Next Phase Newsletter

By Dianne Carmichael, Managing Director, Health Innovation & Venture Services, MaRS Discovery District

The Redefining Early Stage Investments (RESI) Conference is going abroad for the first time. RESI on MaRS will take place on June 23rd in Toronto, the heart of Canada’s financial and health industries, where early stage investment in life sciences and digital health is on the cusp of a major breakthrough.

Take the launch of Johnson & Johnson’s JLABS @ Toronto in May — also a first outside the United States, and in the very same building RESI will take place, the 1.5-million-square-foot building that is MaRS Discovery District. Or the recently announced centre for advanced therapeutic cell technologies, the first of its kind in the world, which is also moving into MaRS thanks to a $40-million collaboration between the government of Canada, GE Healthcare and the Centre for Commercialization of Regenerative Medicine (CCRM).

These initiatives offer a glimpse of how major strategic firms and investors in the health sector are recognizing the Toronto area’s resources, including the region’s pool of skilled talent, its recognized high quality of life, its world-class health research institutions, its strong entrepreneurial culture, and the generous tax incentives available for R&D locally.

While local early stage investing in life sciences picked up last year, venture capital players are still few and far between in Canada. Total venture deal activity for Canada’s life sciences sector hit $511 million (all values in Canadian dollars) for the first nine months of 2015 — a jump from $422.5 million the year before. Canadian companies closing major deals during 2015 included Highland Therapeutics ($50 million) and Trillium Therapeutics ($55.2 million). Another three Canadian life sciences companies collectively cut deals worth $114 million in 2015 — Clementia Pharmaceuticals ($60 million), Northern Biologics (US$30 million) and Profound Medical ($24 million).

Early stage investors active in the Canadian health sector are also tapping into medical devices and the digital health sector, which includes consumer apps that help people manage their own health. Toronto, already known as the City of Apps, is particularly poised to take advantage of the crossover between health and digital technologies that is fuelling innovation in wearables. Precision medicine and robotics are some of the other areas gaining traction in the Canadian investment scene.

The intersection between 3D printing and health is also taking off with Autodesk Toronto and their award-winning research division moving to MaRS, the fastest growing technology and medical research community in Canada. There are over 100 researchers at Autodesk global, 60 of them based in Toronto. This team is already breaking new ground using 3D-printing technology to develop low-cost, prosthetic limb sockets and build highly realistic human models for biomechanical simulation and research. Future developments include 3D bioprinting: the production of living cells from simple tissues to complete organs. The market for this is expected to reach $2.84 billion globally by 2022 and Canada is poised to be a leading player.

Canada is also home to a diverse variety of early stage investment sources. In addition to VC firms such as Lumira Capital, Genesys Capital, Versant Ventures Canada and CTI Life Sciences, Canada also has many other types of active investors. The local angel investment community is becoming more active in the health sector, and many institutional investors already have a strong presence. That is the case of the heavyweight Caisse de Dépôt et Placement du Québec, which manages public and private pension funds.

Canada is also experiencing a rise in capital for health startups from the social impact and venture philanthropy investment trend, which Canada is pioneering. Virgin Unite, Richard Branson’s foundation that links innovators and entrepreneurial ideas to challenge tough issues and improve peoples’ lives, has just recently partnered with the MaRS Centre for Impact Investing to launch the MaRS Catalyst Fund. One third of this early-stage, cross-Canada direct investment fund will be put toward the health sector.

As interest ramps up on the early stage investmenet front, MaRS is growing its support for entrepreneurs, including expanding its team of advisors with experience in early stage investment. This includes a health entrepreneur advisory board chaired by Stefan Larsen, CEO of Northern Biologics, to support accelerating companies that can scale globally.

The graph is trending upwards in Toronto’s early stage health investment sector. RESI on MaRS will welcome innovators and investors from around the globe to engage in the heart of Canada’s rising health innovation hub in Toronto.

Tags: Healthcare, RESI, Toronto