Struggling Canadian biotechs urged to look south for cash

A group of bankers took to the podium in Toronto for a recent panel discussion on raising funds for life sciences companies and the underlying theme that developed was to look south for new cash.

The stats for Canadian biotechs look grim, according to a report in Reuters. The biotech sector accounted for a mere C$366 million out of the $64 billion raised by the country's companies last year. That's the lowest level of fundraising for the industry in a decade and pocket change compared to what the U.S. biotech industry raised a year ago. That's why the bankers were gung-ho in suggesting that Canadian life sciences companies should list on Nasdaq rather than a Canadian exchange.

"The IPO market in Canada is nonexistent for life sciences," said Shameze Rampertab, a partner at Loewen, Ondaatje, McCutcheon & Co. And Rod Altman at CMEA Capital waxed bullish: "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."

But before Canadian biotechs get the idea that the U.S. is a haven for biotechs, they might want to consider the fate of Tengion. The developer's IPO raised $30 million on Friday, after significantly reducing its expectations and listing price. After trying to get out with a share price of $8 to $10, Tengion listed at $5 and closed at $5.02. For analysts, it was more evidence that investors have yet to develop an appetite for biotech companies that face tough odds getting a product to the market.

- here's the story from Reuters