Health Committee on Dec. 11th, 2023

[Sonia Sidhu, Liberal, Brampton South, ON]

Thank you, Mr. Chair.

Thank you, Mr. Tada and Ms. Marquis, for being with us.

Mr. Tada, critics of the deal may be concerned that this deal lost money, but that is not true. We saw the evolution of a vaccine from scratch. We saw the growth of a sector and the development of a talent pipeline.

Can you speak a little bit about what the values of the investment in Medicago were and the importance of the government participating in de-risking these kinds of investments?

[Toshifumi Tada]

Thank you very much for the question.

Thanks to the support and contribution from the government, we advanced technology and science that was born in Canada, by a lot. That resulted in our approval for the COVID-19 vaccine. This is the world's first plant-based VLP vaccine for human use.

Together with our shareholders' investments, the government's contribution was also helpful to provide and advance these technological and scientific achievements. We don't call it a waste. We advanced and we showed significant science advancement for Canada.

Given the situation we were faced with, we had a discussion with ISED, and we agreed by mutual consent to terminate the agreement. We settled the agreement by repaying $14 million in cash and transfers of our key R and D assets, including a pilot plant, IP, assets and equipment to a Canadian company, so our IP will remain in Canada in that sense.

[Sonia Sidhu, Liberal, Brampton South, ON]

Thank you.

Medicago recently reached an agreement with Aramis Biotechnologies, a Canadian company based in Quebec City, to transfer key medical research and development assets, intellectual property and equipment.

Could you let us know exactly what medical research was transferred to this Canadian company? You already told us that the Medicago employees are working with Aramis, right?

[Toshifumi Tada]

I have a confidential obligation not to disclose the details of the transaction with Aramis, but I can confirm that we transferred our R and D manufacturing pilot plant in Quebec City, our equipment and our IP, at the request of ISED.

[Sonia Sidhu, Liberal, Brampton South, ON]

Thank you.

We all know Medicago had really promising research on unique COVID-19 vaccines. Those were plant-based vaccines that didn't contain eggs. Can you expand on why plant-based vaccine technology is important and how this kind of technology could be used for future vaccine development?

[Toshifumi Tada]

Thank you very much.

We could not successfully launch a COVID-19 vaccine under the very unprecedented pandemic situation, but we still believe the scientific potential of those plant-based vaccines. For example, the dominant COVID-19 vaccines are messenger RNA vaccines, but having an alternative, such as protein-based vaccines, including our plant-based VLP vaccine, would benefit people's health because it offers another alternative.

We still believe in our technologies. Unfortunately, we are winding up operations because of business decisions, but because we do have scientific achievement and we do have our people, our employees who made it happen, hopefully these technologies can remain in Canada for future scientific expansion.

[Sonia Sidhu, Liberal, Brampton South, ON]

Mr. Tada, I'll go back to the agreement question again. This agreement enables Canada to maintain an important domestic asset in the Canadian life sciences sector, growing and diversifying the national pipeline of vaccine technologies and providing Canadians with a safe and effective platform that can complement existing and future vaccine products and capabilities. This is why we worked closely with MCG to ensure that Medicago's science, intellectual property and core assets remained in Canada and that its competencies and capabilities are retained in our country.

Could you speak to the importance of retaining intangible assets like IP in Canada?

[Toshifumi Tada]

Yes, thank you very much.

Our shareholder, Mitsubishi Chemical, had to make a difficult business decision. This is the business decision that was made. However, it wanted to be as co-operative as possible with the Canadian government so that we can have win-win solutions. As a result of that, we agreed with ISED to terminate the agreement, but we settled by transferring the key assets we had, which were the R and D pilot plant, the equipment and the IP to a Canadian company at the request of ISED.

I believe this fulfilled the Canadian government's requirements, and we also wanted to make that business decision and execute it as soon as possible.

[Sonia Sidhu, Liberal, Brampton South, ON]

I have two more questions on the plant-based production technology. Are there any other ways this technology can be used to fight other diseases? Was your team working on any other drugs or vaccines?

[Toshifumi Tada]

Medicago is winding up now, so we are not working on that at this point in time. However, if Aramis continues to advance technologies leveraging our medical achievements, hopefully it can find some new solutions, new potential and new applications for the VLP plant-based technologies.

[The Chair, Liberal, Sean Casey]

Thank you, Mr. Tada and Ms. Sidhu.

Ms. Vignola, you have the floor for six minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

Medicago had a plant in North Caroline. Was the technology platform used in that plant transferred to Aramis Biotechnology in Quebec?

[Toshifumi Tada]

Thank you for the question.

The factory we have in North Carolina is a leased asset, so it is not a part of any transaction with Aramis.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Okay, thank you.

Initially, Medicago specialized in developing vaccines for H1N1, influenza and the terrible Ebola virus.

If Medicago had focused on those viruses during the pandemic, would we be in our current position with an empty plant in the D'Estimauville sector, a factory worth millions of dollars, and a disbanded company?

[Toshifumi Tada]

Yes. Previously, we worked on both viruses before. Now, because of the business decision by our shareholders, we are winding up, and we transferred some key assets to Aramis, so hopefully.... I'm not in a position to make any comments on Aramis's business plans and strategies, but it may or may not take those products as its strategies.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

My question was hypothetical. Let me rephrase it.

If Medicago had not offered to help the Government of Canada, in spite of all the risks involved, and had instead focused on the vaccines already being developed, would we be in the same position as we are now?

[Toshifumi Tada]

It's very difficult to answer a hypothetical question, so I'll refrain from commenting on that. I'm sorry for that.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Okay.

Why was the Mitsubishi Chemical Group interested in Medicago initially?

[Toshifumi Tada]

Mitsubishi Tanabe Pharma Corporation acquired 60% of Medicago in 2013, 10 years ago. The vaccine business is one of their core focus areas, so they wanted to strengthen their business capabilities by incorporating Medicago's technology, which is plant-based VLP.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Was the Mitsubishi Chemical Group concerned about Philip Morris International being a shareholder?

[Toshifumi Tada]

Philip Morris was a shareholder of Medicago even before Mitsubishi Tanabe Pharma acquired 60%. Based on the discussion between Philip Morris's investment and Mitsubishi Tanabe Pharma, they agreed to form a joint venture at a 60-40 shareholding ratio.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

In other words, the Mitsubishi Chemical Group did not have any concerns about that.

Is that correct?

[Toshifumi Tada]

I don't know whether they had a concern 10 years ago or not.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Medicago tried to distance itself from Philip Morris International in 2020. How did it go about doing that?

Why did Medicago wait until 2022 to do so?

[Toshifumi Tada]

First, a shareholding structure was a topic discussed between two shareholders. Medicago itself was not involved in the shareholders' discussion, so I'm not in a position to make a comment on that aspect.