Growing our Life Sciences Sector: An Interview with Gordon McCauley

During our January symposium, we heard repeatedly that a lack of capital was a major barrier for life sciences in Toronto and Ontario. Considering Ontario houses half of Canada's life sciences research, particularly concentrated in the Toronto region, what steps do you believe are crucial for developing a self-sustaining life sciences cluster here?

Gordon McCauley: So, I'm going to reflect on both of those points. It is a fool's errand to try and become the next Boston, South San Francisco, or Cambridge. We need to identify our particular strengths and build on them to create a compelling, self-sustaining cluster. There is an extraordinary research enterprise in Toronto. With 50% of the country's life sciences research enterprise in Ontario, the lion's share up and down University Avenue, we have all the component parts necessary for any ecosystem.

The business literature is overwhelmingly clear that if you want to a sustainable cluster, you must have anchor companies. We really have to think about how to build these anchors. There are different challenges in the three regions of the country as to why there aren't anchor companies today, but there is unquestionably a need to build them.

Regarding the absence, or a lack of capital, I think that's the wrong way of thinking We know that capital finds good science. It is clear no company will be successful in this space without attracting global capital. Of the $2.4 billion of real risk capital that our companies have created, the vast majority is foreign direct investment, which is a good thing. If there isn't enough capital, we have to be honest with ourselves and ask if we are organizing the science in a way that really attracts capital. Over the last five to seven years, we've seen a change in how that science is being organized, and we're starting to see the emergence of globally relevant players.

Let’s talk more about anchor companies in a moment. First, I want to follow up on attracting capital in this country. With the proximity and allure of the U.S., won't Canada always be at a disadvantage? Won’t successful scientists just be drawn to bigger research labs south of the border?

GM: Absolutely not. So, look, there's a couple of things. Global capital and the lion's share of global capital in this space are in the U.S., for sure. Global capital is going to be involved in any successful anchor company anywhere in the world. If you tell me that any anchor company is going to be sucked into the U.S., you have to explain why Canada is the only advanced pharma market in the world without a research-based therapeutic anchor. Why is there an anchor company in Belgium, or Spain, or Italy? It doesn't make any rational economic sense, but they exist.

So, being closer to the U.S. is an advantage, not a disadvantage. It’s crucial to understand that while the U.S. has a lot of capital, we can build anchor companies here in Canada by using the same principles. 

We have examples like StemCell Technologies in Vancouver and CellCarta in Montreal, which have developed into significant companies. The idea isn't that Canada can't compete; it's about how we organize and attract the necessary capital and structure our enterprises to make them globally competitive.

So, that leads to an obvious question, how do you connect those two dots?

Gordon McCauley: Creating anchor companies is a deliberate process that you need to start early. What it really means is, instead of thinking about the next milestone, you think about the market. When you're developing a drug, you know, the old chestnut is you start with the label in mind, what's the approval going to be, and you kind of work your way back from there. It's the same thing in creating a company. You've got to think about what this company is going to ultimately look like if it becomes an anchor. Any person that wants to raise a dollar of risk capital should be thinking this wayIn the end, the the only downside to thinking that way is that you create more value 

You’ve given us a lot to think about. For those willing to dream big and go after the dream of founding an anchor company, what practical steps should they take to begin this journey? Can they pick up the phone and call you?

Gordon McCauley: If someone thinks they've got an anchor company idea, the first step isn't necessarily to call me directly, though they absolutely can. I want a scientist to call and say they have an idea that could make a profound difference, and then we can help figure out its commercial viability. Sadly, not every great idea is commercially viable, but if it is, we can guide on getting from here to there, whether it’s with us or not.

For someone in this space wanting to raise capital, they should think about whether their idea can make a significant difference in patients' and families' lives. We can help them figure out if there's a commercial path for that. Venture capital groups and accelerator programs, like the one we run with MaRS, are also excellent resources. These platforms can provide the necessary advice and support to turn a scientific innovation into a viable business.

At the end of the day, the scientist has to decide how involved they want to be. If they're more interested in their research, they can partner with people like us, or other organizations like us who can help organize and navigate the business side of things. This allows the scientist to focus on what they do best—innovation—while we help handle the commercialization.

Last question for you Gordon, there are noted tensions among academia, government, and industry in Canada's life sciences sector. How can these entities work better together to foster the growth of our life sciences sector?

Gordon McCauley: So, I would say two things to that. First of all, we know the science is abundantly clear that diverse groups make better decisions. Right? Diverse groups of the makeups of the people, the perspectives, the backgrounds, gender, etc., so, getting those groups to figure out how to work effectively together, they will make better decisions as a group.

Having said that, of course, there's tension between those three groups. They have very different objectives. They're trying to do very different things. That's okay. However, there needs to be an entrepreneur there that says, 'I want to do this, and I want to think this way, and I want to drive it.' I believe it is the case that in every anchor company ever created there was an entrepreneur who was driving through to that marketplace, thinking that way and really trying to pull people together. It wasn't necessarily a function of a tech transfer office, an investor, an organization like us, or public policy. It was somebody wanting to drive, thinking about an anchor company and being supported along the way.

Our thanks to Gordon again for sharing his insights which remind us of both the challenges and significant opportunities that lie ahead for the Toronto Region’s life sciences sector. By fostering a strategic approach to growth, facilitating easier access to capital, and reducing impediments, we can pave the way for a thriving, world-class life sciences hub. Join us as we explore these vital topics and work together to transform the Toronto region into a beacon of innovation and economic success.

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