High-profile software financings in Canada have recently grabbed headlines, but a major surge of investment in life-sciences startups has gone mostly unnoticed.
Fueled by improved fundraising and exit trends, venture investment in Canadian biotech, pharmaceuticals, medical diagnostics and other life-sciences sectors has gained traction since 2010.
Dollar flows more than doubled over this period, reaching $523 million invested in 80 rounds in 2015. That’s the largest VC deployment to life sciences in nearly a decade, according to Thomson Reuters.
And last year’s results may be outdone in 2016. Some 25 life-sciences financings have to date collected $302 million, an amount that approaches or exceeds annual totals in four of the past six years.
Market activity has been driven by a handful of sizable deals, such as the US$61.5 million ($87 million) Series A financing of Zymeworks, a Vancouver biotherapeutics company. Led by BDC Capital and Lumira Capital and joined by a syndicate of strategic and VC firms, the round was Q1 2016’s largest.
Even bigger was April’s Series B financing of DalCor Pharmaceuticals, a Montréal-based developer of precision medicine for cardiovascular disease. Totaling US$100 million ($127 million), it represents the largest sum a tech company in Canada has secured in three years and the largest on record by a domestic life-sciences company.
DalCor was launched in 2015 with a founding investment from Canadian executive André Desmarais and Sanderling Ventures, a Silicon Valley life-sciences venture firm. Robert McNeil, who is Sanderling’s founder and managing director, serves as the startup’s CEO.
DalCor owes its existence to research conducted at the Montréal Heart Institute on the cholesterol drug dalcetrapib. Originally developed by Roche to treat heart attacks and stroke, the drug tested poorly and was abandoned. In 2012, however, an MHI team led by Dr. Jean-Claude Tardif and Marie-Pierre Dubé found that patients with certain genetic profiles benefited greatly from dalcetrapib.
“These were hard and dramatic outcomes,” McNeil told PE Hub Canada. “The discovery of how different people, because of different genetic profiles, respond differently to drugs or chemical entities is an important finding that opens new doors. We jumped on it.”
DalCor, which obtained the exclusive license for dalcetrapib from Roche, was effectively built from scratch by Sanderling. With backing from the company’s US$50 million Series A round in November, offices were set up and employees hired in Canada, the United States, the United Kingdom and Switzerland.
The subsequent financing, which brought on new investors, including Caisse de dépôt et placement du Québec, Fonds de solidarité FTQ and CTI Life Sciences, aimed at “moving things ahead aggressively,” McNeil said.
Successful fundraising enabled DalCor to embark on a five-year clinical trial of dalcetrapib in collaboration with MHI. Patients in more than 30 countries will be screened to identify a subset of 5,000 for genetic-guided testing. McNeil says the work may lead to other precision medicines targeted to other genetic populations.
DalCor estimates that US$250 million will be required to complete the project. For this reason, one of the company’s next objectives will be to bring on a strong commercial partner, McNeil said.
McNeil says Canada is fertile ground for investments like DalCor. He is attracted by Montréal’s bustling life-sciences hub, which reflects “very good infrastructure” and “low-cost but high-quality opportunities” as well as “great people,” particularly in the oncology space.
DalCor is the latest of several Québec startups Sanderling plans to fund as part of its market strategy, McNeil said. Projected investment, including Sanderling’s commitments and dollars leveraged from other venture firms and pharma partnerships, is expected to surpass US$500 million.
Sanderling is currently investing from its seventh fund, Sanderling Ventures Fund VII, which closed last year at US$170 million. Canadian fund investors included BDC Capital and Fonds de solidarité FTQ.
In addition to its San Mateo, California headquarters, the firm has an office in Montréal.
Photo of Robert McNeil courtesy of Sanderling Ventures
Photo of scientists assessing DNA sequence ©iStock/poba