After several years in the doldrums, the Canadian biotechnology industry is beginning to slowly rebound. This is due in part to a ripple effect from the red hot biotech industry in the U.S., which has spilled over positive vibes to Canadian investors who have started to take an interest in the sector once again. In addition, both targeted government programs aimed at supporting small to medium firms and helping them de-risk their technologies as well as dedicated life sciences venture capital funds are priming the pipeline pump. As a result, there is a renewed optimism about the future for the sector.

Given the upswing in the fortunes of Canadian biotech companies, we will be tracking the progress of the publicly listed companies on a regular basis through our new BioWorld Canadian Biotech Index, which comprises 15 companies that are listed on the Toronto Stock Exchange. (See BioWorld Canadian Biotech Index, below)

It has been an excellent year for the group, with the Index growing 37 percent year to date. Some of the "high flyers" include Laval, Quebec-based Bellus Health Inc., which has over the years gone through a transformation to now focus on the rare diseases space. The company recently reported that it completed targeted enrollment of 230 patients for a Kiacta phase III confirmatory study in AA amyloidosis. The study will evaluate the safety and efficacy of the compound in preventing renal function decline in patients with the disease, which results in chronic renal failure, dialysis and death. The objective of the study is to confirm the safety and efficacy shown in a previously conducted phase II/III trial. The study will conclude when 120 patients have experienced an event linked to deterioration of kidney function and is expected to be completed in 2016. The company's share price has grown by a whopping 207 percent year to date.

Another Laval-based company, Prometic Life Sciences Inc., has seen its share value jump 75 percent so far this year. The company reported that its PBI-4050 antifibrotic lead drug candidate successfully completed its phase I trial and said it is looking to progress the compound into phase II trials.

VALUE ADDED R&D

In an effort to assist emerging biotech companies in Canada, the National Research Council of Canada (NRCC) is positioning itself as a leading research and technology organization that will collaborate with companies and assist them with their research projects.

In order to do that, the NRCC has moved away from an older institute-centric model toward a portfolio approach designed to better support the industry's needs, Julie Ducharme, general manager of Human Health Therapeutics at NRCC told BioWorld Insight.

Through collaborative research agreements "companies can gain access to a tremendous resource of over 300 scientists, which is probably the largest R&D team dedicated to biologics in Canada," Ducharme added.

The critical mass allows NRCC to be able to tackle larger projects and contribute to the success of Canadian biotech companies. The main focus is on biologics, although small-molecule research can still be accommodated.

The NRCC is operating around three key programs. One is the biologics research program, which offers expertise in candidate design, selection and optimization; bioprocess development; and performance characterization. The program partners with Canadian small- and medium-sized enterprises to de-risk a pipeline of biologics and accelerate their progress to market.

The vaccines research program assists Canadian industry in developing vaccines in the areas of infectious and chronic diseases. The third research program focuses on delivering therapeutics to the brain, to address diseases of the central nervous system. That program is designed for partners' molecules to be combined with NRCC's blood-brain barrier (BBB) carriers, which act as shuttles to deliver all types of biologics to brain targets.

GETTING OVER THE HUMP

Through its Therapeutics Beyond Brain Barriers (TBBB) program, the NRCC is levering its long standing research into a family of antibodies discovered in "camelids" (which include llamas and camels) that have a "single-domain" for recognizing molecules and are orders of magnitude smaller than the antibodies found in humans.

Highly stable, those single-domain antibodies have a strong affinity for their target antigens and are proving to be efficient vehicles to take molecules across the intractable BBB. Getting large molecule therapeutics through that barrier still remains a major challenge for biotherapeutics companies, who are focusing on central nervous system diseases affecting the brain.

The BBB is composed of tightly woven cells that safeguard the brain by repelling harmful agents such as bacteria, while allowing the passage of essential nutrients. NRCC has engineered a pipeline of single domain antibodies that work like a Trojan horse exploiting the mechanisms needed for the entry of nutrients in order to enable the delivery of therapeutics.

That research program's core activities have three main area of expertise: generation of carriers, coupling and conjugation strategies, and evaluation of candidates in brain barrier models using biomarkers and other tools.

Kalgene Pharmaceuticals Inc., of Vancouver, British Columbia, is taking advantage of the program to co-develop a new treatment against aggressive brain cancers. The NRCC and Kalgene are targeting glioblastomas, coupling the company's therapeutic antibody with single domain antibodies to enable delivery inside the brain.

Another company that is actively working with the NRCC is Vancouver, British Columbia-based Zymeworks Inc. In March, it signed a three-year multimillion-dollar agreement covering the development of cancer, anti-inflammatory and autoimmune diseases therapies. Zymeworks will augment its in-house capabilities with NRCC's expertise and scientific facilities, which have already produced and characterized more than 6,000 virtually designed proteins for the company. Scientists at the NRCC are able to customize characterization assays and analytical methods to meet Zymeworks' needs and accelerate the firm's therapeutics and platform developments.

The new portfolio approach has been well received by the sector and, according to Ducharme, "we are on the right track since we are there to make companies better and more successful."

NEW WAY OF INVESTING

During the dark days for the Canadian biotech industry the constant lament of biotech executives was the chronic shortage of venture capital to fuel their development plans. The situation is, however, changing. TVM Life Science Ventures VII, of Montreal, for example, reported last week the final closing of its latest fund, TVM Life Science Ventures VlI, which raised $201.6 million from a broad mix of investors, including cornerstone investors Teralys Capital and Eli Lilly and Co. Other investors include the Business Development Bank of Canada, the Minnesota Life Insurance Company, CD Venture and Fondaction. The fund also attracted significant investment from other pharmaceutical companies such as Bukwang Pharma, of South Korea.

The fund's investment focus is a departure from the traditional asset allocation model of venture investing within a portfolio. "Although, in the past, the investment allocation always included a small number of low cost, semi-virtual entities, the new fund will assign a majority of its funding towards these virtual project-focused companies, or PFC's," Luc Marengere, managing partner, TVM Capital Life Science, told BioWorld Insight.

The fund, in fact, expects to invest in a total of 12 to 15 PFCs but will, however, retain a small proportion of its funds in its back pocket to invest in four to five traditional, syndicated venture investments.

The new fund will set its sights on acquiring early stage molecules from global pharmaceutical or biotechnology companies and wrap each of them into a virtual PFC. The objective is to develop each molecule through proof of concept and, should the molecule show efficacy, the molecule and/or development rights will be offered for sale to biopharmaceutical companies.

"We are able to do this in a cash-efficient way, keeping the projects on time and on budget," noted Marengere. "This approach really works well because the PFCs as an added benefit will be able to access Chorus, a virtual drug development organization within Eli Lilly's Global External Research and Development group,"

At the end of the day if the molecule makes the grade then potential purchasers of the asset know it has been developed to exacting pharmaceutical standards and specifications.

The fund already has five investments under its belt, including GLWL Research Inc. of Montreal, which was created to develop GLWL-01 to treat type II diabetes. The product was originally discovered by Indianapolis-based Lilly. GLWL intends to take the product to human proof of concept, at which time Lilly will have an option to acquire the molecule. (See BioWorld Today, Jan. 16, 2014.)

The fund's first investment also involved the diabetes space – Kaneq Bioscience Ltd., which was specifically created to develop a protein tyrosine phosphatase1B inhibitor for treating type 2 diabetes.

TVM Capital has also created PRCL Research Inc., which plans to develop, to proof of concept, a compound originally discovered by Synta Pharmaceuticals Inc. with the potential to treat psoriasis.

The most recent investment was in FAAH Pharma Inc. that will continue the clinical development of a compound with the potential to treat neuropathic pain. The compound was originally discovered and developed by Infinity Pharmaceuticals, Inc., of Cambridge, Mass.