Evidence of meeting #41 for Industry, Science and Technology in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was funding.

On the agenda

MPs speaking

Also speaking

Jerome Konecsni  President and Chief Executive Officer, Genome Prairie
Perry Lidster  President and Chief Executive Officer, Ag-West Biotech Inc.
Roman Szumski  Vice-President, Life Sciences, National Research Council Canada
Paul Hodgson  Director of Business Development, Vaccine and Infectious Disease Organization / International Vaccine Centre (InterVac), University of Saskatchewan
Wilfred Keller  Acting Director General, Plant Biotechnology Institute, National Research Council Canada
Ron Kehrig  Vice-President, Biofuels and Bioproducts, Ag-West Biotech Inc.
Carol Reynolds  Director, Communications and Government Relations, Genome Prairie
Ken Loeppky  Vice-President, Research Park Operations, Innovation Place
Robert McCulloch  President and Chief Executive Officer, Saskatchewan Institute of Applied Science and Technology
Richard Florizone  Vice-President, Finance and Resources, University of Saskatchewan
John Meldrum  Vice-President, Corporate Counsel and Regulatory Affairs, SaskTel
Doug Gill  Managing Director, Industry Liaison Office, University of Saskatchewan

2:15 p.m.

Conservative

The Chair Conservative James Rajotte

We'll call to order the 41st meeting of the Standing Committee on Industry, Science and Technology.

The committee is here in beautiful Saskatoon. We had a wonderful morning, starting with breakfast with Genome Prairie. Then we went off to the synchrotron and had an excellent tour there. We went to Agriculture and Agri-Food Canada. We went to the research centre. The campus of the University of Saskatchewan was another excellent visit.

We have two panels this afternoon, the first panel dealing with agricultural biotech and the second panel dealing with higher education, government, and innovation support.

We have four organizations represented in the first panel. First of all, from Ag-West Biotech Incorporated we have the president and CEO, Mr. Perry Lidster, and second, we have the vice-president, biofuels and bioproducts, Mr. Ron Kehrig. From Genome Prairie we have Jerome Konecsni, the president and CEO.

Did I pronounce that correctly?

2:15 p.m.

Jerome Konecsni President and Chief Executive Officer, Genome Prairie

You were close; it's Konecsni.

2:15 p.m.

Conservative

The Chair Conservative James Rajotte

Oh, I wasn't close at all.

2:15 p.m.

Voices

Oh, oh!

2:15 p.m.

Conservative

The Chair Conservative James Rajotte

Second, we have the director of communications, government relations, Ms. Carol Reynolds. From the National Research Council of Canada, we have Mr. Roman Szumski, vice-president life sciences—welcome again—then we have the acting director general, Plant Biotechnology Institute, Mr. Wilfred Keller. From the University of Saskatchewan we have the director of business development, vaccine and infectious disease organization, International Vaccine Centre, Dr. Paul Hodgson.

We have up to five minutes for each organization for an opening presentation. We'll start with Ag-West Biotech and work our way down the panel. Then we will go to questions from members.

Mr. Lidster, Mr. Kehrig, who's speaking on your behalf?

Okay, Mr. Lidster, you may begin at any time.

2:15 p.m.

Perry Lidster President and Chief Executive Officer, Ag-West Biotech Inc.

Thank you.

First of all, we'd like to express our thanks for having the opportunity to address the standing committee on the topic of biotechnology in support of agriculture.

The agriculture-biotech economy is one of the fastest-growing and innovative sectors in this province, a combination of public and private entities networked to incubate scientific advancement and develop commercial opportunity.

Organizations such as Ag-West Biotech represent a unique model of capitalizing on the commercial opportunity resulting from research developed in these clusters.

The structure of Ag-West Biotech Inc. is that of a not-for-profit, international membership-based organization that promotes and facilitates the application of life sciences and technologies for the benefit of Saskatchewan and Canada. Ag-West Biotech is an independent, arm's-length organization that supports the commercialization of biotechnology, which makes us unique.

We actively seek funding from the Saskatchewan Ministry of Agriculture and federal, and other provincial, sources. Ag-West operates on a $900,000 per annum operating budget, which is a contribution from Sask Agriculture.

Our commercialization activities are centred around agricultural biotechnology, human health and wellness, animal health and nutrition, and biofuels and bioproducts. Ag-West serves as a catalyst to build partnerships and develop alliances among industry, research, and producer groups, with the objective of commercializing innovative products or processes.

We're able to provide direct investments. We have a $4.6 million seed capital fund that facilitates co-investment and provides venture support to start-ups or expanding small- and medium-sized enterprises. We're able to lever in other funds from other areas.

The company champions equitable regulatory policies that allow companies to remain competitive.

So we're pretty much a full-service organization in the commercialization train for the technology.

We have a track record that goes back to 1989. Ag-West has invested $10.4 million in 57 projects involving 45 companies, creating approximately 1,268 person-years of employment during those 19 years. Ag-West investments have allowed investee firms to leverage an additional $74.3 million from other sources.

The total aggregate GDP-impact of Ag-West Biotech in those 19 years and $10.4 million in investment was approximately $760 million since 1989. In our time of existence, we've generated an economic ratio of return of $55 for every $1 invested, and we produce a tax-recovery ratio of approximately 8.3:1. Those returns do not reflect the fact that most of the start-up biotech firms do not make a profit for the first 7 to 10 years; so we have another 7 or 10 years of investments coming to fruition.

The challenges of technology commercialization, from benchtop to profitable company, are many—and we try to deal with as many of those as we can. Early-stage technology companies require financing, some mentoring, path-finding, and the support of an equitable regulatory environment.

Early-stage technology companies are usually under-capitalized, and in fact are almost always under-capitalized, both in terms of human and financial support. They rely on risk capital and granting sources for funding their research and development activities. Small firms rely on family members, grants, and venture capitalists.

Those organizations that rely on venture capital often lose control of their company by the second or third round of financing, or will sell their emerging company to a larger entity with patient capital behind them. Often these processes mean that the full value of the commercialized technology is not captured within Canada, but taken to another jurisdiction.

The federal government can be instrumental in facilitating a higher level of success through strengthening the existing non-partisan organizations, such as Ag-West Biotech Inc., and partnering with them to strategically provide financial support to start-up companies. The mechanism for support already exists within such organizations to administer programs and projects.

The availability of risk capital, particularly at the pre-beta site testing stage, and going on into scale-up operations, needs to be increased. With additional federal support, networking opportunities will obviously increase.

Each year, Ag-West reviews 25 to 30 investment prospects, but due to limited resources, it can only invest in one or two per year. We feel that the hit ratio could be much greater; it could be 20% to 25%, if the resources were available for us to do that.

Ag-West's future strategy is to facilitate a continuum of investment to support SMEs, small and medium-sized enterprises, to develop technology from laboratory to commercialization. We want to get the technology as near to commercialization as we possibly can without seeking venture capital and other public sources of investment.

Our recommendation is that the federal government departments have an opportunity to provide much-needed incremental financing to the growth and development of biotechnology, based on SMEs. Ag-West Biotech Inc. recommends that incremental financial investment capital be provided on a long-term basis, that is, for 10-plus years, using existing mechanisms and infrastructure with a proven record of success. Investment capital should apply to beta testing and early commercialization activities specifically used to support proof of concept, scale-up, and development of manufacturing processes.

I thank you for the opportunity to make this presentation.

2:20 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much, Mr. Lidster, for your presentation.

Who will be presenting for Genome Prairie?

2:20 p.m.

President and Chief Executive Officer, Genome Prairie

Jerome Konecsni

Thank you very much, Mr. Chair.

Good afternoon, ladies and gentlemen.

We would like to thank the chair and the committee for the invitation to appear at this meeting. I am joined by Carol Reynolds, our director of communications and government relations.

Genome Prairie is one of six regional genome centres established by Genome Canada in 2000. Our corporate office is located in Saskatoon, and we also have an office in Winnipeg, Manitoba. We manage and support large-scale or big-science genomics projects in Manitoba and Saskatchewan.

With our partners, Genome Prairie has supported more than $160-million worth of research projects since the year 2000, and this has generated nearly 3,000 person years of knowledge-based jobs and training opportunities in agriculture, animal and human genomics, bioinformatics, instrumentation development, and bioethics. We work with all levels of government, universities, industry, our partners across the Genome Canada network, and not-for-profit organizations in implementing this national strategy and approach to genomics and proteomics that is catching worldwide attention for its innovative approach to managing large-scale research. As well as managing the research, we are committed to providing public education and awareness services to the general public.

Genome Prairie's role as a regional centre involves provincial fundraising as well as providing international linkages and collaborations. To date we've been successful in establishing research connections with New Zealand, the United States, Australia, the Netherlands, China, Taiwan, and India.

Mirroring Genome Canada's innovative business model in fundraising and approach to large scale, we facilitate the development of genomic networks in areas where our region has a particular scientific strength and capacity, such as plant and animal genomics, infectious diseases, and, yes, human health. In the role of facilitator, Genome Prairie brings together industry, government ministries and agencies, universities, research organizations, and the public, in support of strategic priorities to the Canadian public and the global community.

Regionally, Genome Prairie works with many of our colleagues who are seated with us at this table: the University of Saskatchewan, the University of Regina, the University of Manitoba, Agriculture Canada, VIDO, the National Research Council, PBI, the provinces of Manitoba and Saskatchewan, and the ministries that are in support of research.

One of the key observations and recommendations we'd like to make today is that Canada's agricultural biotechnology cluster is poised to claim a leadership role in crop genomics research. In a recent international review of position papers, which are strategy documents identified by scientific teams and their partners across Canada—they're called Genome Canada's “position papers”—the two top-rated papers were on crop genomics for a healthier Canada and bioproducts. This verifies the bias we have sitting on this side of the table for the importance of agricultural biotechnology to Canada. A panel of 27 international experts who are economists, scientists, and policy analysts agreed with the case that was made for the socio-economic benefits for a significant investment in agricultural biotechnology and the application of genomics. But also what it validated to us was that there is a Canadian advantage. That was one of the things the committee recognized: there is a Canadian advantage in this area. It was well articulated in those position papers.

Based on this Canadian advantage and the significant social and economic benefits that could be derived from Canada, we see it as imperative and important that the federal and provincial governments work collectively and collaboratively to support research projects and the infrastructure, so we maintain and build on our leadership role. It is a very competitive environment globally and we'll talk about that a little bit. I'm sure some of my colleagues will reinforce that message.

Genomics tools can be applied to address world issues such as global food and energy shortages, climate change challenges, and environmental sustainability. By fostering research networks and commercialization partnerships, organizations like Genome Prairie, Agriculture and Agri-Food Canada, PBI, the University of Saskatchewan, producer groups, and many Saskatchewan and internationally based companies are encouraging the translation of this research into real products and real crop varieties.

This is an example of our entrepreneurial advantage--the fact that a collaborative spirit and a strong sense of teamwork have been established in this cluster. And it's growing and improving year by year.

In order to maintain Canada's agricultural leadership in the production of crops that are important to Canada, it is important that Canada takes a leadership role. I'm talking about crops like canola and flax that are very significant and important to Canada. Genomics and proteome research are necessary to improve the productivity, durability, and healthy nature of these products. For example, we can accelerate the development of this research by the implementation of a new facility, like a plant accelerator, that will move the research more quickly into new crop varieties.

On our competition in this area, facilities like this exist in Europe, and there's a new facility being built in Australia. They will have the advantage of being able to move research more quickly into new varieties. So it's imperative that we maintain our competitive advantage and keep up with our competitors.

The Saskatchewan research infrastructure is a strong one. We've talked about it here. This is our knowledge advantage.

I talked a bit about the number of jobs that have been created by this genomic research. An estimated 3,000 post-doctoral grad students have been involved in these projects since 2000.

By promoting and funding world-class excellence in agricultural research--Genome Canada will only fund projects that receive an excellent rating by an international peer review--we have consistently proven that the infrastructure here is at a level of excellence. But the research and investment are ongoing. Crop research is a continual effort, and we face continuing challenges in adapting to climate change.

Thank you very much.

2:30 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much, Mr. Konecsni.

Now I'll go to the National Research Council.

2:30 p.m.

Roman Szumski Vice-President, Life Sciences, National Research Council Canada

Thank you, Mr. Rajotte.

I thank the committee for inviting the Plant Biotechnology Institute of the National Research Council to give this short presentation on agricultural biotechnology.

For over 90 years, the National Research Council has successfully played a leadership role in providing scientific knowledge and innovation to meet the constantly changing needs of Canadians and Canadian industry. Dedicated to enhancing Canada's economic growth and the public good, NRC anticipates and performs research and development of an international calibre.

We promote scientific cooperation and act as a catalyst that levers research and development funding from all sectors. We transfer our technologies to industry through licensing agreements, create spinoff companies, and we incubate new firms.

This year, the National Research Council is celebrating its 60th year of research and innovation in Saskatoon, and we are proud of our contributions to the well-being of Canadians. Some of these contributions include the development of canola in partnership with Agriculture and Agri-Food Canada, the University of Manitoba, and the University of Saskatchewan. The Canadian canola industry is now valued at over $11 billion annually--as it provides a nutritionally superior edible oil--and it's playing an increasingly important role in the reduction of transfats in our diets.

The contributions include the development of biotechnologies that can be employed in crop improvement. As an example, we partnered with AgrEvo--which is now Bayer CropScience--and Agriculture and Agri-Food Canada in the development of herbicide-tolerant canola. These new canola varieties are now grown on more than 90% of Canada's canola acreage, and have generated a positive economic impact in excess of $500 million.

In partnership with Agriculture and Agri-Food Canada, we have recently generated and publicly released the world's largest canola genomics database, which comprises over half a million gene tags. We are currently an active member of an international consortium that is doing the complete genome sequence of one of the three plant species that comprise canola.

Our research and commercialization strategy is very closely aligned with the Government of Canada's science and technology strategy, particularly as it relates to the creation of an entrepreneurial advantage and a knowledge advantage. For example, NRC-PBI is engaged in research to enhance crop productivity and yield to address the rapidly rising global demand for food. Using cutting-edge genomics technology, our scientists have identified genes that appear to be associated with drought tolerance, enhanced vigour, and nutrient use efficiency, thereby reducing requirements for costly fertilizers.

We are developing environmentally friendly renewable bioproducts, such as vegetable oil products that can be developed into advanced polymers, lubricants, and biofuels. We're also committed to employing research strategies to further enhance the health of Canada's citizens. For example, we are identifying natural bioactive substances in plants that can reduce the incidence of neurodegenerative diseases, such as Alzheimer's.

We are a strong believer in the power of partnerships to achieve national goals for innovation and competitiveness. We believe that networking at the regional, national, and international levels is essential for success. For instance, NRC has developed a proactive policy for international collaborations. Through formal agreements that have been established with India, China, and Germany, NRC researchers are studying oil seeds, pulses, and natural bioactive compounds to enhance human health and wellness. NRC is an active player in the Saskatoon ag-biotech cluster where complementarity is established through collaboration, reducing duplication.

NRC-PBI has established a 10-year strategic alliance with Dow AgroSciences Canada to improve the seed and oil quality of canola. As a result of this, Dow is now expanding its R and D efforts in Saskatoon by more than 50%. It's another example of where sustained federal investment leads to private sector confidence and investment in a region.

NRC is working in partnership with Agriculture and Agri-Food Canada in developing a national bioproducts program that will include the development of biofuels, biomaterials, polymers, and other chemicals from agricultural biomass.

NRC-PBI established an industry partnership facility in 2003, which now houses seven innovative small companies developing a range of new products and technologies. We also strongly believe in nourishing small and medium-sized enterprises who play an essential role in Canada's innovation system, as you well know.

For example, our work on analyzing the chemical components of plants has resulted in the creation of a new company, Saponin Incorporated, which is pioneering the development of a potential new bioindustrial and biopharmaceutical crop referred to as the “Prairie Carnation”.

As you can see, Canada is very well positioned to capture the tremendous potential offered through research and development on agricultural crops. Our strengths as a nation reside in the fact that we possess more than 60 million hectares of arable land, which places Canada in the enviable position of being able to produce a wide range of foods, environmentally friendly bioproducts, biofuels, and biopharmaceuticals beyond the needs of our own citizens. We thus have the opportunity to export products and contribute to a global bioeconomy that has been valued in excess of $500 billion.

In order for Canada--

2:35 p.m.

Conservative

The Chair Conservative James Rajotte

I'm sorry, Mr. Szumski, but we're going to have to ask you to wrap up here. We're about a minute over our time already.

2:35 p.m.

Vice-President, Life Sciences, National Research Council Canada

Roman Szumski

I apologize; I'll do this very quickly.

The issues that warrant consideration are that we need to continue to invest in the development and application of the latest technologies and cutting-edge sciences, as these will be essential to the development of products beyond the year 2020; the federal labs must operate as effective partners with university and private sector organizations; small companies require sufficient support to work with universities and public institutions to commercialize research discoveries; and a number of strategic Canadian crops, such as flax, lentils, and oats, will require strong public investment, as large industry does not actively pursue the development of such crops.

Thank you for your attention. Merci.

2:35 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much.

We'll go to Mr. Hodgson now, please.

2:35 p.m.

Dr. Paul Hodgson Director of Business Development, Vaccine and Infectious Disease Organization / International Vaccine Centre (InterVac), University of Saskatchewan

Thank you, Mr. Chair.

On behalf of the Vaccine and Infectious Disease Organization, I would like to thank the committee for the opportunity to present the history of our organization as well as its past successes, future challenges, and associated opportunities.

The Vaccine and Infectious Disease Organization, or VIDO, is one of Canada's pre-eminent vaccine research institutes. VIDO currently employs more than 150 people representing 20 countries. Our vision is aggressive: protecting the world from infectious diseases.

Historically we focused on veterinary infectious diseases, and our original name was actually the Veterinary Infectious Disease Organization. However, with the convergence-

2:35 p.m.

Conservative

The Chair Conservative James Rajotte

Mr. Hodgson, just for the translation, could we get you to slow down a bit? We won't dock your time.

2:35 p.m.

Director of Business Development, Vaccine and Infectious Disease Organization / International Vaccine Centre (InterVac), University of Saskatchewan

Dr. Paul Hodgson

My apologies. I'm going to go overtime now for sure.

2:35 p.m.

Voices

Oh, oh!

2:35 p.m.

Director of Business Development, Vaccine and Infectious Disease Organization / International Vaccine Centre (InterVac), University of Saskatchewan

Dr. Paul Hodgson

Historically we have focused on veterinary diseases. However, the convergence of human and animal health has expanded our mission to the health of all species. This expertise was recently recognized by funding from the Bill and Melinda Gates Foundation for a single-shot vaccine for tuberculosis.

Since our inception, VIDO has helped Canadian producers compete globally and ensure the safety of our food supply by applied research into animal diseases and, more importantly, the commercial development of the resulting discoveries.

VIDO's success is quantified by several factors. First, we actually have seven vaccine products in the marketplace, including five world firsts for agricultural diseases of animals. One of these, termed Pneumostar, was the first recombinant vaccine for cattle--actually, for all animals. From 1975 to 2000, a total investment of $65 million into VIDO has resulted in economic savings of approximately $1.3 billion.

Recently we partnered with UBC and Bioniche Life Sciences Inc. in the development of a vaccine for cattle against E. coli 0157:H7. This is the bacteria that was implicated in the Walkerton water tragedy. In 2007, this vaccine was recognized internationally as the best new veterinary product for livestock as part of the Animal Pharm Industry Excellence Awards. It crosses the bridge between human and animal health, because the bacteria does not cause disease in cattle, only humans.

To complement this, we've had over 450 different research agreements since 2000, worth more than $55 million, and more than 80 U.S. patents issued. Most of these are licensed to major biotech and pharmaceutical companies, such as Merrell, Schering, Pfizer, Novartis, and Wyeth.

VIDO is also an active player in the Saskatchewan ag-biotech cluster. We have spun off three companies and helped several start-up agricultural companies get established. One of these was already mentioned, Saponin Inc. We are also partnering with international initiatives, particularly right now with India and China.

With the convergence of human and animal health, our research and development is focusing on platform technologies that apply to these species. Moving forward, VIDO will continue with our strategic vision through a combination of new initiatives. Some of these examples include the International Vaccine Centre. This $146 million biosafety level 3 facility will allow Canada to respond to emerging infectious diseases and enhance Canada's international reputation for vaccine research.

Recent reports suggest that between 60% and 80% of disease outbreaks have animal origins. This includes agricultural animals. InterVac will be one of the most advanced facilities in the world and, certainly, one of the top five in Canada. The annual operating funds required for VIDO InterVac are expected to exceed $20 million.

The Pan-Provincial Vaccine Enterprise, PREVENT, was incorporated after a successful application to the Networks of Centres of Excellence for Commercialization and Research. Its success demonstrates the close alignment between VIDO's strategic objectives and Canada's science and technology strategy. PREVENT will enhance the commercialization of vaccines by moving the technologies further along the value chain and reducing the risk for potential licensors, filling the so-called funding gap. By helping take innovations from the lab to the market, society as a whole benefits. VIDO's role will be focused on vaccines for food and water safety.

The Research Alliance for the Prevention of Infectious Disease, RAPID, was recently funded by the Saskatchewan Health Research Foundation. RAPID has links to prevalent diseases, particularly in high-risk populations. One such disease with direct animal associations is the West Nile virus.

It is my thought that the government has been visionary in its funding of large-scale capital projects for science. However, there are challenges associated with these projects. For example, the cost of capital projects in western Canada has increased dramatically. Specifically, the cost of InterVac increased over two and a half times, and we now have a funding shortfall approaching $20 million.

In addition, it is essential to implement a mechanism for providing secured operating funds for these facilities, such as VIDO InterVac, if they are to be effective in promoting Canada's science and technology strategy. It is not practical to expect these facilities to function at maximum capacity through traditional competitive operating grants.

In closing, I would suggest that VIDO is one of the foremost vaccine research organizations in the world, regardless of the way you determine success. The addition of InterVac will strengthen Canada's competitive advantage in vaccine and infectious disease research, an area identified as strategically important to our country.

Thank you, Mr. Chair.

2:40 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you, Mr. Hodgson, for your presentation.

We will now go to questions from members. The first round will be six minutes for each member, and the second round will be five minutes. It is a very short period of time for questions and answers, so we ask you to be as brief as possible. Also, if the question is not directed to you, but you would like to answer, please indicate that to me, and I will ensure that you get an opportunity to do so.

We'll start with Mr. Simard, for six minutes.

2:40 p.m.

Liberal

Raymond Simard Liberal Saint Boniface, MB

Thank you, Mr. Chair.

I'd like to welcome the panellists here this afternoon. I had the pleasure of having breakfast with four of the panellists, actually, this morning, and most of my questions were probably answered. But there are some things that are still not clear.

I'd like to start with Mr. Lidster. You've spoken about Ag-West Biotech being unique. I agree, it is something that is different. I'd like to understand it a little better. You've indicated, I believe, that this organization has invested $760 million since 1989. Is that correct?

2:40 p.m.

President and Chief Executive Officer, Ag-West Biotech Inc.

Perry Lidster

The investment was $10.4 million, I believe. We had $10.4 million and 57 projects.

2:40 p.m.

Liberal

Raymond Simard Liberal Saint Boniface, MB

Is this 100% provincial funding?

2:40 p.m.

President and Chief Executive Officer, Ag-West Biotech Inc.

Perry Lidster

At this time, yes. We do draw in small amounts from other organizations. But it's primarily provincial funding, yes.

2:40 p.m.

Liberal

Raymond Simard Liberal Saint Boniface, MB

Basically, the province has formed an arm's-length corporation to look at the different projects, and then it assists with these smaller companies, these start-ups and growing companies.

2:40 p.m.

President and Chief Executive Officer, Ag-West Biotech Inc.

Perry Lidster

That's correct, and we have the opportunity to grow our capital seed fund, depending on the return on any of our investment, although we're non-profit.