Moderna founder says Canada needs to build a biotech hub

Derrick Rossi says Canada has well-funded, cutting-edge research but lacks a clear plan to create hub

Financial Post 7 minute read June 17, 2021

A research associate works at the Moderna lab in Cambridge, Massachusetts, in 2017. Adam Glanzman/Bloomberg files

The founder of Moderna, maker of one of the key vaccines in the fight against COVID-19, is urging businesses, universities and governments in Canada to create a biotech hub in this country like the ones in Boston and San Francisco so it can rely less on foreign nations the next time there is a global health crisis.

Some of the elements that made those U.S. cities pharmaceutical powerhouses, such as well-funded and cutting-edge research at respected universities, are already in place in Canada, said Derrick Rossi, who was born in Toronto before heading to Harvard as a molecular geneticist and making his name as one of the pioneers of the mRNA technology behind the Moderna shot.

But the Canadian sector lacks cohesion and a clear template to bring the required elements together — a plan that would incorporate commercial real estate development and lay the groundwork for the creation of anchor companies.

“I’ve been on the phone several times with representatives of both the federal government and the Ontario government, just giving advice and weighing in on future directions for how Canada should think about not getting caught with its pants down next time,” Rossi said in a recent interview.

“I’m advocating for a manufacturing sector, biomedicine and vaccines.”

In addition to government, Rossi said he is consulting with the University of Toronto and what he refers to as the “bio-entrepreneurial community,” encouraging them to emulate the reinvention of Boston and Cambridge, Mass., in the 1980s, or the San Francisco area, which house hundreds of life science, biotech and pharma companies ranging from startups to behemoths like Biogen, Amgen and Vertex Pharmaceuticals Inc.

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“They’re all here for a reason, because of this biotech community,” said Rossi, who has been a founder of five different biotech companies.

“Canada has great science and many of the elements, but (a broader) ecosystem is very important.”

Just a few decades ago, Cambridge, where Moderna is based, “was a wasteland of dangerous, really shady parking lots and warehouses and storage places,” he said.

But then, a crucial decision was made by governments of the day to “take this big chunk of land and try to develop it into a biotech hub,” Rossi said.

The plan involved real estate developers, who got involved to transform a swathe of land close to Harvard and the Massachusetts Institute of Technology, where critical research was taking place.

There was also a broad effort to encourage the creation of “anchor” companies such as Genzyme, a multiple sclerosis drug maker that was ultimately bought by pharmaceutical giant Sanofi.

Anchor companies are important, Rossi said, because people who work there can develop the expertise that fuels the creation and staffing of additional companies.

The development of biotech hubs turned the old pharmaceutical model of large research and development budgets on its head. Instead, most of the ideas were coming out of academia.

“Biotech is much more nimble and focused,” Rossi said.

“It became a big success and then more companies sprouted up like mushrooms around there, and then the VCs, and this whole community is there: the whole ecosystem.”

One area where Canada may struggle, he said, is financial backing from public markets. U.S. investment banks and institutional investors have been bold when it comes to backing future bets in biotech.

Moderna, for example, was taken public and built manufacturing facilities before it even had regulatory approval to turn its scientific discovery into a commercial product.

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Alongside his informal talks with government officials and bio-entrepreneurs, Rossi is bringing his expertise back to Canada as a member of the advisory board of Canada’s Moonshot, a joint project of The Brookfield Institute for Innovation + Entrepreneurship and the Public Policy Forum.

He said it’s early days for the group, but one potential avenue is to advocate for the creation of a Canadian agency to function like the Biomedical Advanced Research and Development Authority. Washington-based BARDA works with industry to coordinate development of vaccines, drugs, therapies, and diagnostic tools for public health medical emergencies such as emerging infectious diseases and pandemics, as well as chemical, biological, or nuclear accidents and attacks.

Rossi said BARDA controls its own budget, so it does not rely on buy-in from the government of the day.

Canada could be poised to make major strides in biotech-related manufacturing and funding, according to a report by commercial real estate company Avison Young released last week.

The report noted that the federal government has contributed $2.2 billion toward life sciences and bio-manufacturing over seven years, and said the stage is set for more demand for facilities since Canada is not yet manufacturing a COVID-19 vaccine.

“Commercial real estate will play a critical role in this sector,” Avison Young said.

Commercial real estate will play a critical role in this sector Avison Young

The report noted that life sciences companies received more than a quarter of the $4.4 billion in venture capital dollars invested in 2020, a 10 per cent increase from 2019, and the sector’s 26 per cent share was second only to information, communications and technology companies.

In addition, three of the top 10 investment deals in 2020 involved life sciences companies going public on NASDAQ.

The federal government is putting additional money into life sciences hubs in Toronto, Montreal and Vancouver, with emerging hubs in Hamilton, Ont., in the greater Toronto area, and Calgary, according to the report.

In May, for example, Ottawa announced a $200 million investment in Resilience Biotechnologies, based in Mississauga, Ont., to expand capacity for vaccines and therapeutics including mRNA jabs. And earlier this year, in March, Ottawa said it would inject $415 million to help Sanofi build a new vaccine production facility in Toronto. A further $55 million is to come from the Ontario government, and Sanofi has pledged to kick in $455 million and invest $79 million in Canadian research and development annually.

Rossi said he is not a fan of the Sanofi arrangement.

“Sanofi Pasteur is the largest vaccine manufacturer on planet earth, but they use old technology. So I actually think it’s a mistake that Canada made there,” he said, adding that he believes mRNA vaccines like the ones Moderna and Pfizer-BioNTech have made to inoculate against COVID-19 will be dominant going forward.

“If I’m going to make a car manufacturing facility, I am not going to make one with motor engines. The future of automobiles is electric motors, there’s no question about it,” he said. “So why would you not invest in electric motors and the next gen of electric motors?”

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Rossi readily acknowledged that his opinion could be a bit biased, given his role in the technology behind two of the most efficacious COVID-19 vaccines.

“Don’t forget I’ve drank the Kool-Aid. I helped brew the Kool-Aid,” he said with a laugh.

Still, he urged Canadian governments and industry and researchers to take a page from Moderna’s playbook and focus on the development of “platform” biotechnologies that can be used to create multiple commercial products.

The messenger RNA technology behind Moderna’s COVID-19 vaccine, and also Pfizer-BioNTech’s vaccine, for example, is being studied for possible use to help the body target other diseases from cancer to multiple sclerosis.

The platform biotechnology model is common in the companies Rossi has helped create, including Intellia Therapeutics, a publicly traded Cambridge-based company whose focus is developing CRISPR therapeutics, a gene-editing technology used to target and modify “typos” in the human genome to treat genetic and auto-immune disease.

“You know mRNA is perfect for that because there are 25,000 genes, which means there’s at least 25,000 different types of mRNA in our bodies, which make at least 25,000 different proteins (and) there’s 6,000 genetic diseases, so the number of applications you could apply mRNA to is massive,” he said.

“They didn’t just focus on one or two shots on net. They raised enough money to take 15 shots on net at the same time.”

Financial Post

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