medicine that the use of a modified alginate material used together with human embryonic stem cells resulted in the first long-term glycemic correction of immunocompetent mice, with chemical induction of Type I diabetes by streptozotocin.

Still, there are challenges with the use of microencapsulation, notably the need for a large enough transplantation site to accommodate the necessary number of capsules, a microvascular bed that will allow for immediate nutrient access, and the difficulty in microcapsule removal. The long-term survival rates for functional islets is another hurdle since vascularization is likely not established. Thus, a number of issues have plagued this field that have not yet been solved to achieve a robust biologically relevant approach to cell therapy.

Macroencapsulation Macroencapsulation bypasses several of the problems noted above. Macroencapsulation usually refers to large (in the context to microencapsulated capsules above) extravascular and intravascular devices. There are a multitude of forms in which macroencapsulation can occur such as hydrogels, and sheets, but for brevity we focus on pouches.

The Cell Pouch approach has already been shown to work well as a platform for niche islet cell transplantation market, with next advances in regenerative medicine solidly enhancing Cell Pouch potential. One firm, SernoApril/May 2017 BIOTECHNOLOGY FOCUS 23

Diabetes Research Illustration of Insulin Production in a Functioning Human Pancreas (Source: US National Institutes of Health)

va, has already recognized that its Cell Pouch’s medical prospects extend well beyond its utility as a reservoir for pancreas-derived islets, and we will focus on this particular technology for illustrative purposes. Researchers are advancing well on figuring out how to create differentiated cell therapies from stem cell precursors, but attention is shifting to how to protect them from immunological attack post-transplantation, how to enable required vascularization and where to house the cells in the body so they are retrievable.

Interestingly, a paper available online and to be published in early 2017 in Diabetologia

by Leiden University researchers specifically emphasized just how susceptible to immunological attack pancreatic progenitor stem cells are, both from innate and adapted immunological pathways. The paper concluded that immune intervention is key to making cell therapies viable longer term and that cellimpermeable macroencapsulation technologies should be explored as a first option, just as London Ontario’s Sernova is doing with its ongoing vascularized Cell Pouch initiatives.

We were intrigued to read in a review published recently in the British journal Nature that a Harvard group is gaining focus on how to protect implanted stem cell-derived islets from immunological attack, again showing us that technologies like Cell Pouch could be as relevant to cell therapy commercial prospects as they reciprocally are to Cell Pouch itself.

A Backgrounder on Type I Diabetes Sernova’s Cell Pouch research focuses on Type I diabetes, and it may prove useful to 24 BIOTECHNOLOGY FOCUS April/May 2017

quickly review some of the data about that condition. Diabetes counts as among one of the most common chronic diseases in North America, and manifests itself in two different forms, Type I and Type II. The commonality between both types lies in high blood glucose levels (hyperglycemia) which eventually lead to several health complications, while the primary distinction between the two types lies in the body’s ability to manufacture insulin — in patients with Type I diabetes the body does not produce any insulin needed to break down glucose, whereas in patients with Type II diabetes, the body still produces insulin but at insufficient levels required to break down glucose. Insulin, as our readers are likely aware, is the hormone produced in the pancreas and released into the blood stream, with the main function of regulating blood glucose levels and transporting it to cells for conversion into energy.

Type I diabetes is typically diagnosed in individuals early on in life, and is a chronic autoimmune disease in which the body’s own immune system attacks the beta cells (to be used interchangeably with β-cells within this report) in the Islets of Langerhans of the pancreas, ultimately resulting in the elimination of insulin production. Clinical manifestations of Type I diabetes typically include extreme thirst, frequent urination, fatigue, unexplained weight loss and sudden vision changes.

Type I diabetes is considered relatively rare when compared to its Type II counterpart; for context, there are about 60,000 new cases of Type II diabetes diagnosed in Canada each year. For Type I diabetes, for which annual estimates of the disease in Canada are limited even though disease onset can transpire as early as during the first year of life in infants, the Public Health Agency of Canada estimates current Type I diabetes incidence at 15 cases per 100,000 children (aged 18 and under). But incidence does seem to vary by geography, as for example in the US where the American Diabetes Association estimates there are about 40,000 new Type I diabetes diagnoses each year.

The underlying causes of Type I diabetes are not precisely known, given its multi-factorial nature and diversity in genetic mutations/genotypes across different patient cohorts, and there is even indirect evidence for viral and bacterial infections as well. Direct environmental and/ or dietary triggers for the disease have yet to be firmly established, though ever-escalating consumption of refined carbohydrate in the general population is gathering attention as a key culprit in diabetes etiology. And immune events may transpire before clinical manifestations of disease, including but not limited to production of islet cell-targeted auto-antibodies from plasma B-cells or islet-specific CD4+ and

CD8+ T-cells that can infiltrate the pancreas to engender islet cell death.

By the time symptoms reach clinical manifestation, patients are typically at the end stage of the disease course, with approximately 60 to 90 per cent of all beta cells destroyed or rendered dysfunctional. Longer term, poor management of the disease often leads to severe health complications. A 30-year natural history of the disease as published by Pambianco and colleagues in Diabetes showed trends in renal failure, coronary heart disease, nephropathy (diabetic kidney disease), and retinopathy (diabetic eye disease). Although new therapies are now available for the management of kidney and eye diseases, leading to the decline of trends for renal failure and retinopathies, there still remains the risk of such complications still arising.

There is no cure for the disease as of yet, but current standard of care continues to be insulin replacement therapy, which has been a plausible option since insulin’s discovery back in the 1920s. Insulin is typically administered by injection though inhalable alternatives like Afrezza are now FDA-approved, but insulin supplementation does suffer from a few limitations including the need to monitor all aspects of daily living, including food intake, physical activity, and the regimented scheduling of insulin injection around these activities. Certainly, these limitations have been substantially mitigated by availability of continuous real time blood glucose monitoring and orallyactive small-molecule drugs for managing earlier-stage disease, frequent insulin injection is still necessary in advanced disease, and prevalence of such cases is growing.

Cell Pouches Addresses Challenges Faced by Other Experimental Methods of Diabetes Treatement The Cell Pouch System aims to overcome several challenges experienced in islet cell transplantation. First, it confers immune protection by allowing for vascularized tissue chambers to develop within the device, while in parallel, islets deployed into the device are microencapsulated to create a barrier between islets and systemic agents of cell-based immunity.

Accordingly, Cell Pouch-incorporated islets exist within a well-vascularized environment into which glucose-responsive hormones can be released and remain bio-active, yet remain ‘immune’ to immunological attack through micro-encapsulation and thus preserve cellular activity/survival far longer than would otherwise be possible if islets were transplanted without Cell Pouch functionality. Other devices we have reviewed have conferred immune protection to varying degree, but often suffer from excessive fibrosis and this can engender

Diabetes Research islet cell death over time. Long-term animal studies show that Cell Pouch does not suffer from this limitation, though human studies will of course be required to confirm clinical relevance of this.

1) Immune response challenge: Researchers did note an increase in anti-Gal IgM levels across the group. Anti-Gal is a type of antibody that arises following pig-to-human transplantation. However, the antibody levels were considered by researchers to be far lower than a separate recorded porcine islet cell transplant study. Nor did researchers identify any cases of immunosuppression during the course of the study. Taken together results appear to be supportive of modulating immune response. While results were positive, researchers noted a few discrepancies including the inability to detect the porcine Cpeptide levels in patients, and the emergence of two subgroups of patients post-transplant (one subgroup achieved significant reduction in insulin requirements while the other subgroup required a slight increase, with the latter being the same as the control group).

Today immune protection is conferred through different means, mostly through islet cell microencapsulation within the device as Sernova has described qualitatively in financial statements and MD&A, and we look for technical details to be revealed in future quarters. The firm’s earlier Phase I/II trial did not use micro-encapsulation, and so pharmacologic immunosuppression in parallel with Cell Pouch-based islet cell therapy was required back then, and separately, those initial studies used donor human islets to validate Cell Pouch performance and not stem cell-derived glucose responsive cells that we expect Sernova and collaborators to develop as a more sustainable, higher-volume source of islet cell supply.

2) Long-term insulin independence: Given the ease of which the device is implanted just under the skin of the patient, Cell Pouch is thus easily accessible if it needs to be removed or to replenish the device with functioning islets over time. Cell Pouch houses islet cells in a tissue matrix, thereby encouraging vascularization or the development of micro-vessels needed for maintaining an organ-like environment from which blood glucose-modulating hormones (principally insulin) can be released systemically and for supplying required nutrients for islet cell survival. Since the device is biocompatible and non-metallic, it is amenable to non-invasive imaging to assess vessel growth and cell survival.

3) Overcome donor islet cell shortage: One of the main drawbacks to the Edmonton Protocol is that the method is more effective when islet cells were collected from more than one donor, and limited supply of donor

organs is one of the main drivers to identifying alternative sources of islet supply. That said, Sernova is still focused on validating Cell Pouch utility for cell transplantation using human donor islets initially, to determine if the device can function as a long-term organ-like environment for donor islets. It is known that most islets infused into the portal vein by the Edmonton Protocol do not survive long in this environment, and so any technology that enhances islet survivability in vivo could at minimum expand the addressable transplant patient population just for conventional islet transplantation alone.

Cell Pouch Clinical Data Our review of the current literature suggests to us that generating a highly-vascularized and locally immune-protective cell therapy environment is becoming increasingly topical in this space and that Cell Pouch has already shown itself to be a credible solution to that challenge, for which validating followon clinical studies are contemplated. After animal studies, Sernova conducted a Phase 1/2first-in-human clinical trial in collaboration with the University of Alberta and Edmonton Protocol innovator AMJ Shapiro (a collaborator on the 2015 preclinical study published in Transplantation), three patients enrolled in the study at the time. In this pilot study, the device was shown to be biocompatible when placed subcutaneously and the transplanted islets when assessed upon device explant were shown to be surviving, wellvascularized within a tissue matrix and able to produce insulin, glucagon, and somatostatin, key hormones in the control of blood glucose levels. Based on the encouraging small and large animal preclinical results and the first in human results, Sernova is now preparing to conduct further human clinical testing at a transplantation center in the United States with Juvenile Diabetes Research Foundation (JDRF) grant funding.

Regulatory Authorities Indicate Urgency for Artificial Pancreas Technologies Diabetes has continuously been an issue for the FDA, as identified in a paper published in Drug Discovery Today, where the agency noted that the artificial pancreas is “one of its critical path initiatives”. What the agency considers this to define is an automated system of controls to replace the function of the endocrine pancreas in patients with diabetes, for which an artificial pancreas can be either completely biological by way of an islet transplant or mechanical-biological hybrid. More important, the FDA has also discussed that potential clinical trial design should be expanded into testing patient populations including all

adult patients with Type I diabetes mellitus, and recipients of islet cell transplantation who may be free of severe hypoglycemia but may require exogenous insulin.

Furthermore, the FDA has also issued final guidance for Investigational Device Exemption (IDE) and Premarket Approval Applications (PMA) as it relates to Artificial Pancreas Device Systems back in November 2012, while separately, the JDRF established a new $42M fund in January 2017 that specifically targets innovation in medicine and device development in type 1 diabetes management, and the fund has already invested in technologies overlapping with Cell Pouch through investment in insulin delivery system developer Bigfoot Biomedical. Sernova does have a few competitors in the regenerative medicine/cell reservoir space that are developing distinct technologies independently, and these include CA-based Encaptra developer ViaCyte, Australia-based mesenchymal stem cell developer Mesoblast, also-Australia-based NTCELL (alginate capsulecoated porcine nerve cells) developer Living Cell Technologies, and islet sheet developer Cerco Medical.

Reference 1. http://www.medicinenet.com/stem_ cells/article.htm Douglas W Loe, PhD MBA, healthcare equity analyst with Echelon Wealth Partners who brings nearly two decades of experience to financial analysis in the global drug development, medical technology, healthcare services and specialty pharmaceutical sectors. Dr. Loe has been recognized as one of Canada’s top healthcare analysts both by the StarMine Analysts Awards and Brendan Wood International, based on the quality of his recommendations to institutional investors. With his extensive knowledge of the healthcare industry, Dr. Loe analyzes and publishes his views on trends in the sector and interprets them within the context of a diversified suite of companies under coverage across multiple healthcare industry silos, many of which locked in substantial returns for investors over the last several quarters.

Prior to his career shift into capital markets, Dr. Loe’s academic career was focused on scientific underpinnings of cancer chemotherapy and multidrug resistance.

He holds a Ph.D. in biochemistry from the University of Guelph and a MBA from Queen’s University.

To see this story online visit www.biotechnologyfocus.ca/cell-pouchmacro-encapsulation-offers-solution-torejection-in-cell-therapy April/May 2017 BIOTECHNOLOGY FOCUS 25

20th anniversary

| Compiled by Shawn Lawrence

Biotechnology 20th Anniversary Special: Years 4 to 6!

Biotechnology Focus at the years 1998 to 2000

Continuing with our celebration of Biotechnology Focus’ twentieth anniversary, we’re take a look back at our past issues to highlight various moments in time that speak not just of then, but of today as well. This month we’ll look back at past issues from the years 2001 to 2003.

January/February 2001 Vol. 4, No. 1

Staff writer Mary Sanchez provides tips for successful drug delivery partnerships with big pharma, while Timothy Caulfield writes about patents, labels and regulatory environments and whether there is room for social-ethical concerns.

In Canadian news, Ontario’s first clinical genomics centre opens up at Toronto General Hospital.

March 2001 Vol. 4, No. 2

In a precursor to our regular Innovator spotlight section Dr. Marianna Sikorska is the subject of our cover story as she details her transition from lab researcher to entrepreneur. We also explore bioinformatics, where biology and computer science converge. Across Canada we look at some of the advancements being made in the Canadian stem cell research field. Finally, we celebrate the Canadian Institutes of Health Research’s first year of existence.

July/August 2001

January/February 2002

Sept

Vol 5, No 1

May 2002

Vol. 4, No. 6

Vol 5, No 4

Vol 5

With the post-genomics era upon us, the race to map the proteome mapping kicks into high gear as Mary Sanchez takes our readers on a tour inside the proteomics research tool shed Next, George Wolff asks “where are the Canadian biotech investors.” We also profile Dr. Terrance P. Snutch and his company NeuroMed Technologies Inc., and finally, we go one-on-one with then Genome Canada president and CEO Dr. Martin Godbout.

In research news, a U.S. company (Advanced Cell Technology Inc.) successfully clones human embryos. Our feature story lineup includes a look at bio-cheminformatics and how they are integrating data in the drug development process. The aftermath of Sept. 11 continues as the potential market for bioterrorism countermeasures moves to the front burner. Finally, we feature Warren Steck and his Saskatoon-based plant extract and phytochemical company Fytokem Products Inc. in our Innovator spotlight.

We keep the advice pieces coming with a jointly written article by David Lauzon, Jay Levine and Brad Holden’s on successful expansion/scale up strategies. Next, Anya Colussi’s gives advice on how to collect and utilize strategic information. In her cover story, Mary Sanchez looks at pharmaceutical producing plants, and finally, you may know him today as one of our regular contributing writers, but once upon a time, industry expert Wayne Schnarr was also one of our featured innovators.

In this facing ing po releva the ev era of erable Conso bioinf

March 2002

June 2002

Nov

With the news that Bio 2002 is headed to Toronto, ON, we discuss conference optimization and offer up tips on how to maximize your conference time. On technical front, we look at what’s new in the separation sciences including downstream processing. In terms of new trends, elearning catches on fast with biotech firm facing workforce development challenges. And our featured innovator is Dr. Rosemonde Mandeville, founder and then CEO of Biophage Pharma Inc.

We prepared this behemoth (52-page) issue for the 2012 Bio International Convention hosted in Toronto. More than 15,000 attended and “Oh Canada”, did we put on a show! Within this issue, we did our best to showcase the tremendous growth in Canada’s biotech industry, spotlighting all our “Can-do clusters” from coast-to-coast. Among the other stories are individual spotlight pieces on Canadian molecular diagnostic developers, neuroscience biotech firms, and leading Canadian pioneers in the biophotonics space.

September 2001 Vol. 4, No. 7

Our cover story AIDS @ 20 was an in-depth historical look at the disease that was first mis-introduced to the world as GRID-Gay related immune deficiency. The disease got a much more suited acronym less than one year later. And while we’ve come a long way in terms of advances in detection, treatment and prevention of the disease, there is of course still considerable work to be done.

2001

Nov

Vol 5

Lorne issue Canad obser scien grabb total V Next, Diabe on tre

by Ca Trans togen and N

2002

Biotechnology Focus at the years 1998 to 2000

2001 April 2001 Vol. 4, No. 3

In this issue, Mary Sanchez’s piece “Drug Discovery 2001” highlights the various cutting edge technologies needed to generate a new generation of drugs. Next, we lined up Dr. Tony Cruz, CEO of Transition Therapeutics . To wrap it up, we showcase some of the British Columbia biotech industries biggest players.

May 2001 Vol. 4, No. 4

October 2001 Vol. 4, No. 8

This issue kicks off in a somber way as our publisher Terri Pavelic takes a moment to recognize some of those we as an industry lost in the 9/11 attacks.

All these year’s later, it’s still a haunting read. Next, Melanie Windover’s cover story “Greener Pigs” focuses on work out of the University of Guelph where transgenic pigs, called Enviropigs™, were being purposed to create less polluting phosphorus in their feces. Graham Smith follows with an outline piece on the timelines and costs associated with preclinical development of novel therapeutic agents.

Feature stories include our examination of the EU’s position on patenting higher life forms, the explosion of miniature science and advent of miNovember/December 2001 croarray technologies in Canada, and Vol. 4, No. 9 we spotlight contract research organiBioprocessing is the subject of our zations and Canadian university tech cover story along with the subtleties transfer offices across the country. of scale up. Next, industry experts offer up their tips on how to make June 2001 the transition to go bigger. The Vol. 4, No. 5 patentability of Gene’s is also a hot Cloning is all the rage as the Scottopic in this issue as we highlight the tish-based biotech that introduced Province of Ontario’s decision to take us to Dolly the Sheep produces the first transgenic cloned piglets. Mean- on Utah-based Myriad Genetics, asking the federal government to revisit while, politicians in the U.S. introthe validity of the law that allows the duce legislation called the “Human patenting of the human gene.

Cloning Prohibition Act of 2001”.

26 BIOTECHNOLOGY FOCUS April/May 2017

Vol 5, No 2

Vol 5, No 5

July/August 2002 Vol 5, No 6

On the cover, Canadian researchers step up their efforts to understand proteins and solve the proteome puzzle using computational approaches. The results are in on the Biotechnology Human Resource Council’s 2000 round-table PulseKeeper survey. We also recap two new reports from Ernst & Young and Deloitte & Touche on the state of the industry. Finally, we roundup the “best of Bio 2002”.

Vol 5

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20th anniversary We hope you enjoyed this retrospective look at Biotechnology Focus Years 4 to 6. Be sure to check back to see our next timeline piece for 2004 to 2006!

September 2002 Vol 5, No 7

January 2003

May 2003

September 2003

Vol 6, No 5

Vol 6, No 9

For 2003, we expanded from nine to 12 issues. Taking the January cover spot is Particia Nicholson’s article on the current state of Canadian biotech. Despite Canada’s reputation for first-rate research and its long list of promising startups, the Canadian biotech drug development industry is need of a shot in the arm. 14 years later, the same capital shortage problems still exist.

On the cover, Dr. William Hunter leads Angiotech into the big leagues.

Next, metabolomics emerges as the next “omic” science of interest. In global news, severe acute respiratory syndrome (SARS) takes the world by storm and researchers from the Michael Smith Genome Sciences Centre respond by mapping its DNA sequence. And finally, the Medical and Related Sciences (MaRS) Discovery District is launched in Toronto.

We go green with this issue, beginning with Deborah Komlos article on special ingredients and novel bioprocessing option that are helping to spice up the food industry, followed with an environmental piece again by Komlos this time on the NRC’s Biotechnology Research Institute aiming for a cleaner and greener future.

Patricia Nicholson keeps the ag-biotech conversation going with her article on marketing bioporducts.

Vol 6, No 1

In this issue we look at the struggle facing policy makers in developing policies and guidelines that are relevant in the post-genomics era, the evolution of biofuels and a new era of bioproducts, and the Interoperable Informatics Infrastructure Consortium’s (I3C) work to simplify bioinformatics.

November/December 2002 Vol 5, No 8

Lorne Zeiler kicks things this issue off with an analysis of the Canadian venture capital industry observing that biotech and life science companies were actually grabbing a larger share of the total VC market than expected.

Next, Mary Sanchez looks at Diabetes marketplace focusing on treatments being developed

by Canadian companies such as Transition Therapeutics, Diabetogen Bioscieces, Diamedica Inc. and Neurochem.

February 2003 Vol 6, No 2

Features from this issue include: In pursuit of a treatment for prostate cancer, the merits of project management, and the Canadian Bioprocess Institute copes with the bioprocessing crunch.

2002

June 2003 Vol 6, No6

In this issue we look at the emerging bioproducts industry’s impact on rural economies, the latest milestones of Canada’s top research universities, ethical considerations for plant-derived vaccines, and our featured innovator is Dr. Martin Gleave of OncoGenex Technologies.

2003

October 2003 Vol 6, No 10

Coinciding with what had been a trying year for public health in Canada in terms of outbreaks of infectious diseases like SARS, West Nile Virus and BSE , we ran a piece about the prospects of new therapeutics countering superbugs. Of note from this article was the growing concern even back then around antibiotic resistance. We also introduced a new section to the magazine called Asked & Answered where we pose some of the most pressing questions facing biotechnology companies to industry experts to get their perspectives.

2003 2003

November/December 2002 Vol 5, No 9

page) nal More anada”, s ise the biotech n-do mong potlight agnostech neers in

March 2003

July 2003

November 2003

Hot takes from this issue include: Building the bio-economy, a technology roadmap marks the route; and Public relations for biotechnology companies, a luxury or a necessity?

In terms of our company spotlight and innovator pieces, we showcased MDS Proteomics and KGK Synergize.

The Protein Engineering Centres of Excellence (PENCE) mobilizes its research expertise against SARS, we glance key proteomic projects underway in Canada, our innovator spotlight features Inex Pharmaceuticals Corp.’s Dr. Pieter Cullis and contributing writer Richard Clark gives his advice on selling your business and having a sound exit strategy.

Themes from this issue include the rpublic sectors role in boosting the bio-economy, how to attract more clinical trials to Canada, and the pros of outsourcing.

Vol 6, No 3

April 2003 Vol 6, No 4

We close out 2002 with a pretty diverse issue, beginning with our cover story “Adventures in bioprocessing.” As Tim Lougheed notes, the stakes in bioprocessing are high, and interest in biologics was mounting even back then. Next, on the outsourcing front, we over advice for negotiating clinical trial agreements with university-hospital sites. We close things out with a profile piece on Hermes Chan and his medical biotech company MedMira Laboratories Inc.

We celebrate the 50th anniversary of the discovery of the DNA double helix by Drs. James Watson and Francis Crick, as key figures from the Canadian biotech reflect on its significance to their work.

Vol 6, No 7

Vol 6, No 11

August 2003 Vol 6, No 8

We spotlight the drug delivery technologies of some of the Canadian drug-delivery firms presenting at BioFinance 2013 including Labopharm Inc., Inex Pharmaceuticals Corp., Protiva Biotherapeutics, Supratek Pharma Inc. , Delex Therapeutics Inc. and Topigen Pharmaceuticals.

We also look at tech transfer offices across Canada, and finally, Medicago’s Louis-Philippe Vezina is our innovator.

December 2003 Vol 6, No 12

Headlining the editorial lineup is our cover story biomarkers, and how not only do they shed light on disease, but they also can improve drug development. Mark Livingston follows with his advice piece on making the perfect pitch, and Dr. Jeffrey Skolnicks closes things off with protein structure prediction in drug discovery.

April/May 2017 BIOTECHNOLOGY FOCUS 27

infectious disease

| By Ciara Mccann

New drug combination therapy could treat

the world’s worst infectious diseases

E

ric Brown, scientist at the Michael G. DeGroote Institute for Infectious Disease Research (IIDR) at McMaster University in Hamilton, Ontario, has discovered a drug combination that has the potential to change medical practice for the treatment of drug-resistant infections.

The IIDR is a world-leading centre for infectious disease antimicrobial resistance (AMR).

The institute is a multi-disciplinary team of investigators and trainees working to solve the crisis in antibiotics through the discovery of the underpinnings of AMR and applying this knowledge to find new treatments and to inform clinical practice.

AMR is an increasingly dangerous global health crisis and threat to the practice of medicine. It is the result of bacteria acquiring genes that protect them from antibiotics. Currently, there are bacterial strains that are resistant to most and even all current drugs.

The misuse and overuse of antibiotics is making the crisis worse and the pharmaceutical industry, which used to supply new antibiotics, has not discovered a new class of drug since the early 1980s – over 30 years ago.

To address the AMR crisis, innovation in antibiotic discovery and alternatives to antibiotics are crucial. The IIDR is at the forefront of such efforts and members, including Eric Brown, have made numerous advances in this area over the past decade. Brown’s latest project, which was published in Nature Microbiology this past March, is another drug

discovery breakthrough for the institute.

Brown’s new discovery is a drug combination that targets Gram-negative bacteria, the superbugs that are resistant to all known antibiotics which the World Health Organization (WHO) identified this past February as of “critical priority” for their threat to human health.

“We looked for compounds that would mess with these bacteria, and I think we’re nailing it,” said Brown, who is also a professor of biochemistry and biomedical science at McMaster University’s Michael G. DeGroote School of Medicine.

Gram-negative bacteria are increasingly resistant to all antibiotics including last resort drugs, such as colistin, and lead to pneumonia, wound or surgical site and bloodstream infections, as well as meningitis in healthcare settings.

The bacteria have an intrinsically impenetrable outer shell that is a barrier to many otherwise effective antibiotics, and this makes these infections deadly, particularly in hospital settings.

Brown and his team developed a technology to detect perturbations on the outer surface of Gram-negative bacteria and then tested a collection of 1,440 off-patent drugs in search of one that might compromise that barrier in the superbugs.

Drug screening was done at the Centre for Microbial Chemical Biology (CMCB), IIDR’s core facility and one of the first academic

labs of its kind in Canada. The CMCB’s High Throughput Screening Lab has a unique library of molecules and drug screening capabilities that were vital in helping Brown and his team find the drug that breaks down the bacteria.

“These pathogens are really hard nuts to crack, but we found a molecule that shreds that shell and allows antibiotics to enter and be effective,” said Brown.

The scientists discovered that a previously known antiprotozoal drug, pentamidine, disrupts the cell surface of Gram-negative bacteria, even the most resistant.

Pentamidine, when used with other antibiotics, was found to be particularly effective against two of the three pathogens, which the WHO has identified as having the most critical priority for development of new antibiotics. Those were Acinetobacter baumannii and the Enterobacteriaceae. The combo therapy also had some impact on the third most critical bacterial pathogen, Pseudomonas aeruginosa.

The discovery was found to be effective in the lab and in mice, but more work is needed to offset potential side effects and ensure human safety. Brown added that his lab is continuing to test more compounds as well.

“One of the things we want to pursue further is why this is working so well. Pentamidine seems to enable a large number of antibiotics to now be effective against Gramnegative bacteria that weren’t before.”

“Also, the fact that Pentamidine is an existing drug means it has strong potential for a much quicker path to the clinic.”

Brown and other scientists at the IIDR are continuing to look for other drugs that will break down Gram-negative bacteria and others.

Using state-of-the-art infrastructure in drug discovery and innovation in pathogen surveillance, the IIDR offers new hope in the pressing battle against drug-resistant germs that kill thousands of people annually and threaten the very foundation of modern medicine.

To see this story online visit www.biotechnologyfocus.ca/new-drugcombination-therapy-could-treat-the-worldsworst-infectious-diseases

Eric Brown talks with students in his laboratory 28 BIOTECHNOLOGY FOCUS April/May 2017

new PRODUCTS

Cameras FLIR Systems, Inc. has introduced two new high-speed, longwave thermal cameras, the FLIR X6900sc SLS and FLIR X8500sc SLS for science and research applications. The new cameras are based on FLIR’s highest-speed, midwave thermal camera models, but feature strained layer superlattice (SLS) detectors filtered for longwave infrared. These SLS detectors produce high frame rates and wide temperature ranges, as well as integration times that are more than 12 times faster than their midwave counterparts. The X6900sc SLS high-speed longwave thermal camera captures full-frame 640×512 thermal images at 1004 frames per second, at temperatures up to 3000 degrees Celsius. The FLIR DVIR™, a removable storage device that comes standard with the X6900sc SLS, saves up to 26 seconds of data to on-camera RAM without dropping frames. With advanced triggering options and an automatic, fourposition filter wheel, this camera offers the functionality to stop motion on high-speed events both in the lab and at the test range.

The X8500sc SLS records up to 181 frames per second of full 1280×1024 HD thermal imagery. This camera also features the FLIR DVIR which saves up to 36 seconds of data to on-camera RAM without dropping frames, and can measure temperatures up to 3000 degrees Celsius. The X8500sc SLS

streams high-speed, 14-bit data simultaneously over Gigabit Ethernet, Camera Link, and CoaXpress for live viewing, analysis or recording.

Web: www.flir.com/science Thermometers H-B Instrument – SP Scienceware has released its Electronic Verification Thermometers calibrated specifically for freezers, refrigerators and incubators. Equipped with liquid or glass bead filled bottles which mimic the sample, these thermometers deliver temperature verification without the risk of sample con-

tamination. Multiple models are available with features including dual zone, single or multiple displays, alarms and more.

Web: www.belart.com Incubators Torrey Pines Scientific EchoTherm™ vibration free bench top chilling incubators are Peltier-based for heating and chilling, and are vibration-free making them ideal for doing protein crystallizations. They

Syringe Pumps KD Scientific offers its new Gemini 88 plus dual rate syringe pump.

This unique pump is really two individual syringe pumps in one instrument, providing two independent pumping channels linked through hardware and software. The pump can infuse simultaneously at different rates, or infuse with one syringe and withdraw with the other. When combined with a valve box, it provides the continuous delivery of a peristaltic or piston pump with the accuracy, absence of pulsation and low flow rates of a syringe pump. This functionality allows continuous infusion or withdrawal, 24 hours a day, 365 days a year with the accuracy and low flow of a KD Scientific syringe pump.

Other key features include a large touch screen display for quick and easy setup, high

or low pressure operation and continuous fluid delivery. The instrument is compatible with a wide variety of syringes.

Web: www.kdscientific.com

have 100 litre capacity and can hold 66 assay plates without stacking. Other applications include incubating marine samples below room temperature, enzyme reactions and deactivations, hybridizations, ligations, and general lab incubations. There are two models. The IN55 is fully programmable for temperature cycling crystals for better growth while the IN50 is simple digital.

Both models feature temperature ramping up and down. Chamber size for both is 100 liters. They are settable form 4.0ºC to 70.0ºC and feature temperature control to ± 0.1°C, and can be controlled at or near room temperature. Chamber size is 24″ high by 20″ deep by 14″ wide and come with eight stainless steel racks with room for twelve racks. Racks are split in the middle for variety of sample sizes.

Web: www.torreypinesscientific.com.

Flow Cabinets Air Science Purair Horizontal Laminar Flow Cabinets are designed to protect equipment and other contents of the work zone from particulates, for applications sensitive to such contamination. The cabinets are designed for desktop use, but may be installed on an optional mobile base stand. Users can choose from a standard powder coated interior or stainless steel interior (-SS models). They come in 2′, 3′, 4′, 5′, 6′ and 8′ widths in standard and extra tall heights for general applications.

Some of the other features and benefits of the Purair Horizontal LF Series include: a perforated rear wall to reduce work surface turbulence by removing some of the airflow to the rear, a lip on the rear to protect the ULPA filter from spills, and high capacity air handling that delivers flow velocity of 0.350.45 m/s or 70-90 fpm. Other accessories are an IV bar, service fixtures, base stand, UV lamp and front door/cover. The hoods are shipped fully assembled. No installation is required; just plug them in and use them.

Web: http://www.airscience.com/ laminar-flow-hoods April/May 2017 BIOTECHNOLOGY FOCUS 29

| By Ulrich Krull

LAST word

The Future is Already Here

O

ne needs only to turn on any modern communication device to understand how interconnected the world has become, and to appreciate the explosion of information in all areas of the life sciences and medicine. We are better able to communicate about much richer raw data sources than ever before, and this creates some interesting opportunities for the future of the pharma-related biotechnology industries.

One direction that will have significant impact is the development of artificial intelligence. More specifically, the topics of deep learning and machine learning will be focal points, and Canada is well positioned in these areas. When it comes to pharma-related biotechnology, desk top modeling platforms already offer utility in representing putative receptor sites and searching for structures with potential for selective binding. Such approaches are usually quite focused as defined by the user, and tend to be limited in the volume of space and the permutations that can be searched at high resolution. Such methods are also useful for directing the choice of compounds and biomolecules and should be explored for value as therapeutic agents, but this is a crutch for the traditional paradigm of screening suites of compounds to feed a funnel that selects lead compounds for more detailed evaluation.

Now imagine an autonomous machine platform that can integrate information from thousands of publications about the structure and behavior of a particular receptor including the complexity added by considering energy landscapes, and that can concurrently search through thousands more of unrelated publications for sets of structures that may have utility in binding. This ability to sift through all the scientific literature represents a form of data mining at a scale that only now is becoming possible.

It is not just the scale of the data though, as there must be interpretation of the meaning of data and the relational information associated with molecular interactions. This is the machine learning aspect, where simulated intelligence that searches for patterns can inspect data that is far too great for an individual to manage. The approach takes on even more significance when one considers scaling of molecular complexity from small molecule pharma to biopharmaceuticals. But what about concerns regarding the quality of the data, and the significant potential that there is data that may be fabricated? An interesting twist that has already been demonstrated by machine learning is the ability 30 BIOTECHNOLOGY FOCUS April/May 2017

to detect fraudulent data and concocted results, which may be essential given the directions taken in a world of “alternate facts”.

A second direction again reflects on the access provided by the Internet, but beyond data – to draw in those who create and interpret such data. Imagine an ability to encourage and harvest creativity by drawing on collective problem solving and collective intelligence of a global community. This will seem foreign to anyone operating in the traditional modes of the pharma-related biotechnology industries, where intellectual property and details about processes are carefully controlled to achieve and maintain market position. Yet the biotechnology industry is not dissimilar to numerous other technology-based sectors, and one can see a change in some of these industries to embrace crowd sourcing to stimulate development of new ideas around intractable problems.

There will be a balance of interests here, in that there is the potential to lose some control of intellectual property. However, there is a significant gap between the formulation of an idea and the demonstration of reduction to practice, with all manner of non-disclosure and licensing agreements as a buffer along this road. There will need to be some innovation to encourage contributions of high quality, but various software and engineering sectors are already using such approaches with good outcomes. Secondary beneficial outcomes would be the ability to encourage a different public attitude to the secrecy usually attached to pharma-related enterprises, and an opportunity to bridge the industry-academic divide to forge productive relationships and experiential learning.

The potential for such innovation within the pharma-related biotechnology industry is in hand now. My prediction is that there will be rapid uptake of the machine learning opportunity, in particular because it offers another route to overcome the limitations encountered in more traditional approaches of drug discovery and design.

Ulrich Krull is a Professor of Analytical Chemistry and AstraZeneca Chair in Biotechnology, Interim Principal: University of Toronto Mississauga, Interim Vice-President: University of Toronto, Editor - Analytica Chimica Acta, University of Toronto Mississauga Got something to say? Please send your comments/letters to biotechnology_focus@promotive.net

CALENDAR

MAY 2017

JULY 2017

May 1-2

July 23-26

November 1-3 9th Canadian Science Policy Conference Venue : Toronto, ON Emial : info@sciencepolicy.ca Web: www.sciencepolicy.ca

new card:Layout 1 1/31/2013 BIO 9:09World AM Page 1 Bloom Burton & Co. Healthcare Investment Congress on Industrial Conference Biotechnology Venue : Toronto, ON Venue: Montreal, QC Tel: 416-640-7580 Email : worldcongress@bio.org.

Email: bbloom@bloomburton.com Web : www.bio.org/events/ Web : https://www.bloomburton.com/ bio-world-congress conference/

May 8-9

November 13-16 Medica 2017 : World Forum for Medicine Venue : Düsseldorf, Germany Tel : 416-598-1524 Web : www.medica-tradefair.com

NOVEMBER 2017

World Health Summit North America Venue : Montreal, QC Email : mc.fiset@umontreal.ca Web : https://www.worldhealthsummit.org/

SRC101

May 10 Vaccine Innovation Conference Venue : Montreal, QC Email : kjohnston@icid.com Web : http://www.biotech.ca/policy-matters/ health/preventing-disease/

May 16-18 LABVOLUTION & BIOTECHNICA Venue: Hanover, Germany Tel: 416 598-7114 Fax: 416 598-1840 Email: info@hf-canada.com Web: http://www.labvolution.de/home Web: http://www.biotechnica.de

May 26-28 Labcon 2017 Venue : Banff, AB Web: https://labcon.csmls.org/

JUNE 2017 Jun 19-23 Spectr’Atom 2017 Venue: Quebec City, Canada Web: http://www.csass.org/

June 19-22 Bio International Conference Venue: San Diego, CA Email: convention@bio.org Web: http://convention.bio.org/2017/

June 26-27 WIN 2017 Symposium : Expediting Global Innovation in Precision Cancer Medicine Venue: Paris, France Email: vladimir.lazar@winconsortium.org Web: www.winsymposium.org

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JOB FUNCTION 50 C Level Management 50a Engineer 51b Principal Investigator / Research Scientist 51c Professor / Faculty 53a Group / Project Leader 53b Procurement / Supply Chain 53c R&D Director / Manager 54 Legal / Financial / Administration / Regulatory / Communications

55 58 59 60 62 63 64 65 99

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C86 Buying Influence A Authorize

B Recommend

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Analysis Instruments Basic Lab Equipment Chemicals/Biochemicals Chromatography – Gas Chromatography – Liquid Filtration, Water Purification LIMS

H I J K L M Y

Liquid Handling & Sample Prep Microscopes, Optics, Cameras Safety & Hygiene Spectroscopy Testing Systems/Equipment Vacuum Equipment None of the Above

C88 Product Development Stage (check all that apply)

COMPANYs PRIMARY BUSINESS ACTIVITY 50 50a 50b 50c

C87 Which products are used in your lab?

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A Research/Development B Pilot/Scaleup

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C89 Are you building a new lab?

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C90 We have the following enewsletters: 1 2 3 4

Biotechnology Focus eBulletin Laboratory focus eBulletin BioPharma BioMedical

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For a quick response please fax: 905-727-4428 or e-mail: circulation@promotive.net April/May 2017 BIOTECHNOLOGY FOCUS 31

New: 4 liter capacity!

More Capacity Centrifuge 5920 R The new Centrifuge 5920 R delivers extraordinary high capacity in a very compact and ergonomic product design. Its state-of-the-art refrigeration system provides excellent cooling performance and keeps your temperature sensitive samples safe.

> Max. capacity: 4 x 1000 mL or 52 x 50 mL conical > Dual use buckets for tubes and plates > Benchtop centrifuge with floor-standing capabilities > Designed for even lower noise levels

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