Trial and error

Posted on September 05, 2017 | Atlantic Business Magazine | 0 Comments

Arthvan Sharma working in the lab at Immunovaccine Inc.

Almost 30 years after its inception as a seal birth control experiment, Halifax-based Immunovaccine, Inc. is nail-bitingly close to commercializing its ground-breaking cancer treatment—or taking a fatal step towards derailment. It’s just another day in the life of a biotech startup

Brian Lowe had a question. “What do you want out of this,” he asked Warwick Kimmins, Dalhousie University’s then-dean of science?

It was 1999, and the two men had been brought together by Stephen Armstrong, a mutual acquaintance from the National Research Council.

Armstrong knew Kimmins and his team of scientists at the university had perfected a humane way to keep harp seals from creating far too many more harp seals. As important as that “seal pill” seemed to be for the future of an imperiled fishery, Kimmins believed the vaccine platform he and his team had developed to deliver its contraceptive vaccines could also be used to solve all sorts of other perplexing medical problems, not only in animals but also in humans: infectious diseases, even cancer… The issue was how to get what they’d created out of the constricting confines of their university lab and into the open spaces of the commercial marketplace.

Which is why Armstrong had thought to invite entrepreneur Brian Lowe into the discussion. Born in London, O.N., Lowe had arrived in Nova Scotia 27 years earlier as an 18-year-old business administration student at Saint Mary’s University, quickly discovered the joys of living and working on the east coast, and never left. Lowe’s business mentor became prominent Halifax commercial real estate developer John Lindsay, Sr., who “gave me my start.” Lindsay would not only eventually serve as chair of two environmental services companies Lowe created but also give him the right advice at exactly the right moment. When Lowe decided to sell the companies in 1992, he took Lindsay’s advice (“cash is king”) and accepted a cash offer for them from South Carolina-based Laidlaw Environmental Services.

The cash gave Lowe, who was then still only 38, the opportunity to do what he did best—get in on the ground floor of other promising IT startups as a hands-on investor/advisor, even co-founder. “I’ve always been one to build something from scratch,” Lowe explained to an interviewer later. “In early startup companies, I get motivated by the people, the excitement and the accomplishment of seeing businesses grow.”

Though he was no expert in the bio-sciences, Lowe liked Kimmins, liked the people around him, liked what they were trying to accomplish together. Says Lowe: “I knew they had a story that could generate investment.”

Which was why, he says now, he also needed to understand where Kimmins was coming from and what he ultimately wanted out of what he and his team had created. Kimmins didn’t hesitate. “I’d like to see some money,” he said forthrightly, “and I’d like to help mankind. In no particular order.”

They had a deal. Kimmins would become their fledgling firm’s chief executive officer, Lowe its chief operating officer.

There were, however, a few issues Lowe wanted to clarify with his new partner. If their company succeeded as they hoped, he told Kimmins, it would eventually “outgrow you. Me too.” Kimmins said he was fine with that.

In the end, the company did outgrow them both. Kimmins, who did not have a deep background in human health sciences, stepped away from day-to-day management and became company chair in 2006. (He died of cancer in 2007.) Lowe moved on in 2010, and now spends much of his time with First Angel Network, a successful regional venture capital fund, whose own psychic and economic creation story is intimately connected to the company he and Kimmins co-founded.

That company? Now officially known as Immunovaccine Inc. of Halifax (and, more accurately, the world), IMV has become a sought-after princess at the suddenly crowded cancer-cure ball.

In his 2016 State of the Union address, then U.S. President Barak Obama called for what he described as a “National Cancer Moonshot” (similar to the sixties American push to put a man on the moon) to eliminate cancer as we know it, and pledged US$1 billion to jumpstart the process. As part of its “concerted new effort… to identify new ways to prevent, diagnose and treat cancer” the White House emphasized the potential of immunotherapy—a treatment that’s directly in IMV’s area of expertise—which it described as “ripe for further exploration.”

Researchers, in fact, have come to realize just how important the body’s own immune system can be in fighting cancer. Immunotherapy uses substances made by the body or in a lab to help the body’s own natural defences fight back against, or at least slow down, the progression of cancer cells. Although few of these new treatments have gotten through all the official approvals/hoops/stages at this point, lots of companies, big and small, including Immunovaccine, are eager for a piece of the action. The industry publication BioPharm Insight recently predicted the immuneoncology market could generate sales of over $35 billion by 2020.

No wonder IMV’s current believers believe/hope they will not only soon “see some money”—and lots of it—as a result of the company’s work to date, but also—and even more important— they may, as Kimmins himself once put it, be able to “help mankind” by finding a cure for cancer.

And to think it all began with a seal contraceptive pill.

During the last half of the twentieth century, Canada’s east coast seal population had gotten wildly out of whack with its natural environment, wreaking havoc on the North Atlantic ecosystem and, more practically, the then-lucrative cod fishery.

Scientists at the time believed the ever increasing numbers of seals were not only vacuuming up cod as food for themselves, but also competing with cod for other ocean-based food supplies. To make matters worse, nematodes, or seal worms, which spent part of their life cycle inside seals, were being expelled into the oceans in ever greater numbers from ever greater numbers of seals. The worms became food for smaller fish, which became food for cod, which eventually showed up (yuck!) on consumer plates. While the worms were a “natural phenomenon,” easily destroyed by freezing and normal cooking procedures, their mere existence did not make cod seem an especially appetizing consumer dish.

That was one reason the federal department of fisheries and oceans, along with National Sea Products— then the global seafood giant— approached Dalhousie in 1988 to ask for assistance. Biologists at Dal quickly concluded the best way to reduce seal numbers would be to reduce the numbers of seals getting pregnant. They tried contraceptive vaccines but discovered the traditional water-based technologies used to deliver doses were “logistically prohibitive in a marine animal population.”

As biologist Robert Brown, who worked on the project at the time, later explained in an interview on IMV’s web site: “Even when we could locate [the seals], we found that existing vaccines would not work very well. We achieved contraception in about 70 per cent of the animals after 46 days, but the vaccine wore off in nine months, so you would have had to re-vaccinate every year. That just wasn’t going to be practical.”

Back to the lab. The scientists decided to try switching from the traditional water-based solution to one that was mostly oil-based to protect and deliver the antigens (the “foreign” substances that trigger the body’s immune response), allowing the vaccine to be effective faster and for a longer period of time.

Kimmins later described the development of the vaccine delivery platform as “serendipitous.” Not to forget effective. The vaccine began working in less than half the time it had previously required and contraception was achieved in 90 per cent of animals, with the vaccine itself lasting more than 10 years in their systems instead of the nine months with the earlier water-based platform.

How did the scientists know that? Every January for the next 10 years, Kimmins and his team traveled back to the seals’ nesting grounds on Sable Island in order to check on the 300 they’d vaccinated, taking blood samples from each to check levels and make sure the seals hadn’t gotten pregnant in between visits. “You wouldn’t believe it,” Kimmins told Lowe. “We would come back every year, and every year the seals would be within five or six feet of the spot we’d found them the year before.” Most importantly, of course, they were still not pregnant. Success!

One of the keys to real scientific progress, however, is to ask questions, push boundaries. What could the scientists do with what they’d learned? How could they apply their new knowledge in new ways? As a contraceptive for other animals? “Wild horses overgrazing the national parks on the Great Plains, deer in Ontario, feral cats in the alleyways of Toronto and monkeys in Hong Kong…” OK. And then what? What about using that same delivery platform to deal with infectious diseases in animals— rabies, distemper, etc.? That could revolutionize veterinary medicine. But, since they were blue-skying the future anyway, why not consider the leap of leaps? What about using antigens and the technology they’d developed to tackle the un-tackleable: human cancer?

ABM V28N5 2017.indd

As tantalizing as that prospect was, Kimmins and Lowe understood the fastest route to get where they wanted (and believed) the company could go was to start with animal health.

But even before that, there was still that pesky question of the intellectual property rights to commercialize a technology that had been developed inside a university lab by university scientists for a government/industry client. Lowe spent close to a year negotiating a deal with Dalhousie that gave their still startup company ownership of the patent but included the university as a company shareholder.

Lowe acknowledges the company probably couldn’t have succeeded in its early years without “continuous support” from the university, which provided lab space until the company could build its own, and helped it qualify for critical research funding.

There was also support from Innovacorp, the province’s early-stage incubator, and from ACOA. “We received the largest award/loan of any privately held company under round 2 of the Atlantic Innovation Fund (AIF) managed by ACOA,” Lowe recalls, noting the company eventually “scored three rounds of funding from them.”

While Lowe raised private seed capital (more than $10 million) from wealthy locals, including singerstockbroker Denis Ryan and serial entrepreneur-investor (and now director) Wade Dawe, company scientists began testing a totally oilbased delivery system that would become foundational to IMV’s future success. By 2005, the company had landed a contract in Australia, which licensed its platform—now known as DepoVox—to help control infectious diseases in livestock.At the same time, the scientists were also conducting tests on mice using vaccines they’d developed themselves to see if those new vaccines could control cancer growth in animals. “We injected these mice with cancer cells,” Lowe recalled in an interview with Atlantic Business Magazine back in 2010. “Huge tumors formed on the mice. We hit them with our vaccines and within 14 days, all the tumors disappeared and the mice became perfectly healthy.”

In October 2006, in order to let the scientific world in on its marvelous little secret, the company spent $80,000 to bring leading cancer researchers from around the world to Halifax for a two-day workshop to review its findings. The idea, Lowe said at the time, was “to assess what we have [achieved] to date in the area of cancer research and get their feedback as to maybe what more we should do before selecting our course for human clinical trials.”

The experts, Lowe says today, “were ecstatic. They said we’d found the holy grail, and the sooner we can move into humans, the better.”

At the time, Lowe told an interviewer: “I feel better about this venture than anything in my life. To think that technology that started at Dalhousie University can make an impact worldwide for mankind? That would be phenomenal.”

But—just as Lowe himself had forecast—the company began to outgrow its co-founders. Lowe, in fact, headed the search committee for Kimmins’ successor, which meant “I was effectively hiring my boss.”

That turned out to be Dr. Randal Chase, a scientist-businessman with 30 years experience in the field of human health, biotechnology and pharmaceuticals. Though officially named president and CEO in 2007, the company news release made clear he was only working “on a parttime interim basis as the company is at an early stage of development for human vaccines.” Coincidentally, Chase also served as chair of the board of a phenomenally successful Quebec-based biotech startup called Medicago. Remember that name. We’ll come back later to the interconnected story of IMV and Medicago.

Chase’s appointment reflected the company’s desire for a clearer focus on human health as well as the need for someone like Chase who could swim in those deeper investment waters and help forge partnerships with bigger industry players. It didn’t work out as well as hoped—the company, under Chase, “didn’t have the momentum the board had hoped it would have,” recalls Lowe, and Chase left for “personal reasons” in 2011. His immediate successor couldn’t seem to find that momentum either, and the company seemed to drift for a number of years.

By that point, Brian Lowe had already decided on his own to take his leave. “My forte is startups,” he says now. “I remember thinking at one point, ‘This has been fun but it’s coming to an end.” In January 2005, Lowe called Ross Findlay, a PWC executive with whom he’d worked to raise money for IMV in 2004. “I said, ‘let’s have a coffee.'” They talked generally about the need for angel investors to help goose business development in the region, particularly in technology, and about the startling lack of such helpful investors in Atlantic Canada.

“Why don’t we do it?” Lowe said finally. “Jesus, if we can do what we did for IMV, why not for other early stage companies?” The First Angel Network—whose “genesis,” Lowe says, was IMV—was born. In 2010, Lowe left IMV to focus on First Angel. It now boasts 35 companies in its portfolio and has raised close to $65 million from Atlantic investors to invest in Atlantic start-ups.

Meanwhile, back at the IMV research ranch, the company continued to evolve: scaling up its research and testing, going public on the Toronto Stock Exchange in 2009. But, in order to succeed in the global marketplace, which was what biotech had become, the company’s board knew IMV had to become global.

But what would that mean for Immunovaccine, a Halifax-based company that had gotten its start in a university lab two decades earlier creating birth control pills for seals?

“No problem. I’m happy to talk,” Frederic Ors says into the phone. Ors is now the president and CEO of Immunovaccine, Inc. Ors signed on in 2015 as vice president of business development and strategic planning, and officially assumed the top jobs in April 2016. I’ve reached him on his cell in Paris, where he was born and raised. He actually lives in Quebec City. And, of course, he runs a company, whose head office is still officially in Halifax.

The reality, he explains, not unkindly, is that Halifax is not a biotechnology centre of the universe. Boston and San Francisco certainly, Montreal maybe. If you’re not in such a centre, he says, you need a management team that’s been there, done that. “The Catch-22 is that without those kinds of people, big institutional investors and investors that specialize in biotech won’t take a meeting, even for a company with good technology.”

So IMV, which had to outgrow its founders, must now outgrow its home base—without, in the process, necessarily leaving it behind.

Ors’ own globe-girdling background in the biotech business begins in Paris where he served for four years in the late 1990s as manager for intellectual property and licensing at the Université Paris, focusing on “collaboration. We created an incubator for biotech partnerships.”

But eventually, Ors, who had earned a combined master of science degree in biotechnology and business administration (essentially a program to equip scientists with the business tools they need to become science entrepreneurs) decided he “wanted to be on the other side of the street.”

So, in 2001, he moved across the Atlantic to join Medicago, that Quebec City-based biotech startup whose history is not dissimilar to IMV. (A reminder: Randal Chase, IMV’s previous CEO, had served as Medicago’s board chair while running IMV.)

Initially inspired by government interest in developing nonagricultural applications for alfalfa, Medicago had launched in 1997 inside the University of Laval. Three years later, it became a private company. By 2006, when Medicago went public, the company had morphed from alfalfa to focus on using virus-like particles to speedily develop vaccines to protect against seasonal influenza and pandemics.

It’s worth noting again the links between IMV and Medicago. The man most responsible for transforming Medicago’s business model was the company’s CEO at the time, Andy Sheldon. Sheldon is now the chair of IMV’s board; he joined the company at the same time Ors took over its top management positions.

Sheldon and Ors—who had become Medicago’s vice president of business development—helped Medicago find scientific and commercial success. In 2008, the company triumphantly announced plans to produce a vaccine for the H1N1 virus just 19 days after the publication of the virus’s genetic sequence. Five years later, Mitsubishi-Tanabe Pharmaceutical Corp. (definitely Big Pharma) bought the majority of Medicago’s shares for $595 million.

Although no longer involved on a day-to-day basis with IMV, Lowe thinks the Medicago links have helped—and will help—IMV. “IMV is going through a process Medicago already went through,” he says.

“We had become one of the most successful biotech companies,” Ors says proudly, “going from 10 to 500 employees. That wouldn’t have been possible without big outside investments.”

Fredric Ors

Ors stayed on at Medicago for two years after Mitsubishi bought the company. “It was interesting learning how Big Pharma works,” he says now, “but it also helped me realize I am more interested in small companies. I see myself as an entrepreneur.”

That’s what led him to Halifax, and to IMV (where he had already collaborated with the company in 2009 on a project “on the research side”), and to the opportunity to make another small biotech player much bigger.

Ors, notes one analyst, “moved into [IMV’s] executive suite… and engineered a corporate reset, with new management, a new board and a new business plan.”

The strategy itself is straightforward. “Value is created by products,” Ors says. “We want to develop our own products. We want to develop products for other applications. But we can’t chase it all. That’s why we take on partners.” In the past few years, in fact, the company has shaken hands on major partnerships with the likes of Merck, Incyte Corporation, the Dana Farber Cancer Institute, Leidos and UConn Health.

In many ways, management is now more virtual than location-based. “Our chief medical officer is based in Vancouver,” Ors tells me. “She had the profile we were looking for, so it didn’t matter where she was.” Ors and the company’s CFO are both based in Quebec. (The CFO, by the way, also worked previously at Medicago.)

“Once you assemble your team, you give a level of comfort to those big investors you need,” Ors explains. “We’ve done that, and with that backing, we’ve been able to accelerate growth,” not only raising more money than ever before in the last 16 months, but also doubling IMV’s workforce to 40, the vast majority still based in Halifax.

The company has also announced some key research and development breakthroughs. In February, for example, IMV announced the Princess Margaret Cancer Centre at Toronto Hospital, one of North America’s top cancer research centres, will conduct a Merck-funded Phase 2 clinical trial to evaluate IMV’s DPX-Survivac cancer vaccine for recurrent, resistant ovarian cancer in combination with a Merck therapy. “Combination therapies,” Ors explains, “are emerging as increasingly promising approaches for hard-to-treat cancers.”

In July, Ors announced IMV’s scientists had achieved yet another research breakthrough, jamming 14 cancer-fighting peptides onto DepoVax, creating what Ors described to a reporter as “an opportunity to develop truly personalized therapies on a scale that could, in our opinion, truly impact the way in which bespoke medicines are used in today’s treatment landscape.”

The next big business step, Ors says, will be a listing on NASDAQ, the New York Stock Exchange. When it comes to large potential investment, he says, “the rewards [on Wall Street] are big, but so are the risks. If we don’t deliver, it would be a disaster. So it is not something to be taken lightly. We must be fully prepared.” He intends to deliver.

All of which, of course, leads back to our earlier question: What will Immunovaccine’s success—if it happens—mean for Halifax?

Perhaps surprisingly, Ors says the prognosis is excellent. “We intend to grow the company in Atlantic Canada.” While it can cost a billion dollars or more to get a drug to market and that requires outside, out-sized investors, he notes, the calculations change when you come to the cost of operating the ongoing business. Halifax has universities, a highly educated workforce, and a reasonable cost of living and doing business

“The funny thing,” he says, “is that Halifax ranks very well at that point.”

Even though he’s no longer part of the company, Brian Lowe agrees. “I think the company will stay here,” he tells me. “Halifax has a lot to offer and I think they’ll be hiring a lot of people here going forward. I see a great future ahead.”

One other, perhaps hopeful link between the stories of Medicago and Immunovaccine: In 2015, even after Medicago had been gobbled up by Mitsubishi, the company announced plans to develop a new $245-million production complex that will double its local workforce to close to 400 people and “generate more than $461 million in direct and indirect [local] economic benefits over the next five years.”

Now that would be nice.

Clarification: The story has been altered to reflect the fact that ACOA’s funding for IMV was in the form of a loan, not a grant.

Full disclosure: Author Stephen Kimber’s own very small investment portfolio contains an even smaller number of Immunovaccine shares. He bought them on the advice of his stockbroker, which is how he first heard of IMV.

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