Toronto Biotechnology Initiative Mentorship

After being a member of the Toronto Biotechnology Initiative (TBI) for several years, I recently joined the newly founded Mentorship Committee to help develop a program for TBI that bring mentors and proteges together to promote skill and knowledge development.

A short bit on TBI:

The Biotechnology Initiative represents and promotes life sciences technologies and encourages their commercial success in Ontario through Government advocacy, stakeholder engagement, mentoring and education and promotion of Ontario’s world-class science and industry.

With over 300 members, TBI supports a wide range of sectors: academic and research institutions; government; companies from the biopharmaceutical industry, agriculture biotechnology sector, agricultural/ petrol bioproducts, medical devices, biopharmaceuticals, pharmaceutical multinationals, contract research/manufacturing, financial, legal, human resources and consultants.

To those of you that are interested, we will be starting a 6-month pilot program soon. Feel free to get in contact with me if you wish to be either a mentor or a protege for this period. After the pilot, we will open up the program to new TBI members, who may join TBI for the benefits gained from this mentorship program and from being a part of the TBI community.

I will keep everyone in the loop with regards to key dates.

BioFinance Conference in Toronto

I have certainly been neglecting my blogging recently! I have been busy focusing on completing my masters degree, and delivering good results at my internship with GSK. Either way, sorry to dissappoint my readers who used to come by here much more often!

This week I will be attending BioFinance, a conference known to bring together early-stage life science and medical devices companies. In fact, I will be volunteering at the partnership desk, so I will get to work with a number of the companies during my time slot there.

This year will mark the 3rd BioFinance conference that I have attended – I must say that heading out to these types of events really helps to grasp the state of the financial markets and the state of entrepreneurial ventures in the Canadian marketplace, particularly in the biotechnology/pharmaceutical sector. It is also the first time that I have ever seen a focus on Cleantech; there is a luncheon with a Cleantech panel and then a number of Cleantech company presentations on the Thursday afternoon. I will try my best to report back on some interesting leads there.

The Luncheon with the Cleantech Panel will include:
Moderator: Duncan Stewart, Deloitte and National Post
Panel: (1) Dr. Jürgen Scheffran, Center for Advanced BioEnergy Research University of Illinois; (2) John Cook, Investeco Financial Corporation; (3) Steven Winokur, Canaccord Adams; (4) Alex Kilgour, Gowling Lafleur Henderson LLP; and (5) Susan McLean, TSX Group Inc.

Biofuels Outlook Update

Invest in biofuels today. At least, 2 people think you should — Vinod Khosla of Khosla Ventures, and Dr. Jens Riese of McKinsey & Co. who gave keynote speeches at the World Congress on Industrial Biotechnology and Bioprocessing.

An article from TheAutoChannel discussed this in further detail, but I want to highlight some important points from the post:

In a speech titled “The Role of Venture Capital in Developing Cellulosic Ethanol,” Khosla outlined the range of technologies currently being commercialized to convert cellulosic biomass to transportation fuels. Khosla said that the U.S. Department of Energy’s recent grants to cooperatively fund biorefineries that produce ethanol from cellulose is an acknowledgment that the technology is moving faster than expected. He said that a 100 percent replacement of petroleum transportation fuels with biofuels is achievable, and predicted that ethanol from cellulose technology will be cost competitive with current ethanol production by 2009.

Dr. Jens Riese of McKinsey & Co. also addressed the World Congress plenary session with a speech titled “Beyond the Hype: Global Growth in the Biofuels Industry.” Riese predicted that global annual biofuel capacity would double to 25 billion gallons over the next five years and could reach 80 billion gallons – meeting 10 percent of world transportation fuel demand, enough to replace the annual oil production for fuel of Saudi Arabia – by 2020. According to McKinsey & Company’s model, biofuels can economically replace 25 percent of transportation fuel with crude oil above $50 per barrel. He concluded that the race is on to build a biofuels industry and that companies should invest now.

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Pharma and Biotech Update

Pharma seeking patents on old drugs, and a 40x increase venture capital spent on biofuel-related companies:

An article from CNN talks about big pharmaceuticals looking to acquire new patents on old drugs to fend off generic competition. They are using the creative minds of their in-house, legal teams to try to “work the system” to their advantage… see Big Pharma teaches old drugs new tricks for the full story.

On the biotech side, there was a report today that discussed a 4000% year-over-year increase in the amount of venture capital spent on biofuel companies from 2005 to 2006. The majority of the funds were geared toward genetically engineering enzymes in the production of bioethanol.

Biofuel Investment Jumps 4000%

Dramatic increases in Venture Capital in the area of Biofuels was realized in 2006. I just caught wind of an article from the Associated Press, Biotechnology that highlights one of the largest one-year increases in venture-backed funding I have ever seen.

An interview at Associated Press with Ron Pernick, who co-founded Clean Edge (a company tracking venture capital investment), said that “Venture capital investment in biofuels has increased from less than $1 million in 2004 to $20.5 million in 2005 to $813 million last year [in 2006]. Much of that investment is flowing to biotechnology companies that genetically engineer microbes that produce enzymes needed to break down crops into alcohol.” If we’re cracking out the calculator, that’s about a 4000%, or 40x increase year-over-year! Now, it is extremely helpful to the venture investors, and the companies, that the US Department of Energy (DoE) has awarded $385 million over the last four years (to six companies, albeit) to develop ethanol.

Please see Biofuels Spark Biotech Rally for the full article.

Some other relevant links include: Biotechnology Industry Organization, and US DoE.

Are you investing an a Biofuel company yet? Maybe you should jump on that wagon before it leaves town…

Subprime Melt Down Effects on Biotech

I was going through my email today when I came across some really insightful comments made by Jayson Parker, who is an associate professor of my Biotechnology program. With his expressed consent, please review some key points that highlight the effects of the US “subprime melt down” that is taking place and their relevance to the biotechnology industry.

He explains that there are two basic outcomes:

1. Core inflation is priority. If interest rates go up, it hurts biotech (as it is capital intensive and increases the cost of money for loans).

2. The housing market continues to meltdown in the US. If interest rates go down in response to a recession precipitated by the housing meltdown it will also hurt biotech (money is cheaper, but investors will assign a much higher risk to stocks and the flow of money will decrease).

Recapping some events that have take place so far:

  • The US economy has defied gravity for the past several years given the unexpected strength of consumer spending.
  • Consumer spending has been made possible by unprecedented appreciation in housing values and historically low interest rates – consumers have borrowed against this to maintain their purchases.
  • Unlike previous market bubbles, a substantial portion of consumers have leveraged themselves to be part of this current bubble – the housing market.
  • Some consumers have borrowed heavily enough against the price appreciation of their homes – that a strong market correction could leave them owing more money on their homes (negative equity).
  • In a historically low interest rate environment, some mortgage companies have offered loans to high risk clientale (e.g. NINJA – loans to folks with no income, no job and no assets) assuming far greater risk in their client base than is normally prudent.
    These risky loans have been “securitized” – meaning the debt has been repackaged – and through a series of events I don’t follow – have been included in other investment vehicles that affect more broadly the retail market.
  • The housing market in the US – which has seen more growth than in Canada – is the “canary” of US economic outlook – recent interest rate increases have seen an increase in bankruptacy rates among homeowners who cannot make their monthly payments.

Currently, the US federal reserve is meeting over the next two days to decide on whether interest rates will climb – the expectation is that it will remain status quo. Core measures of inflation (excluding indices of energy), indicate that inflation may be a concern which will eventually demand an interest rate increase. Finally, giving the “recap” above, the Federal reserve will likely will be more focused on the Housing market and in keeping bankruptacies to a miniumum by keeping interest rates as low as possible to avoid a recession. Keep your eyes on the subprime meltdown in the US over the next quarter. If we enter into a recession, there will be harder times for biotech.

Once again, I would like to thank Jayson for his insightful comments!

Banking on Global Warming

Many variables are contributing to the warmth of the world, at at the same time a whole of set of opportunities are arising as a result of the global warming bug.

Opportunities lay in:

  • Biotechnology applications for coal plants to “scrub” emissions before they are released
  • Cleaner oil refinery processing, to emit less carbon dioxide from oil sands particularly in Alberta, Canada
  • Carbon sequestration technologies to capture and store carbon dioxide deep within the Earth (still to be determined if this is a good idea)
  • Real estate and community planning of areas that are either going to become habitable and a lucrative shipping/trading centers (such as Nunavut, Canada described in this article)
  • Places will become flooded as ocean levels rise and entire cities are going to find themselves under 20 feet of water – technologies may be needed in advanced insulation from water, dam building, or something I can’t even imagine right now.
  • Cleantech: as an increasing number of emission laws come into place, there will be an escalating need for cleaner technologies to develop energy efficiently. This is not a new concept, merely a reinforcement of the need. I recently found out that Sustainable Development Technology Canada (SDTC) now has a $550 million not-for-profit foundation that bridges the gap in the innovation chain by fast-tracking groundbreaking clean technologies through development and demonstration in preparation for commercialization. There is certainly incentive for some businesses to consider developing their technologies in Canada, or perhaps, in partnership with Canadian businesses and educational institutions. Interested? Leave me your email in a comment and I’ll put you in touch with some people here in Canada!

The retreat of glaciers and arctic ice sheets are going to open up new shipping routes, key ports and new economic centers. One such gateway community is discussed an interview with a writer from The Atlantic, Gregg Easterbrook. I have to credit Paul Kedrosky for introducing me to this piece from his blog “Paul Kedrosky’s Infectious Greed“. The interview is as follows:

Early in this article you ask, “If the world warms, who will win? Who will lose?” But even the winners in this equation would seem to face grave risks. The Inuit of Canada may come to own valuable ports, for instance, but their traditional ways of feeding themselves and making a living will be decimated as the animals they hunt disappear. I suspect many people will consider the question and answer, “We will all lose.”

No, I don’t think so. In economics we don’t find many zero sum games and I don’t think this is a zero sum game. I think a lot of people and nations will come out ahead. The Inuit–the little semi-nation of Nunavut–is going to become significantly more valuable in a warming world. Right now Nunavut’s a frozen wasteland. I would love to be the guy with the Nunavut promotion account twenty years from now because I’m going to rechristen the place “the gateway to the hemispheres” and invite celebrities, and cruise ships will be stopping by, and the sign on the dock will say, “Welcome to Nunavut, Gateway to the Hemispheres!” We’ll see all kinds of wild economic activity up there. There will be change, yes. The traditional way of life will fade and be replaced with something else, maybe something zany, but change seems an inevitability of human experience. Really no society on earth, maybe the ones in the Amazon basin are the only exception, has been able to insulate itself from change. We can’t insulate ourselves from it and I doubt the Inuit will ever be able to do that, either.

On Technorati:

India Update: Finance Bill 2007

Some changes are going to happen in the finance communities in India. Their Finance Minister, Palaniappan Chidambaram, recently presented the Finance Bill 2007. PricewaterhouseCoopers put out an extensive report discussing the implications for Ireland, but also discusses many of the changes affecting overseas investments among other tax and investment changes.

India’s venture capital scene is highlighted by a tax pass through status eligible to foreign and domestic funds, as discussed in The Financial Express. What does this mean? It means that they are exempt from tax on income from investments in venture capital undertakings. However, this is not the case for all industries. This tax pass through is only applicable to investments in the IT, biotech and nanotech industries.

Another article in The Financial Express highlights a new clause put into Finance Bill 2007 surrounding gas distribution networks.

“A new clause (vi) inserted in sub-section (4) of Section 80-IA provides that any undertaking carrying on the business of laying and operating cross-country natural gas distribution network, including gas pipelines and storage facilities being an integral part of the network, will be eligible for deduction under the section if it is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation established constituted or constituted under any Central or state Act…” (Full text available at The Financial Express)

It isn’t surprising to see the Indian government giving special provisions to gas distribution networks. At the rate business enterprise and consumer wealth is growing in India, much more energy is needed; a more comprehensive network of gas distribution will be required to get the energy where it needs to go. This is backed by a huge demand in automotive vehicles. A news report from Hindu Busines Line mentions that Hyundai Motor India realized a 74% increase in domestic vehicle sales during February 2007 compared to the same month last year. This is complemented by a 60% increase from Honda Siel Cars India (HSCI), and an 81% increase from General Motors. Nice trend. Where are you putting your money?

Want to learn more about doing business in the new Indian economy, consider a few bestselling books to gain some insight:

Put yourself in the know so that you can make the most of your investment strategy whether you’re a day trader, a fund manager or an average joe.

Global Warming, Cleantech and Canada

The world is ranting about global warming, and it should be. There is a very real problem, and finally politicians are appearing to try to combat them. Is their rationale money, power, influence or an actual regard for the sustainability of Earth?

In recent news President Bush announced an Ethanol deal with Brazil, which will work to increase the development of ethanol; Brazil produces much of its ethanol from sugar cane. Also today, the European Union heads of state agreed on a long-term strategy on energy policy, which followed agreements made in February 2007, when they agreed to cut greenhouse emissions by 20% by 2020. In Canada, Prime Minister Stephen Harper says that Kyoto targets are unattainable, as the former Liberal government committed to a reduction of greenhouse gases to 6% below 1990 levels … Canada is currently 35% over that mark (Vancouver Sun). So … what is Canada going to do to address this issue? Maybe allocate an increase to the investments in startups that are focusing on environmental biotechnology or cleantech solutions? Wow, that sounds like a good idea!

There are currently a number of Canadian company developing cleantech technologies, but certainly not enough. Of those companies innovating that space, most are grossly underfunded as many don’t even have websites! As the Toronto Star tech reporter, Tyler Hamilton, mentions in his cleantech blog – Clean Break – Sustainable Development Technology Canada (SDTC) , a fund created to finance cleantech startups, invested only $43.4 million on 15 new projects in 2005. The Alberta government is currently experiencing massive surpluses in the order of billions, its about time to start financing cleantech and environmental biotech startups so that Canada can remain competitive in the energy, or “Clean Energy” space in the future. Getting an early foothold in the market just seems like a good idea to me …

Canadian technology happens to be some of the most innovative in the world, so says Len Brody, who’s keynote address I saw at the Canadian Venture Forum. Nice guy, I managed to get myself a signed copy of his book Innovation Nation: Canadian Leadership from Java to Jurassic Park. I haven’t had a chance to read it yet, but if your patriotic and want to find out a little more about Canadian business … maybe grab yourself a copy. In any case, if Canadian technology is so innovative, then INVEST IN IT. The lack of funding at the early stage, is crippling the growth and development of Canadian companies. CEOs are constantly chasing money, to stay cashflow positive and burn rates are minimized, which doesn’t allow these start-ups to effectively execute on their business plans.