Health Committee on Oct. 30th, 2012

[The Chair, Conservative, Joy Smith]

Committee, I'd like to call the meeting to order so we can begin right now, because I understand, Dr. Hormes, that you have to leave at 11:45 today. Is that the case?

[Dr. Josef Hormes, Executive Director, Canadian Light Source]

I have a meeting with the Deputy Minister of Health at 12.

[The Chair, Conservative, Joy Smith]

I wasn't trying to pry, but thank you. We could give you your dismissal slip any time. You have permission now.

[Dr. Josef Hormes]

Thank you. My director of industrial research is joining me and he will stay longer. If there are additional questions, he should know everything I know and he can answer the questions.

[The Chair, Conservative, Joy Smith]

Thank you.

Dr. Menon, from London, I understand you were at the airport at 5 a.m.

[Dr. Ravi Menon, Professor and Canada Research Chair, Robarts Research Institute, University of Western Ontario]

Yes, I was. Unfortunately, as you know, income trusts pay out a lot of money, but they don't invest and Air Canada Jazz is one of them. Their aircraft was dead on arrival.

[The Chair, Conservative, Joy Smith]

It was dead on arrival, DOA. Thank you very much for persevering. You're a man of tenacity, and we're very pleased that you're here by video conference. Dr. Weaver, we're delighted that you could join us as well. We're going to have wonderful presentations today.

We're going to start with Dr. Hormes. I am going to ask the committee that during questions, be mindful of the fact that Dr. Hormes will be leaving, but Dr. Cutler will remain. This is great.

You have 10 minutes, and we will be delighted to hear your presentation.

[Dr. Josef Hormes]

Thank you very much.

I am representing Canadian Light Source. Therefore, my presentation will focus on the potential applications and realistic applications of synchrotron light for health research. I am not sure if all members of the committee have visited Canadian Light Source in Saskatchewan. You are more than welcome, and I am inviting you. Therefore, I will say a few words about what a synchrotron light source is.

In principle, there is an electronic accelerator, and it is a huge one. The circumference is something like a soccer field, 160 metres. Electrons are accelerated and they are producing light, also visible light. The most important property, and the only one you should keep in mind, is the X-ray intensity of this machine is a million times higher than the most intense X-ray machine that you can use in hospitals. If you keep that in mind, it means the most important property is the extremely high intensity when it comes to X-rays. You can do things and develop new techniques based on the applications of X-rays.

This machine can serve several users at the same time. At this point, we have 15 different stations that are used in parallel. This machine is operated 24/7 and for something like 5,000 hours per year.

I would like to cover two parts. One part is the general potential of synchrotron radiation for health research. Then, I would like to highlight a few examples of the research that is going on at Canadian Light Source in Saskatchewan.

I will start with my standard opening statement. The basic or fundamental research is extremely crucial in the area of health research. In basic research you are developing the tools that you can apply in applied research. Without good basic research, there is no good applied research. That's normally my opening statement.

What can synchrotron radiation do for health research? There are three different areas.

The first one is basic research on health-related problems. I will give you some examples.

The second one is a direct application for drug development. At this point, that is the most important part. More or less all pharmaceutical companies that are doing research in drug development are using synchrotron radiation facilities somewhere in the world.

The last one is, because of that high intensity, you can develop completely new diagnostic and treatment techniques based on X-rays. That means improving the techniques that are available in hospitals.

Regarding some examples for basic research, there are a lot of diseases where the molecular origin, the molecular level, is not well known.

I learned that the next presentation will focus on Alzheimer's. There is a lot of speculation, for example, that metals, and aluminum was discussed, could cause some of the Alzheimer's cases. I'm not taking away from the other presentation, but sorry about that.

There are other issues, such as how cancer drugs really work. With Cisplatin, for example, there are a lot of basic things that are not well understood. What is really important and challenging is the opportunities for nanoparticles for biomedical applications. It starts with very simple things, using magnetic nanoparticles as drug carriers. Is it possible to get a drug directly to a tumour? That means if you use chemotherapy, you are not poisoning the patient close to the point that the patient is dying, but you are targeting things. Nanoparticles have a huge potential for that.

That is basic research. I already mentioned drug development. The problem is, for a long time drug development was trial and error. Industry was using 10,000 starting compounds and they were just testing which one had potential.

If you know which target you have, which virus is causing the disease, and you know the three-dimensional structure, you can do what is called rational drug design. You can design a drug based on the structural information, and that's called the key-lock principle. It means you have a lock, and you design the key to go into that lock. That is the way drug companies are doing that, but you need the three-dimensional structure of the virus.

The example that I normally mention is HIV. For a long time, HIV was a deadly disease. It's now a chronic disease. The reason is people understand better the structure of the virus and the changes of the structure of the virus. That knowledge is based on synchrotron radiation research, which unfortunately is not done in my facility, but is done in Stanford.

At this point there are something like 40 or 50 drugs either on the market already or under development that are based on that rational drug design. Pharmaceutical companies around the world are spending significant amounts of money for that. For example, nine companies in the U.S. form a consortium at the Advanced Photon facility in Chicago, and they operate one experimental station jointly. At least they are paying jointly for the operation. Of course, they are doing their research independently.

There was drug development, and then the development of new diagnostic tools. As you might know if you go to a hospital, the X-ray technique today is the same that was used more than 100 years ago. They used an X-ray film. Now you have a CCD camera on the other side, but the technique is 100 years old. There was hardly any improvement.

What you also might know is X-ray techniques are not extremely sensitive. For example, breast cancer is not detected because the MD sees a difference in the structure of the healthy and the cancerous tissues; it's detected because of calcification. That's a secondary process in the detection.

If you could develop a technique that would detect cancerous tissue directly with a huge sensitivity in the sub-millimetre range that allowed you to detect metastases very early, it would be a breakthrough in cancer detection and early treatment.

There are techniques that Canadian Light Source developed that are going exactly in that direction. Our challenge is that you can't bring several thousand patients a year into a research facility. The challenge for us is the transfer of that technique that's developed at a research facility into hospitals. In all those cases that I'm talking about, that's a very important point to keep in mind.

The second point is biopsy. You might know that an MD looks through a microscope, and it's the experience of the MD that is a crucial part for the right diagnosis. If you have more objective tools using spectroscopic ways of analyzing your tissue sample, there could be a significant improvement. People are working in that direction.

That was the general overview. What are we doing at Canadian Light Source? We are what is called the user facility. That means I'm operating this facility for Canadian and international users. In 2011, for example, 600 users from 200 institutions around Canada came to use our facility.

As an aside for the committee, beyond synchrotron radiation, we are also building a facility for isotope production, technetium-99, molybdenum-100 . When the Chalk River nuclear power station or the nuclear plant is closed down, I hope we can step in.

At this time, something like 20% of our users at Canadian Light Source are doing health-related research, and something like 30% of the publications that are coming out of our research are directly connected to health research.

My users are doing research in the three areas that I mentioned. In basic research, I gave three examples.

Crohn's disease is one of those diseases where the origin is not really clear. Then there are some types of esophagus cancer where you can see early stages of changes in the structure of cells by spectroscopic techniques. If these techniques could be completely developed and transferred to hospitals, there could be a breakthrough in early diagnosis of cancer in various forms.

When it comes to drug development, we have a broad group--

[The Chair, Conservative, Joy Smith]

Doctor, you're going to have to start to wind up now because your time is up.

[Dr. Josef Hormes]

Yes, I have one minute more and then I'm at the end.

[The Chair, Conservative, Joy Smith]

Half a minute more.

[Dr. Josef Hormes]

Okay.

We have a broad range of users who are using what is called protein crystallography, that is, detecting the three-dimensional structure of viruses and various diseases. They are in many cases connected to drug development, but it's basic research.

The diagnostic techniques, I've already mentioned. With improving X-ray techniques, the range is very broad. It starts with arthritis, for an ageing population. It's bone research, but it's also stroke research and other areas. Half of the users coming to Canadian Light Source are graduate students, Ph.D. students. We are also training a broad range of young people who will go to industry later on.

Of the problems we are facing, I would highlight one. At the centre, the medical problems that we are facing are very complex. It means an individual university researcher will not be able to solve those problems. My feeling is that the federal government should define some areas and bring them together.

[The Chair, Conservative, Joy Smith]

Thank you, Dr. Hormes. Sorry to interrupt you, but you're way over.

[Dr. Josef Hormes]

That's okay, I'm at the end.

[The Chair, Conservative, Joy Smith]

By the way, during Qs and As, you can have a chance to add anything else you want.

We'll now go to the video conference from London, Ontario. From the University of Western Ontario, we have Dr. Ravi Menon, professor and Canada research chair.

Doctor, welcome again. Please proceed.

[Dr. Ravi Menon]

Thank you very much, Madam Chair, and members of the committee, for this opportunity to share with you some of my experiences in innovation in medical devices and in drugs in Canada. I'm going to describe a few of my own experiences, and I have some additional examples from my institution in the briefing materials that were provided.

My research is in the application of ultra-high magnetic field MRI machines to the study of brain structure and function. These are MRI scanners that operate at two to seven times the magnetic field strength of the MRI scanners usually found in hospitals. My laboratory in London is the only cluster of such machines in Canada, and it has the highest magnetic field MRI scanner for human and animal use in the entire country.

We use these machines to study Alzheimer's, multiple sclerosis, brain cancer, and Lou Gehrig's disease, as well as to understand how the normal brain works. In developing the potential and unique sophistication of these machines for research and diagnostic use over the past 18 years in my laboratory, we have established a number of medical device technologies that are being, or have been, commercialized. I want to talk to you about this.

The first point the committee should understand is where these innovative medical device technologies come from. They don't come from thin air. They come from basic research. They come from the creative minds of my students and my staff who are trying to understand the laws of physics and then apply them to important medical questions.

My initial basic research in this area was funded by the Medical Research Council of Canada in the 1990s. When we started in 1996, we had one of only four such machines in the world for human studies. We did not know what brain disorders could be imaged with this technology or what they were good for. We just had an informed hunch. We had to beg Varian and Siemens, two enormous multinational corporations, to sell us the parts to build such an instrument ourselves, because the big companies had already tried and failed.

This is what the initial $6 million raised by the Robarts Research Institute to recruit me back from the United States was spent on. It was a big risk for our institute, but being innovative requires risk taking. Canadian companies will not take this risk. Canadian banks will not take this risk. Canadian venture capital companies will not take this risk. This is the role of government, to seed innovation in the laboratory, even when you do not know what it will yield or when it will yield it.

MRI scanners use radio waves as part of their operation. From our fundamental research on radio frequency interactions with the body, we produced a new design for a radio frequency coil that was essential for developing this new MRI market. However, no company in Canada was interested in producing such coils because they thought the potential market was too small. Therefore, two of my staff members and I started our own Company, XLR Imaging, in 1998 to sell these coils around the world. We sold $1 million of coils in the first three years as the market for these new MRI machines grew, but we could not raise the capital in Canada to grow the company.

A similar small company, USA Instruments, started in Cleveland. Because they had much easier access to capital south of the border, they grabbed a significant share of the market for these radio frequency coils. They had the money to hire 250 employees; we had three. There are now 4,000 very high and ultra-high field MRI scanners operating worldwide. Purchasers of these scanners have bought $1.8 billion of radio frequency coils in the last five years. In fact, to secure a coil provider for this rapidly growing market, GE acquired USA Instruments, that small company I talked about, for $100 million in 2002. That could have been us. That could have been this country.

This example of lost opportunity highlights two important points.

First, funding of basic science is important for Canadians. It can create enormous wealth, but it could be five years or five decades before that happens. Once we and a few others had shown the usefulness of this technology, many companies entered what is now a $5 billion per year MRI market for these types of high-field magnets, including Siemens, GE, Philips, and Toshiba. But Canada was left behind even as a component supplier, because we failed to capture the value of our basic research.

This leads me to my second point. The failure was not the fault of scientists. Federal and provincial governments repeatedly blame Canadian scientists for not commercializing their devices. This is not fair. We want to be rich just as everybody else wants to be. In my own research area, the data collected by the Canadian Institutes of Health Research show that neuroimaging researchers in Canada rank number two in the world in academic productivity, yet there is no major manufacturer of a medical neuroimaging device in Canada. Why?

Our scientists would love to commercialize discoveries and to find alternate funding streams for their laboratories in this era of shrinking funding for basic science. The problem is there are no Canadian companies that want to bring our products to market. There is no Canadian capital interested in funding that. Therefore, the ideas either die in the lab or are licensed out of the country. I think the problem is that Canadian industry and investors are pathologically risk averse.

I have many more examples of risk aversion from my own institution. Two of my colleagues, Dr. Holdsworth and Dr. Fenster, developed a micro CT scanner technology 20 years ago. They spun it off as a London, Ontario company called EVS, but couldn't get the capital to grow the company. General Electric bought the company for a song, and sold it, as they often do, to another company, Gamma Medica Inc., which moved 100 jobs to California and then went bankrupt. That was the end of another Canadian success story.

My colleague Ting-Lee has developed special software that allows blood flow in the brain to be measured using a standard CT scanner. It is an essential tool for stroke diagnosis around the world. GE holds the exclusive licence, which yields $4 million a year to our institution in royalties. GE sells $2.5 billion a year of CT scanners that use that software, but we were unable to capitalize on that manufacturing in this country.

My colleague Chil-Yong Kang has begun an FDA-approved clinical trial of an HIV vaccine in the United States. The trial is funded by Sumagen Canada, which is really a subsidiary of Curacom, a South Korean company. If this historic vaccine is successful, it will be a breakthrough in global health, but the vaccine will be made in South Korea, not in Canada. The Medical Research Council and the Canadian Institutes of Health Research supported the basic research for this vaccine, but no Canadian company wanted to invest in it.

These four examples from my institution show how Canada has squandered billions of dollars in potential revenue and taxes by sending technologies that we taxpayers paid for out of the country instead of investing in them.

Canadian companies have to learn to take risks and innovate. I worked at Bell Labs for many years with a colleague, Seiji Ogawa. He worked there for 33 years. It was a company that heavily invested in research. That company has 13 Nobel laureates. No company in Canada has ever produced a Nobel laureate. In fact, Bell Labs has produced more Nobel laureates in just one building in New Jersey than the entire country of Canada has produced since the Nobel prizes were put into place.

We need to develop a culture of corporate research and development in this country if we are to capture the benefits of researchers such as myself. It is, however, dangerous to try to divert money from fundamental research to do this, as is currently happening. We need to look at other solutions.

Thank you very much.

[The Chair, Conservative, Joy Smith]

Thank you very much.

Now we'll go to Dr. Donald Weaver, Department of Medicine and Department of Chemistry. Thank you, Dr. Weaver.

[Dr. Donald Weaver, Professor, Department of Medicine and Department of Chemistry, Dalhousie University, As an Individual]

My standard opening is that if we learn through failure, I ought to be a bloody genius.

We talk a lot about innovation. We hear the word “innovation”. I find it to be a horribly over-used, abused, misused word. It's in everything now, from television ads all the way out. Everything's supposed to be “innovative”. From my point of view, innovation occurs when someone takes research and converts it to a useful product. A useful product is a drug, it's something that helps people, and it helps not only their health but it helps the economy. That is my definition of the word “innovation”.

Initially, I trained as a neurologist. Neurology is known as the “diagnose and adios” specialty, because we see people and say, “That's what you've got; no, there's nothing we can do; 'bye”. After I did this, I went back and went into drug design so that I could design and develop drugs. Basically, I'm going to make a few statements about what it's like to try to design drugs in Canada.

From my own point of view, I have been working primarily in neurologic diseases as one of the co-founders of a company called Neurochem Inc., which produced the drug Tramiprosate. This was the first drug to reach phase three human trials for the treatment of Alzheimer's disease. Regrettably, that drug was unsuccessful, but it was a company that ultimately raised over $100 million and had approximately 200 employees. Because of this, I have a strong interest in drugs and the effect drugs have not only on medical but also on economic health.

Recently, as a curious exercise we looked at 186 countries in the world that do some sort of science and wondered how many of those countries actually produce drugs. It was not that many of the 186. We looked at a whole bunch of descriptors and what it is that makes a country successful in drug design. Really what it comes down to is the two most useful descriptors are the country's GDP and population. We then developed a prediction algorithm based upon the GDP and population of all these countries, and did a linear regression analysis to try to produce an equation which asks if we can predict how many drugs a country can produce based upon its size and wealth. If you do that and look at countries all around the world that produce drugs, you can come up with a fairly good equation that is fairly accurate in predicting how many drugs a country can produce.

If you look at the 20-year period from 1990 to 2010, that two-decade period, and you apply this equation to Canada, we should have discovered 16 drugs in that 20-year period for a country of our size and wealth. In fact, we produced six. This gives us what I call a drug discovery deficit of about 10 drugs over the course of 20 years. The question that arises is why. Why haven't we discovered more drugs? As I said, drugs are useful to the health and wealth of our nation. A drug like Lipitor in its heyday was producing billions of dollars per year and it would be bloody nice to have a Lipitor that came out of Canada.

What are the factors that contribute to our drug discovery deficit in Canada? First of all, we don't really have any multinational drug companies in Canada, and we don't have any drug companies doing industrial-based research in our country, so this certainly is a liability to enabling us to convert research to product.

Second, there really is a marked shortage of seed-stage venture capital in Canada. We simply don't have a whole lot of venture capitalists who really have what it takes and the interest to take on this problem. There's a real valley of death between research and a product. When you do research and you take it to a drug company, they ask if you have all this information on it. Most of the time you don't, because it takes venture capital in order to get some of that information in place. As a result, we have this desperate shortage of seed-stage venture capital.

The venture capitalists that we do have, who might be interested in early-stage biotech space, are risk averse. They want the product so bloody de-risked by the time they get it. You say that you're ready for a phase three trial, which is what you want, but you hear, “Sorry, we're not going to be there.” I find that some of the venture capitalists who are interested in early-stage investing also lack the skill set necessary to meaningfully assess some of the biotech opportunities that come their way.

Another issue comes from the structure of our university system. We are still built very much with departments. We have departments of biology, departments of pharmacology, and departments of chemistry, and usually they don't talk to each other. We have very much of a silo structure. If we are trying to convert research to products, it has to be multidisciplinary. We have to have people talking to each other. A silo environment is wrong. We really have to have something in place that promotes a multidisciplinary approach to product development and to drug discovery.

In the particular area of drug discovery—and I'm going to focus particularly on drugs—we have a shortage of medicinal chemists in Canada. Medicinal chemists are the types of people who make molecules. Chemistry departments in Canada don't produce medicinal chemists. Schools of pharmacy don't produce medicinal chemists either.

We really have a shortage of people who want to sit down and make drug molecules. Neither NSERC nor CIHR has any programs that nurture medicinal chemistry. My impression is that NSERC focuses on organic chemistry, saying that medicinal chemistry should be done by CIHR, and CIHR says that it's chemical and so should be done by NSERC. They rather fall into the cracks, so we have a bit of a shortage.

My last comment about the university is that I think we have some very strong biomedical and biological researchers in Canada, but knowledge about patents and about knowledge transfer and actually converting research to products is not well developed or understood in this particular group. You're not really encouraged to do it by your university. Progress through the ranks is by publication, not usually by patents. I think this is an issue.

In an attempt to address some of this, about two years ago a colleague and I coined the phrase “micropharma” and published an opinion paper on drug discovery today. We talked about the rise of micropharma. We defined micropharma as small biotech companies that spin out of universities, university institutes, or hospitals and that are disease focused. They're small, built out of 10 or 12 people, and really focused.

One of the strengths of micropharma companies is they can change direction quickly. It's not like a great big behemoth of a company, such that it's like putting your shoulder to an ocean liner to try to move it. A micropharma company is something small that can react quickly.

If we look at it, big pharma is now failing us. There are huge layoffs happening in big pharma. The drug pipeline is not what it should be, and they're not producing drugs. There is a huge unmet need out there, but also there's an opportunity. We have a strong university system within this country. With correct nurturing we could have increasing numbers of micropharma and drug discovery endeavours coming out of our universities, a number of which could result in products that ultimately could be useful, because there certainly is a huge number of unmet clinical needs.

Thank you.

[The Chair, Conservative, Joy Smith]

Thank you very much.

We'll go to questions and answers. We'll begin with Ms. Davies, please.

[Libby Davies, NDP, Vancouver East, BC]

Thank you very much, Madam Chair.

Before I begin my comments and questions for the witnesses, I would like to read into the record a motion that I hope the committee will consider.

[The Chair, Conservative, Joy Smith]

Let me say that we have business at the end. You can do it then.

[Libby Davies, NDP, Vancouver East, BC]

Yes, I know. I'd still like to read it into the record, because I know that the government members will insist that it only be done in camera, which is very unfortunate.

I will be moving that the committee immediately commence a study on the matter of sections of Bill C-45, a second act to implement certain provisions of the budget tabled in Parliament on March 29, 2012, and other measures, which directly fall within the mandate of this committee, namely part 4, division 13, clauses 269 to 298, Hazardous Materials Information Review Act.

I know that the government members will only allow this to be debated in camera, which is unfortunate, but it is something that we should be discussing and studying at this committee.

I'd like to—

[The Chair, Conservative, Joy Smith]

I want to comment that this motion will be ruled inadmissible, because it is almost identical to the one we did the other day, and it was defeated.

I wanted to let you know that.

[Libby Davies, NDP, Vancouver East, BC]

I'm sure we'll have a discussion about it when we get there.

[The Chair, Conservative, Joy Smith]

You may begin with your questions.