Didier Leconte, venture partner at AdBio, and Mounia Azzi, partner, in Montreal on Sept. 28.Andrej Ivanov/The Globe and Mail
One of Canada’s top domestic life sciences backers, Montreal-based Fonds de solidarité FTQ, has enticed another foreign biotechnology investor to set up shop in Quebec in the hope that it can help reverse a trend of declining company creation.
The labour-sponsored fund, which invests $100-million in life sciences annually, has committed an undisclosed amount to Paris-based AdBio Partners’ third seed fund, which specializes in creating biotech companies. AdBio has opened a Montreal office, its first outside Europe, and hired two local industry veterans.
AdBio, which spun out of venture-capital giant Advent Life Sciences, has raised more than half of its €120-million ($193-million) goal for the third fund, after raising a €67-million ($108-million) fund in 2017 and second in 2021, securing €94-million ($151-million), Alain Huriez, AdBio chairman, said in an interview. AdBio’s prior funds have backed 30 companies to date. Other investors in the new fund include the European Investment Fund and French government-backed National Seed Fund 3.
Mounia Azzi, previously a vice-president with adMare Bioinnovations – a Canadian non-profit organization that provides lab space, funding and other support for drug startups – was made a partner this year to lead the Montreal office. Didier Leconte, who once led life sciences investment activities for the Fonds, will serve as a venture partner, serving on boards of investee companies.
Mr. Huriez said Quebec has incredible scientists.
“We believe there is a lot of opportunity and a lack of early-stage company builder funds,” Mr. Huriez said.
AdBio, which hasn’t previously invested in Canada, will invest up to 20 per cent of the fund outside Europe, primarily in Quebec. Mr. Huriez said the goal is to back three or four companies in Canada, investing €2-million ($3.2-million) to €3-million ($4.8-million) each initially.
The Fonds, which had $23.7-billion of assets as of May 31, has used a similar strings-attached approach before to bring American and European capital deployers to Quebec. Those include Versant Ventures, Sanderling Ventures, Forbion Capital Partners, Theodorus Investment Funds and Sofinnova Investments, which opened offices and/or invested in Canada.
That approach “is really embedded in our strategy” alongside backing Canadian biotech venture-capital funds, Maxime Pesant, vice-president of private equity and impact investing, Life Sciences with the Fonds, said in an interview.
In its portfolio, Fonds has 11 companies in Quebec now, down from 20 earlier this decade and Mr. Pesant said they need to replenish the portfolio.
“We have had some great performance in life sciences, so we need to focus more on company creation,” he said.
Canada’s biotech sector has been a strong performer this decade. Several Canadian companies have sold for US$1-billion or more while others have been buoyed by positive clinical results including AbCellera Biologics, Xenon Pharmaceuticals Inc. and Zymeworks Inc., or signed lucrative development deals with pharma giants, including Variational AI and Aspect Biosystems.
Data from Business Development Bank of Canada shows that domestic life sciences venture-capital funds have averaged 19.9 per cent annual returns over the past 10 years – well above funds focused on information and clean technologies.
But most funds here aren’t large enough to attract backing from Maple 8 pension funds, except for the Caisse de dépôt et placement du Québec.
Meanwhile, life sciences companies raised just $258-million in 49 financings in the first half, down from $894-million over 58 deals in the same period a year earlier, according to the Canadian Venture Capital &Private Equity Association.
AdBio’s Ms. Azzi said the number of companies being created has declined despite “the great science we’re seeing at universities.”
“Every time there is this type of crisis there is also opportunity – and we see a lot of opportunities. We just need to roll up our sleeves and work together to ensure they become successful companies.”
Several other venture-capital firms operating in Canada have focused in the past decade on creating companies, including Genesys Capital, Amplitude Ventures and Versant, as well as adMare. Genesys and Lumira Capital have also attracted new investors to the sector, including the University of Toronto, McMaster University, The Terry Fox Foundation and Canadian Cancer Society, to back young biotech companies.