Alberta’s biotech sector is on its way to reaching its goal of becoming a key component of the province’s economy, according to a new report.

But the 16-page study on the state of the industry in Alberta, prepared to coincide with National Biotech Week, Sept. 27 - Oct. 1, emphasizes that the sector requires some assistance if it is to reach its full potential. “We need to provide a competitive environment in which the companies we create can grow and thrive,” says the report, prepared for industry association BioAlberta.

The new report card is a followup to recommendations on policy submitted to the province in May 2004.

“Biotech around the world continues to deliver,” says Andrew Baum, CEO of Calgary biotechnology firm SemBioSys Genetics Inc. “If you take a look at it globally, it has more than delivered on its expectation. Global biotech sales are well in excess of $50 billion.”

But Baum, also BioAlberta’s chairman of the board and a member of the board of BIOTECanada, says Alberta is not keeping up with the rest of the world, though he believes the province can become a significant player if it takes the right steps.

Recommendations in the new study call for robust and supportive tax and fiscal policies designed specifically for research-intensive businesses; programs to attract high-quality people; the development of an active venture- capital industry and a focus on improved access to, and commercialization of, technology.

“There are new companies starting here (in Alberta) and some companies are hanging in, but we’re below that critical mass we need for the industry to drive itself and the biggest challenge is capital,” says Baum. “It’s tough to raise money in Canada compared to the U.S. and it’s tougher to raise money in Alberta than it is in Ontario, Quebec or B.C.”

“I’m the CEO of a biotech company and I’m trying to raise money,” he adds. “It’s really hard being from here.”

Retired angel investor Gerry Tertzakian understands Baum’s concerns.

“Although I think there is a significant potential here, every time we gain a new company, we tend to lose one on the other side,” Tertzakian says from Edmonton. “The growth isn’t dramatic and my biggest concern is about losing what we already have.”

Lack of financing is one of Tertzakian’s major concerns. In Edmonton’s case, he points to an image problem, where investors do not necessarily know much about the city or its strengths.

“It’s not known outside (the area),” he says. “Our good sides seem to go unnoticed, only the bad sides come out such as, ‘It’s cold’, or ‘Edmonton is far from everywhere.’”

Couple this with a lack of tax concessions and research credits in the province, and it doesn’t make the situation any easier, adds Tertzakian.

For Baum, beefing up biotech means taking action on adding value by converting biotech research into products and companies.

Tertzakian would like to see tax concessions and research credits from the province, though he doesn’t expect this will happen.

But painting a bleak picture of the industry would also be wrong, says Myka Osinchuk, executive director of the Edmonton-based BioAlberta, a private, not-for-profit industry association.

“One of the interesting things we found, despite the financing climate not being very robust, is that 40 per cent of our (biotech) companies were established between 2000 and 2003, which was a difficult period for high-tech companies,” she says. “That tells us we have a lot to be proud of in terms of research and development – even in tough times we still grow.”

Edmonton, with approximately 80 per cent of the province’s biotech industry, represents the fourth-largest biotech cluster in Canada, after Toronto, Montreal and Vancouver, adds Darcy Wiltse, director of industry and cluster development for the Edmonton Economic Development Corp. and the program manager for the city’s biotech cluster.

In addition, says Wiltse, the number of local biotech companies increased 7.14 per cent since the year 2000, with 13 new companies for a total of 195 firms.

Demand is even strong enough that Edmonton is seriously looking into plans to build a special lab to assist early- stage biotech companies.

“It’s been identified that Edmonton is missing affordable wet-lab facilities. We’ve completed a feasibility study which is positive, we’ve completed a business plan and a site plan and they also look positive,” says Wiltse. “Now the process would be look into a public-private partnership with industry and the two levels of government.”

Wiltse trots out a recent KPMG report, called the Competitive Alternatives Business Cost Study, that shows Edmonton, on a cost index measure, is an excellent place to locate a biotech company. The city ranked first in an analysis that looked at 10 countries and 14 U.S. Midwest cities for the best place to set up clinical trial management, biomedical R&D, pharmaceutical production or specialty chemical manufacturing.

Also a strong point for Edmonton, and in part why it has a strong share of the industry, is the University of Alberta.

Both Osinchuk and Wiltse emphasize the university’s long-standing excellence in medicine and the number of spinoffs it has spawned in the life sciences arena.

Meanwhile, Wiltse notes that long product-development cycles, as lengthy as 10 years in some cases, give the impression that companies are not as active as they actually are.

“That’s really only true from an outsider’s point of view,” he says.

“The fact of the matter is all of these firms have been very, very busy with their product-development efforts.”

As to the future, Osinchuk points out that there are more than 500 products being developed in Canadian biopharma research labs.

“Those products are going to help treat a range of diseases from diabetes to arthritis. Secondly, if we look at the potential of industrial biotechnology to solve some very pressing problems, there are researchers working on many products,” Osinchuk says.

“For instance, companies are working on creating plants that are drought-resistant so they can withstand drier conditions and still produce good crops.”

Bio-fibres – the process of using forestry or agricultural waste to create materials or bioplastics, where plastics are made from plants rather than chemicals, also hold promise, as well as the emerging sector of nano-biotechnology.

“We have lots of reasons to be proud, both in Canada and Alberta,” says Osinchuk. “Canada is a world leader in biotech, it ranks No. 2 in terms of the number of biotech companies, behind the U.S., and we’ve developed (in this country) about 10 per cent of the world’s new medicines and discovered more than 25 per cent of the known disease- causing genes.”

During the past five years, she adds, the foundation has been laid in Alberta for a successful bioindustry, supplemented by one of the strongest research centres in Canada.

ALBERTA’S BIOTECH STORY T

* There are 61 biotech companies in Alberta, with the majority located in Edmonton. The industry directly and indirectly employs about 3,000 people. Some examples of the work that is being done includes:
* Isotechnika Inc.’s lead product ISA 247 is being developed to prevent organ rejection in transplant patients and is also a potential treatment for psoriasis.
* Ceapro Inc. has developed a diabetes test kit for early identification of Type 2 diabetes.
* If any of the medications you take are in gel cap form, it’s possible that Banner Pharmacaps Canada made the capsules. The company operates a manufacturing facility for the production of pharmaceuticals in Olds.
* The lead product for Edmonton-based company BioMS is for the treatment of multiple sclerosis.
* Engineers at the University of Calgary have developed the Intelligent Pill, or iPill, a new drug-delivery system providing more targeted treatment for many ailments such as AIDS or diabetes.
* SemBioSys Genetics Inc. is using genetically engineered safflower plants to produce recombinant proteins abundantly and at low cost.
* Alberta is home to at least two biogas generators in operation utilizing livestock manure to produce electricity.
* Several startup companies are working on producing bio-diesel from waste frying oils.
* One wheat fractionation company (Permolex) is producing ethanol, wheat starch and gluten.
* TTS Inc has developed a new building panel utilizing wheat straw and pine bark.
* A major bioplastics research program is under way through the Alberta BioPlastics Network, with strong commercial involvement.

Source: BioAlberta

(Laura Severs can be reached at laura@businessedge.ca)