BIOTECanada has made further announcements on the financial condition of the Canadian biotechnology industry.

A recent survey indicated that 70% of Canadian biotech companies have at least a year of cash on hand versus a mere 30% in July 2009.  According to the January 25 news release this turnaround was achieved by companies restructuring their operations (read “downsizing”) and increased access to foreign investment (read “fire sale”). With the important proviso that I haven’t seen the underlying survey data, I can’t help but wonder if the upswing in apparent financial viability was driven by closures of less financially fit companies than any genuine positive momentum.

In other news, there is intense interest in the recently announced Tandem Expansion Fund I, LP – a $300 million pool seeded by BDC, EDC and Teralys.  The fund would appear to offer a significant new domestic source of capital for emerging firms.  Very good.

Tandem arrives at a critical time since various regions around the world are courting our emerging biotechs with tantalizing investment and development infrastructure packages.  Its flattering to have this sort of attention, but in my opinion it’s tragic that Canadian innovators need foreign risk capital life support – after all, the bulk of our life sciences innovations were paid for through our own tax dollars.

Unless we develop a credible and sustainable domestic funding mechanism for emerging life sciences companies it seems inevitable that many of our best and brightest innovations will end up providing economic rewards to other countries.

At times like these I’m reminded of Cal Stiller’s famous refrain “we discover, they develop and we buy back.”

It’s time for Canada to decide whether we’re in the game or not.

John McCulloch

John provides assistance to life sciences entrepreneurs in business strategy, management, intellectual property, financing and licensing. See more…