Cluster effect

Can P.E.I.’s bioscience sector engineer a big industry fish in their small rural pond?

In early September, employees at the Center for Aquaculture Technologies Canada Inc. (CATC) began working in their new research space. The company’s freshly-built labs and fish tanks are located in a 20,000 square-foot section of a former lobster processing plant in Souris, P.E.I.

As one of the Island’s growing number of bioscience companies, CATC is putting a new gloss on a traditional Prince Edward Island industry (the fishery), while also helping to alter— however slowly—the province’s oldfashioned economy.

CATC, a subsidiary of the San Diego-based Center for Aquaculture Technologies, was launched in 2012. The company does contract research for the aquaculture industry. For instance, CATC tests fish feed ingredients and additives, and runs trials to prove the safety and effectiveness of new drugs and vaccines. The company’s $6-million renovated site is also intended to provide space for independent, inhouse research of new products, particularly for warm water species, such as tilapia and catfish. “Our objective is to be a global company. We’ve built our facility keeping that objective in mind,” says Debbie Plouffe, CATC’s vice president of research, and a transplanted Albertan. “We’re just getting started here.”

In 2005, there were 10 companies on PEI that could be considered “bioscience” companies. Today there are 42, half of which are from outside the province.

The revenues at those companies have also grown in the past 10 years, from about $50 million annually to close to $200 million this year — all of it export revenue. Similarly, bioscience employment is up from 400 to more than 1,300 (though not quite to the previously stated goal of 1,500).

“It’s quite remarkable, actually, the growth that some of the companies have had,” says Rory Francis, the founding executive director of the PEI BioAlliance. “Nobody believes the numbers,” he adds, laughing. “They look at it and say, ‘Yeah right.’”

The growth of PEI’s bioscience sector has, to a large degree, corresponded with the existence of the PEI BioAlliance, now in its tenth year.

The BioAlliance—whose board is made up of bioscience company executives and representatives from research agencies and the provincial government—is at the centre of the province’s bioscience “cluster”. That cluster includes the 42 companies, most notably BioVectra (a 45-yearold, homegrown manufacturer that produces ingredients for global pharmaceutical and biotechnology firms), Sekisui Diagnostics (a medical technology company based in Lexington, Mass.), and Elanco (an animal health outfit based in Greenfield, Indiana).

The cluster is also comprised of the Atlantic Veterinary College, the Duffy Research Centre (which houses researchers from the University of Prince Edward Island, the National Research Council, and Agriculture and Agri-Food Canada), BIO|FOOD|TECH (a provincial agency that provides research services to food companies), and Canada’s Smartest Kitchen (an R&D centre focused on food science and marketing).

Most of those institutions are huddled on the UPEI campus in Charlottetown. Nearby is the BioCommons Business and Research Park, a 65-acre site that’s now home to five companies. The BioCommons is presented as an ideal spot for outside companies to set up a P.E.I. division. A medical marijuana production company is now constructing a building there.

Francis admits the BioCommons has filled more slowly than he initially hoped. There are now roughly 100 people working there. “We would have liked to see double that by now,” he says.

The challenge?

“You have to get them here. If you’re in Europe or South America or even in most of the U.S., Prince Edward Island doesn’t exactly light up on the screen in their minds,” Francis says. “They don’t know where the hell it is.”

Fifteen years ago, when Francis was deputy minister in the provincial agriculture department, an effort was launched to move the Island’s economic base beyond its dependence on traditional farming and fishing.

The idea was to encourage companies to emerge from—and benefit from—the many research agencies that already existed in the area.

In 2005 the BioAlliance was incorporated to help those companies network, find mentors, launch clinical trials, test markets, and raise money.

Francis proudly notes that P.E.I. bioscience companies now raise $12 million to $18 million a year in private investment. “That’s money that would not be coming into Prince Edward Island,” he says. “We’re defying gravity here by having this kind of infrastructure and business success in Prince Edward Island. It’s better known now across Canada and we have a reputation as a location that knows what it’s doing, has a strategy, and is getting results.”

The gains made over the past decade are tangible, though still modest.

For instance, half of the Island’s bioscience companies are “prerevenue.”

Francis isn’t deterred, however. The point, he argues, is to help create as many bioscience companies as possible, and hope a bunch take root.

To accelerate that effort, the BioAlliance launched the Emergence incubator program last fall. Touted as “Canada’s Bioscience Business Incubator”, the program offers its participating companies help with topics such as product development, business planning, market assessment, fundraising, marketing, and product design.

Emergence has so far accepted 25 companies, including close to 10 from outside the province. “We have connections from Hungary to Oklahoma at the moment,” Francis says. “The network has to be big. The smaller we are, the bigger our network into the world has to be.”

Greg MacFarlane has been a pharmacist in Fredericton for 20 years. Over that time he says he’s developed a slew of supplements tailored to his patients’ health requirements—from fighting fatigue to relieving arthritic pain.

MacFarlane and Dan Pike, a fellow pharmacist, recently co-founded Liv9 Nutrition Inc. They are now trying to mass-produce and distribute their various supplement blends. Health Canada recently approved a Liv9 vitamin and energy supplement. It will soon be in stores. The goal is to create more concoctions and distribute more widely.

For the past year they’ve been aided by both the BioAlliance’s Emergence program and BIO|FOOD|TECH, which has helped hone the flavoring and stability of Liv9’s formulations.

MacFarlane says he entered the Emergence program to access the contacts and mentorship needed to turn his company into a mainstream producer. “They have technical excellence, resources, and internationally-recognized researchers,” he says.

Liv9 is now co-based in Fredericton and Charlottetown. “I don’t know how long we’ll be there,” MacFarlane says, “but I hope it’s for years to come.”

Russ Kerr relocated to PEI in 2007.

Kerr moved his university lab and spinoff company, Nautilus Biosciences, to Charlottetown from Florida Atlantic University. He’d previously lived in Canada and vacationed on PEI as a boy. Still, it was a surprising move, particularly for his family.

But Kerr wanted more freedom to move resources between his university lab and his company. He is now both the CEO of Nautilus and a professor and Canada Research Chair in Marine Natural Products at UPEI.

Nautilus has a “bank” of marine microbes (bacteria and fungi) that can be used to produce chemicals and compounds useful in items ranging from household products to pharmaceuticals and cosmetics.

Nautilus has a royalty-sharing agreement with Croda, a large U.K.- based chemical company, and has a partnership with AB Vista, another U.K. firm.

AB Vista, an animal feed company, is hoping to use enzymes from Nautilus’ fungal collection to break down the cellulose in straw before it is fed to cows. The goal is increased milk production.

Nautilus now has 17 people on its payroll. “We are growing—not quickly, steadily,” says Kerr, who is also the BioAlliance’s chairman.

“This is a perfect location for Nautilus,” he adds, pointing to the available lab space and easy access to government decision makers. “We are confident that we will be a stable company and will shortly be revenue generating.”

Back at CATC, Debbie Plouffe is adjusting to life in the company’s new research space.

CATC’s ranks have recently increased from six to 12 employees. That number could hit 20 by year’s end. “Our staff really like it here,” Plouffe says. “It’s a nice place to raise a family. It’s quiet. There are nice beaches in the summer time.”

There’s only one significant problem.

“It’s impossible to get here,” she says, laughing. “Especially when you’re coming from San Diego. It’s at least three or four flights to get here. It’s a challenge. Other than that I think it’s a great location.”

The challenge within P.E.I. is making Islanders as familiar with the bioscience sector as they are with the fishery and potato industry. It’s getting there, Francis argues.

“We’re not a local, interesting little cluster,” he says. “We’re leading for Canada in this area. That’s the attitude we have to carry to continue the growth. It’s a bit of a mindset shift,” he says before adding: “It’s starting to sink in that this actually could be a new pillar of the Prince Edward Island economy.”