It's time for a few words about biotechnology companies. I've talked a lot about infotech in previous columns and therefore this column will be dedicated to biotech.
What is a biotech company? Is a software company which produces diagnostic applications a biotech company? To answer this question, I went to the B.C. Biotech Alliance (BCBA) website (http://www.biotech.bc.ca). The BCBA defines biotechnology as "the systematic industrial use of biological processes and organisms to manufacture medical, agricultural and consumer products. It uses highly efficient natural mechanisms evolved by living organisms to produce new products. Biotechnology is figuratively and in some cases literally a "green" technology. The combination of traditional genetics with the latest advances in molecular biology has led to dramatic advances in the scope and capabilities of biotechnology in recent years."
Interestingly, many companies who define themselves as biotech do not satisfy this definition and do not appear on the BCBA's listing of biotech companies. There are other companies, e.g. some listed on the VSE, which satisfy this definition but which do not appear on the BCBA listing. Would chemical (i.e. non-biological) drug companies be excluded according to this definition?
Originally, my goal was to include a listing of all B.C. biotech companies in this article. To do so, I'll attempt to stick with BCBA's definition. The list at the end of the section includes the "obvious" ones. No doubt some are missing and perhaps some shouldn't be on the list. In any event, they're all B.C. high tech companies and worth taking a look at. (The reader is encouraged to provide feedback as to any omissions!)
Biotech is a hot growth industry. Our population is aging and heathcare costs are increasing. There is considerable competition in the fight against diseases. Research laboratories are producing new discoveries that are seeking commercial applications. Locally, the University of British Columbia and Simon Fraser University are incubators for many new ventures.
According to the KPMG Biotechnology Report, there were some 80 "core" (public and private) biotech companies based in B.C. last year. In 1992 industry revenues were only $13.7 million and are now well over $100 million. In 1996, companies raised $220 million in public offerings and private financings.
I have heard many investors compare investing in biotech to investing in resource plays, i.e. you drill some holes in the hope that you hit a motherlode. Biotech ventures, like mining companies, will raise some initial capital to do some exploration. Brian Fagan, publisher of the Fagan Report (http://www.faganreport.com) came up with an interesting comparison of new drug development to mineral exploration (July, 1998). Stock price movements parallel the analogy made by Fagan. For example, senior mining companies rely on junior exploration companies to make new discoveries which they then develop through joint ventures or acquisitions. Likewise, big pharmas look for entrepreneurial development companies to find new products which they can license or use to form joint ventures. It is the anticipation of discoveries and the subsequent dealmaking which can trigger stock price run-ups. Hence, biotechs are as exciting and potentially rewarding to the investor as were the speculative gold plays of yesteryear.
In previous columns, I've emphasized the value of a good management team in building an infotech venture and creating shareholder value. In biotech, this is even more true insofar as it is more difficult to assess the value and merits of the underlying technology. Hence, the investor must rely more on the reputation and credentials of the management team. It generally takes much longer for a technology to be validated and be commercialized in biotech than it does in infotech. If a technology is invalidated, it is often dead. In the case of infotech, a technology's validity is not quite so binary.
The biotech business model is also different. Companies are far more R&D intensive and it takes a startup many years - ten or more - before commercial revenues are generated. And when such revenues materialize, they are often generated from royalties on licensing deals with "Big Pharma".
The following list briefly identifies and
describes 14 of B.C.'s publicly listed biotech firms, ranked by value,
i.e. market capitalization. Our T-Net20 stock index includes the first
six companies on this list. To learn more about these firms, go back to
the T-Net listing to link to the company's website or to investment related
sites. QLT Phototherapeutics recently broke through the $1 billion in value
mark with some recent positive announcements. QLT got its start on the
VSE and you could have purchased the stock at $2.00 not that long ago.
These 14 companies represent a market value of $2.3 billion. Not bad for
a fledgling industry!
| Company | Ticker-Exch | Market Cap | Price (Feb 25) |
| QLT PhotoTherapeutics Inc | QLT - TSE | 1,616,446,959 | 59.30 |
| Forbes Medi-Tech Inc | FMI - VSE | 225,688,797 | 16.40 |
| Angiotech Pharmaceuticals Inc | ANP - TSE | 140,743,068 | 12.00 |
| Micrologix Biotech Inc | MBI - TSE | 64,564,077 | 2.80 |
| ID Biomedical Corp | IDB - TSE | 56,994,611 | 3.65 |
| Stressgen Biotechnologies Corp | SSB - TSE | 52,073,945 | 1.75 |
| Inflazyme Pharmaceuticals Ltd | IZP - VSE | 47,382,255 | 1.48 |
| Nortran Pharmaceuticals Inc | NRT - VSE | 28,000,325 | 1.02 |
| Inex Pharmaceuticals Corp | IEX - TSE | 21,031,001 | 1.90 |
| Marine Bioproducts International Corp | MBP - VSE | 14,998,482 | 0.63 |
| IGT Pharma Inc | IGT - VSE | 6,526,667 | 0.74 |
| Helix Biopharma Corp. | HBP - TSE | 4,821,745 | 0.35 |
| Solar Pharmaceutical Ltd | SL - VSE | 3,047,115 | 0.35 HALTED |
| Immune Network Research Ltd | IMM - VSE | 2,444,454 | 0.12 |
QLT PhotoTherapeutics Inc. (QLT) is a world leader in the development and commercialization of proprietary pharmaceutical products for use in photodynamic therapy, an emerging field of medicine utilizing light-activated drugs in the treatment of disease. QLT's innovative science has advanced photodynamic therapy beyond applications in cancer towards potential breakthrough treatments in ophthalmology, autoimmune and cardiovascular disease. QLT's portfolio of products include PHOTOFRIN® (porfimer sodium), the world's only approved photodynamic therapy drug, used in the treatment of various cancers throughout North America, Japan and Europe; and Visudyne™ (verteporfin), a therapy in final stages of testing to treat the wet form of age-related macular degeneration, the leading cause of blindness among those over 50.
Forbes Medi-Tech Inc
Forbes Medi-Tech is dedicated to the development of valuable pharmaceutical compounds from forest industry by-products. Within the development pipeline are a number of products that offer potential entry into billion dollar markets.
In 1981, the University of British Columbia (UBC), under the direction of Professor James Kutney, began to research possible commercial applications of the many by-products of the local forest industry. Over a 10 year period, this research has produced valuable technology related to tall oil "soap", the frothy substance that floats on top of the vat during the pulping process. This "soap" is rich in plant sterols and it is these plant sterols that have the attractive commercial applications. Plant sterols are naturally occurring compounds found in all plant matter and are chemically similar to cholesterol.
In 1993, Forbes Medi-Tech signed a cooperative research agreement with UBC, to provide financing and further development of UBC's plant sterol extraction and fermentation technology. In return for this commitment, Forbes has secured exclusive worldwide commercial rights to this technology in exchange for royalty payments on product revenue.
Angiotech Pharmaceuticals Inc
Since its inception in 1992, Angiotech Pharmaceuticals Inc. has been engaged in the development and commercialization of new treatments for chronic inflammatory and angiogenesis-dependent diseases. The lead products of the Company involve the reformulation of the anticancer drug, paclitaxel, for uses other than its present applications. These include diseases such as restenosis, rheumatoid arthritis, multiple sclerosis, psoriasis, hypertrophic scarring, surgical adhesions, inflammatory bowel disease, and neovascular diseases of the eye. Paclitaxel is the active ingredient in Taxol®, an anticancer product registered in the name of and marketed by Bristol-Myers Squibb. The Company's initial products under development include treatments for restenosis, rheumatoid arthritis, multiple sclerosis and psoriasis through both systemic and local delivery of paclitaxel.
Micrologix Biotech Inc
Micrologix Biotech Inc. is focusing on the discovery, development and commercialization of innovative drugs to treat life-threatening diseases. MBI's drug candidates are based on the development of improved derivatives of naturally occurring peptide compounds found in the defense systems of virtually all life forms. These powerful proprietary compounds are remarkably effective at killing the multidrug-resistant microbes responsible for the most clinically important infectious diseases.
ID Biomedical Corp
ID Biomedical Corporation (IDB) was established in 1991 and is developing products in two distinct new areas of disease control: gene-based diagnostic testing and subunit vaccines. IDB's products in development target some of the most serious, worldwide threats to public health, including drug-resistant bacteria, tuberculosis, group A streptococcal disease, HIV/AIDS and E. coli.
Stressgen Biotechnologies Corp
Founded in 1990, StressGen Biotechnologies Corp. is engaged in research and the development of innovative vaccines to prevent infectious disease and treatments for cancer. These medical therapies are based on a new area of scientific study called the cellular stress response. The cellular stress response is an essential survival process found in virtually all life. When the cells of any organism are damaged, a subset of genes called stress genes produce special proteins called stress proteins which work to repair damage and to protect against further injury. When foreign microbes such as bacteria or parasites invade our bodies, they face hostile conditions which cause them to produce stress proteins to protect themselves. Scientists have discovered that the stress proteins foreign microbes produce, actually activate the human immune system to fight off the invading microbes
Inflazyme Pharmaceuticals Ltd
Inflazyme Pharmaceuticals Ltd. is a Richmond, B.C. based biopharmaceutical company which is focused on the discovery, development and commercialization of drugs to treat serious inflammatory diseases such as asthma, rheumatoid arthriits, allergies, psoriasis and inflammatory bowel disease. The Company has discovered several naturally occuring compounds that have promising anti-inflammatory activity. Recently, the company announced that it has signed a binding letter of intent with Hoechst Marion Roussel (HMR), the pharmaceutical company of Hoechst AG. Under the letter of intent, the company and HMR have agreed to form a collaboration for the development of a compound to be selected from Inflazyme's IPL576 class for the treatment of respiratory disease and asthma, as well as the development of HMR's H1/NK1 inhibitor as a treatment for allergies. The transaction has a potential value of $91-million (U.S.) plus royalties on future sales.
Nortran Pharmaceuticals Inc
Nortran is a drug discovery and development company focused on pathology targeted ion channel drugs. Nortran is currently researching and developing drugs with blockbuster potential for two major therapeutic areas: prevention of the ventricular arrhythmias which cause sudden cardiac death following a heart attack, and the control of pain.
Inex Pharmaceuticals Corp
INEX Pharmaceuticals Corp is a biopharmaceutical company commercializing drugs that utilize the company's proprietary drug delivery systems to treat cancer and inflammatory diseases.
Marine Bioproducts International Corp
Marine BioProducts International Corporation was established in 1997 following a name change from ECA Technology Ltd. Its roots go back two decades. Marine BioProducts will be the first agar producer to offer premium specialty agar products extracted from specific strains of cultivated seaweeds. It utilizes proprietary cultivation and extraction technologies based on research initially funded by the Science Council of British Columbia.With its well developed and proven technology platforms, Marine BioProducts is poised to enter an established global marketplace with new, innovative and unique, high value-added products. The current global agar, agarose and related end-user markets are valued in excess of $1.5 billion Cdn per annum. Premium agars are in high demand by the biotech industry.
IGT Pharma Inc
IGT Pharma is a drug discovery company developing innovative therapeutics for cancer and diseases of the central nervous system. IGT is achieving its objectives in these areas through its three operational divisions: Cancer Drugs, CNS Drugs, and Fine Chemicals. In the cancer area, IGT's new drug, AVLB, has been recently approved for human clinical trials by the US FDA. Areas of neurological drug development include the treatment of schizophrenia, anxiety, stroke and epilepsy.
Helix Biopharma Corp.
The Pharmaceutical Division of Helix BioPharma Corp operates as a biopharmaceutical company engaged in the development, international licensing and marketing of pharmaceutical drug delivery technology and innovative products. A core group of experienced professionals are focused on R&D, regulatory affairs, business development and finance. The company and its key members are committed to the global commercialization of their proprietary technology and products. The company has also established several key affiliations and will continue to develop and nurture alliances that will help it achieve its ultimate goals.
Solar Pharmaceutical Ltd
Solar Pharmaceutical Ltd - Alas, this company has been halted from trading for being delinquent in the filing of its financial reports! Hence, we won't say much about this one.
Immune Network Research Ltd
Immune Network Research Ltd. is a biotechnology company focused on developing therapies to restore the body’s immune system. The company is working to develop immunological products to treat diseases related to weakened immune systems through active research in immunology and the discovery of monoclonal antibodies. Its present focus is the study of its proprietary monoclonal antibody, mAb IF7, in primates to evaluate it for therapeutic treatment of HIV infection and AIDS.
So, there you have it! Those are the candidates. Ladies and gentlemen: place your bets!
Copyright, 1999.