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LEGAL REPORT: LIFE SCIENCES & BIOTECH Michael Herman, a partner with the corporate finance group at Gowling Lafleur Henderson LLP, agrees. "Access to funding has been the No. 1 issue iden- tified in Canada by life sciences compa- nies, their CEOs, their researchers, and their academics. And I would say the situation has deteriorated over the last few years." He points out that last year, there was only $215 million invested in biotechnology companies, which amounts to a 41-per-cent decrease in private investment compared to 2008. "Part of that is due to the economic downturn that has affected everybody, but part of it is due to structural issues in the venture capital sector in Canada which need to be addressed." Part of the problem is biotech and life sciences companies try to go pub- lic when they're not ready, he says. "A lot of biotech companies have gone public to raise funding probably at a time when it was too early for them to have gone public. As a result, many of them have struggled and it has made it really impossible for a biotech company to go public. Last year there were no [ini- tial public offerings] in the sector. They are really finding themselves in very difficult straits when it comes to having sufficient cash to pursue their research and development programs, and bring their products to commercialization." He also says many large pharmaceu- tical companies are seeing their patents poised to expire in the next few years, which is integral to the industry's ability to establish relationships with smaller company innovators to perhaps under- take a merger and acquisition transac- tion. "There has been significant M&A activity in the U.S. and elsewhere, but not so much in Canada," says Herman. "So far, Canada hasn't really joined the M&A party. I suppose the question is, 'How do we find ways to improve the funding and investment environment for the life sciences sector in Canada?'" Herman adds that banks, pension Your IP partners Whether arguing before the court or the patent and trademark offices, the partners and associates at Dimock Stratton bring experience, perspective, insight, and attention to detail to the job. Our approach has won the respect of peers and clients alike and generated the consistent results that have earned us the distinction of mip Canadian Patent Contentious Firm of the Year 2008 and 2009. When you need a top ip partner, contact the team at Dimock Stratton. Dimock Stratton partners from top left to right: Mark Eisen, Henry Lue, Jenna Wilson, Bruce Stratton, Ron Dimock, David Reive, Angela Furlanetto, Mike Crinson Dimock Stratton llp experience. results. 20 Queen W. 32nd fl, Toronto | 416.971.7202 | dimock.com 52 M AY 2010 www. C ANADIAN Law ye rmag.com ntitled-5 1 2/17/10 12:32:25 PM funds, and other institutions have regrettably been shying away from investing in the life sciences and bio- tech sector although, he admits, invest- ments won't necessarily yield a return for investors for several years. "It's a bit of a catch-22 because the returns have been poor," he says. But in the longer term, most biotechnology and life sci- ences companies are indeed viable once they establish themselves. He suggests the amendments to Canada's tax act could indeed entice venture capital investors. "By making this change, it is hoped it will allow more U.S. venture capital funds to take an active interest in Canadian startup companies including those in the bio- tech sector," says Herman. "We need to look at dramatic and radical solutions that engage everybody in the process," he says of facilitating investment into the sector. "These are important indus- tries for the future of our country." Brian G. Kingwell, a partner at Smart & Biggar's Vancouver office whose prac- tice is focused on patents in molecular biology, biochemistry, chemistry, and