Aquinox, Cardiome raising BC’s profile among biotech investors

Every week Techvibes republishes an article (or two) from Business in Vancouver. This article was originally published in issue #1079 – July 6 – July 12, 2010.

Recent milestones could raise B.C. biotech’s profile as investor confidence appears to be inching back to high-risk investment options.

However, the Toronto Stock Exchange has been unstable of late and many Canadian venture capitalists are still laying low. And while the milestones are positive, they might reflect only that the little money available in biotech is exclusively for companies with strong management teams that have established in-roads with investors and have advanced their companies’ pipelines despite shoestring budgets.

“We’ve gone through a difficult period here and lost a number of companies,” said Joseph Garcia, a partner in McCarthy Tétrault LLP’s Vancouver office. “But for the remaining companies, if they have solid management and world-class technology, then they stand a reasonable to good chance of securing financing.”

Garcia noted that the recent positive developments in B.C.’s biotech sector could raise the province’s profile with investors.

On June 25, a committee in the European Union’s drug-regulating body recommended for market approval Cardiome Pharma Corp.’s (TSX:COM) intravenous treatment for atrial fibrillation, a form of abnormal heart rhythm. Garcia noted that Cardiome will be one of the few Canadian companies to develop a drug from infancy to market approval, as will Aquinox Pharmaceuticals Inc.’s US$25 million Series B financing, Garcia added.

Particularly notable in the financing, which was announced June 17, was the entrance of a new Aquinox investor, Pfizer Venture Investments, which is pharma giant Pfizer Inc.’s investment arm and one of its ears to the ground for potential acquisition opportunities.

“The fact that we now have two of the world’s largest pharmaceutical companies, Johnson & Johnson [Inc.] and Pfizer, as our investors, speaks to the fact that we’re onto something here that could be very important,” said David Main, Aquinox’ president and CEO.

The company’s lead candidate, which is part of a new class of anti-inflammatories, is being developed as a potentially better treatment for asthma and allergies.

Main also noted the importance of having previous biotech experience and a strong management team when courting investors.

“Having the experience of knowing what to do and what not to do and knowing how persistent you have to be in this business gave investors the confidence that I can build the team and that we can march down a path to value,” said Main, who is a former president and CEO of Inex Pharamceuticals Corp., a former vice-president of QLT Inc. and a former LifeSciences BC chairman.

Aquinox’s recent financing followed a US$14.5 million round in 2007.

As Med BioGene Inc. (TSX-V: MBI) and Tekmira Pharmaceuticals Corp. (TSX:TKM) attempt to tap U.S. capital via the Nasdaq stock market, they could benefit from any spotlight on B.C. stemming from Cardiome’s and Aquinox’s milestones.

Med Biogene initiated plans to list on the Nasdaq last year; Tekmira announced a similar plan on May 12.

Med Biogene’s share price on the TSX Venture Exchange is sputtering around $0.11 compared with a high of $0.70 in 2007 before the downturn.

Tekmira’s share price, which was near $1.40 at press time, is on a jagged but upward trajectory. However, that compares with a share price of more than $3.50 in 2007.

To Garcia, the U.S. overtures of Med Biogene and Tekmira suggest managerial confidence in their respective companies and the investment climate.

“If you have really pro-active management who believe in the company and believe they’re going to hit their milestones, then you go out and file, for example, [for a stock listing].”

Garcia added that obtaining a listing doesn’t necessarily mean a company is attempting to raise capital immediately, but it quickens the process when it does go to the market for funds.