RPT-DEALTALK-Bay St says life sciences fare better in U.S.

Mon Apr 12, 2010 8:05am EDT

(Repeats story from Sunday)

* IPO market for life sciences companies dead in Canada

* Regulatory approvals could draw investor interest

By Pav Jordan

TORONTO, April 12 (Reuters) - Canadian life sciences companies that need to raise cash in capital markets are best served going south of the border for their financing needs, Bay Street specialty bankers said.

"The IPO market in Canada is nonexistent for life sciences," said Shameze Rampertab, a partner at Loewen, Ondaatje, McCutcheon & Company in Toronto.

So began a recent panel discussion by bankers in Toronto's financial district, where life sciences players bemoaned the market's lack of interest in financing them nearly three years after the last life sciences initial public offering in Canada in November 2007.

"The whole world changed for this sector in the fall of 2007, when the door slammed shut," said Wayne Schnarr, a healthcare consultant for TMX Equicom and the moderator for a panel entitled The View from Bay Street at BioFinance 2010, which took place April 6-8.

Canadian market interest in life sciences companies has been sapped by poor drug trial results, the global financial crisis and an investing public besotted with mining and energy stocks.

Canadian-listed companies raised more than C$64 billion in 2009, but only C$366 million of that was directed towards Canadian biotechs, the lowest amount in a decade and a tiny fraction of the record $55 billion raised by the U.S. biotech sector last year in partnerships and financings.

"We spend 90 percent of our time marketing in the United States," said Andrew Smitiuch, managing director for investment banking at Dundee Capital Markets in Toronto.

In fact, the three-day meeting in Toronto had a decidedly U.S.-flavor to it, including a luncheon that featured seven U.S. bankers at the head table, several of whom urged Canadian biotechs to choose a Nasdaq listing over a Canadian one if they hoped to survive.

U.S. investors are hungry for biotech, eager to invest early in the next great wonder drug or medical device.

"In my 10 years in venture capital I've never seen a more opportune time to invest in life sciences than over the last year," said Rod Altman, a doctor and senior partner at U.S. private equity firm CMEA Capital, which has about $1.3 billion of investments under management.

CANADIAN COMPANY BREAKTHROUGHS

Pools of capital are smaller in Canada and most investment funds are generalists, panelists said, adding that as capital starts to flow back into the biotech sector as economies recover from the crisis, Canadian investors are largely absent.

Bankers said Canadians are also less patient than their U.S. counterparts, demanding quicker returns.

Life science companies finance to events - going to market as they hit major milestones in the development of new drugs or technologies.

Experts said Canadian investors may want to take another look at biotech stocks in coming months, when three homegrown companies will see treatments go before U.S. or European regulators for approval for commercial production.

Theratechnologies (TH.TO), a Montreal-based company, is awaiting approval of tesamorelin, for the treatment of excess abdominal fat in HIV-infected patients with lipodystrophy.

Cardiome Pharma Corp (COM.TO) hopes to see vernakalant, which is used for the treatment of atrial fibrillation, receive regulatory approval.

And Isotechnika Pharma Inc ISA.TO is also hoping for a regulatory approval in coming months for its drug voclosporin, under the proposed brand name LUVENIQ. Voclosporin is proposed for the treatment of non-infectious uveitis involving the posterior segment of the eye, a leading cause of vision loss and long-term disability and the fourth leading cause of legal blindness in the industrialized world.

"Lets hope they make it so we can trumpet their success to Canadian investors," said Equicom's Schnarr.

($1=$1.006 Canadian) (Reporting by Pav Jordan; editing by Peter Galloway)

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