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Open innovation, creative partnerships and profitable collaborations

Quebec Consortium for Drug Discovery – CQDM

 This story is taken from the NCE anniversary report "Building on 25 Years of R&D Excellence."

Canada has what pharma needs most these days: high quality academic research, world-class institutions, strong research networks, highly trained personnel and world-class, innovative biotech companies.

The business challenge

The high risks and escalating costs of drug development have made it difficult for early-stage biotech companies to attract financing. Those that succeed often have to relinquish too much equity; those that don’t may move out of Canada or close up shop. These challenges, combined with imminent patent cliffs, have triggered a major restructuring of the global pharmaceutical industry as companies race to decrease risk and become more capital efficient.

The opportunities for Canadian companies

Canada is well positioned to grow our biotech sector and help big pharma revitalize its product pipelines at the same time. That’s because Canada has developed proven investment models that reduce risk through open innovation and collaborative R&D with young biotech companies, academia and public bodies. This allows biotech companies to move beyond a fee-for-service model, retain equity and ownership of their intellectual property, and grow their operations in Canada.

What CQDM is doing right

The network is a non-profit organization sponsored by seven leading pharmaceutical organizations (Merck, Pfizer Canada, AstraZeneca, GlaxoSmithKline, Boehringer Ingelheim, Eli Lilly Canada, and Novartis Pharma Canada) and the Quebec and Canadian governments. It provides critical funding and a neutral ground where pharmaceutical and biotech companies, venture capitalists, universities, hospitals and governments work collaboratively to accelerate the development and validation of pre-competitive research tools and platforms. Here’s how they’re doing it:

  • Good governance and management: CQDM’s strategic direction, research priorities and investment decisions are guided by a board of directors and two advisory committees – all of which have strong representation from seven of the world’s top 12 pharmaceutical companies as well as academia, biotechnology, venture capital and government. Research projects are evaluated by an independent, international panel of scientific experts for their research excellence and potential industrial impact. A risk analysis on all intellectual property, financial, ethical and organizational aspects (including involvement of a private sector collaborator) is performed in parallel by CQDM. In addition to their participation on committees and as mentors, pharma members provide essential industrial expertise and access to specialized equipment, databases or clinical samples.
  • Shared funding, shared risk, shared benefits: The network’s globally unique business model reduces the risk of early-stage research and fills a critical financing vacuum. Its collaborative, pre-competitive approach pools private and public funds to support research that is too advanced for traditional research grants, too early stage for venture capital, and too expensive for companies to support on their own. This model allows it to generate a financial leverage of 20 times. Cash contributions from pharma members comprise nearly half of CQDM’s budget. Similar consortiums in other countries tend to attract more in-kind than cash contributions.
  • Aligning research with industry needs: Up to seven top scientists from pharma sponsors act as mentors for every project. This forges strong links between the pharma industry and scientific community – both within and outside of CQDM – while ensuring that research is aligned with each company’s needs.
  • Strong industry oversight: Each project plan includes clear milestones, critical steps, deliverables and go/no go decision points. This ensures scarce resources go to projects with the best chance of success. Mentors play a critical role in these evaluations through their advice to CQDM’s advisory committees.

Show me the results

  • Medicago, a clinical-stage biotech company, has invested $4 million in its Quebec City pilot production plant, created 20 new jobs, launched a U.S. subsidiary and signed an agreement with a CQDM pharma member to develop a new flu vaccine. Medicago’s growth is the result of a high-throughput platform – developed with support from CQDM– that identifies vaccine candidates in less than 10 weeks, and at one-tenth the cost of conventional methods. VLPExpress™ is expanding Medicago’s portfolio of vaccines, including Ebola and rabies. CQDM support enabled Medicago to increase its market value without reducing its equity. In July 2013, Medicago announced a strategic alliance that will see Japan’s Mitsubishi Tanabe Pharma acquire the company for $357 million.

These resources [from Mitsubishi] provide us the ability to foster the development of innovative vaccines with the financial stability to expand our Quebec, Canadian, U.S. and global operations.

Andy Sheldon, President/CEO, Medicago
(July 12, 2013, Globe and Mail)

How CQDM benefits biotech partners

  • Non-dilutive funding: Rather than selling equity, CQDM’s support allows firms to de-risk research and build a portfolio of assets before seeking venture capital.
  • Companies retain royalties, milestones and product development rights.
  • Collaborations with pharma members advance and validate technology, and open channels to global markets.