Dr. Raphael Hofstein in Biotechnology Focus: Building a catalytic reaction across Canada’s Life Sciences Sector

Dr. Raphael Hofstein

Dr. Raphael Hofstein, president & CEO, MaRS Innovation.

Biotechnology Focus, a compendium of the Canadian life sciences industry, has published a guest column by MaRS Innovation President & CEO, Raphael Hofstein.

The article explores the role of catalysis in building Canada’s Life Sciences sector:

In chemistry, according to Encyclopædia Britannica Online, a catalyst is any substance that increases a reaction’s rate without itself being consumed. Kinetically, Wikipedia tells us, catalytic reactions are typical chemical reactions where the reaction rate depends on the reactants’ frequency of contact in the rate-determining step. Usually, the catalyst participates in this slowest step, and rates are limited by the amount of catalyst and its “activity.”

I would like to propose a second definition within the context of knowledge-based economies, where a catalyst is the minimal funding that allows promising early-stage technologies to bridge the “Valley of Death.”

As a chemist by training, catalysis intuitively describes for me what it takes to successfully translate sensational discoveries into transformational healthcare advancing processes and products.

But in Canada’s life science sector, true catalysts are quite rare. More accurately, angel investors willing to advance scientific findings from the bench to the bedside are not abundant entities in Canada. And without this particular brand of catalysis, the chemical reaction that produces the sweeping rates of innovation and company creation desired by government, investors and Canadians seeking highly-qualified jobs in their native land will proceed at a very low rate.

Correspondingly, the likelihood of Canadians benefiting from their country’s sizable research investment and its contingent outcomes is low to nil.

The federal government’s recent initiative to revitalize the Canadian venture funding industry through the $400 million now earmarked for venture capital activity, demonstrates the government’s equal concern regarding this rate of return. While it is a very significant and positive move in the right direction, one has to ask the key question: is it relevant to the medical science sector? What kind of catalysis will it produce?

While it remains a positive signal, this funding’s successful implementation depends on various players taking the right steps to prime the venture capital ecosystem. The kinetic barrier has to be reduced by de-risking the assets in play, which remains the responsibility of both provincial governments and angel investors.

Yet, Canada has lost the energy required to address de-risking simply because no significant financial tools came to replace labor-sponsored funds, the main engine of the 1990s. Provincial governments created certain vehicles to fill the void, but clearly at suboptimal levels; simultaneously, angel investors did not emerge in sufficient numbers to assist the life sciences sector.

It is time to address the need for a mechanism to bridge the valley of death’s chasm. The first step is comparing notes with other jurisdictions where governments have moved to close the gap. Massachusetts’ $1 billion campaign, which enabled that state’s life science industry to overcome hurdles that inflicted other economies, is a prime example. Massachusetts remained attractive to a wide spectrum of strategic partners, including Sanofi, Pfizer, GlaxoSmithKline and Novartis.

Strategic alliances exist wherever early-stage technology development is extensively and creatively addressed. Yet as any entrepreneur will tell you, angel investors aren’t likely to come to the table in a significant way until early-stage technology is sufficiently de-risked for their purposes. To ensure their participation at an early stage, even earlier catalytic financing is required to establish a mutually-tolerable comfort zone.

The task of taking the necessary action required to ensure that tolerable risk in the ratios that produce significant results falls to federal and provincial governments alike. While numerous agencies, including MaRS Innovation, have been tasked to cover the gap, the level of financial support remains suboptimal.

As in the case of chemical catalysis, there ought to be a certain minimum concentration of the catalyst, still very small relative to the whole, which allows the innovation reaction’s kinetics to safely cross the barrier the valley of death represents and better society for all of us.

So what is MaRS Innovation’s role as an example of an early-stage catalyst?

We first need to define our identity within Canada’s innovation ecosystem: namely, as the catalyst that ensures a reaction will take place with the minimal energy cost. Others and I have already said much concerning the best practices to translate academic research to a commercialization-driven program.

Yet the chasm between the two remains, and is significant enough to be called the valley of death. Bridging that valley is the first rate-limiting step required to successfully establish a life-sciences based knowledge economy.

Those of us contributing to this successful transformation are the Catalytic Bridge—it is our responsibility to address the complexities of de-risking early-technologies for a community that has grown somewhat risk-averse in recent years. It’s clear our federal and provincial partners recognize both the potential and their obligation to contribute.

The Boston Red Socks’ legendary third baseman Wade Boggs, once said, “A positive attitude causes a chain reaction of positive thoughts, events and outcomes. It is a catalyst and it sparks extraordinary results.”

MaRS Innovation exists to bring one catalytic positive action. The extraordinary results we and others spark will speak for themselves.

The original post is available on Biotechnology Focus’ website.