Sir Michael Houghton Urges Canada to Shift VC Mindset in Biotech

Canada’s life sciences sector faces significant challenges in transforming research into commercial products, according to Nobel Laureate Sir Michael Houghton. During a conversation with Digital Journal CEO Chris Hogg at the recent Life Sciences Week, Houghton emphasized the need for a shift in venture capital (VC) mindset to stimulate early-stage development.

The discussion took place in Edmonton, Alberta, where local leaders convened to highlight the province’s progress and future opportunities in life sciences. Houghton noted that while Canada excels in basic scientific research, it struggles to bridge the gap between discovery and commercialization.

“Canada has strong science at the basic level,” Houghton stated. “But the ability to develop those inventions into products really has not been in Canada, traditionally.” This gap, often referred to as the “Valley of Death,” represents the critical phase where promising scientific breakthroughs encounter a lack of infrastructure, capital, and regulatory expertise necessary for product development.

Houghton elaborated on this challenge, highlighting the exit of major pharmaceutical firms from Canada, which has left fewer pathways for translating scientific discoveries into marketable products. “There are no so-called knowledge users and receptors,” he explained, leading many Canadian academics to seek opportunities abroad, primarily in the United States and Western Europe.

The result is a cycle where promising Canadian innovations often find a home outside their country of origin.

A Cautious Investment Climate

Part of the problem, Houghton suggested, lies in Canada’s investment landscape. While the oil and gas sector attracts substantial investment, high-risk biotech ventures often struggle to secure necessary funding. “One of the strengths of Canada is its oil and gas industries,” he noted. “But the slight negative of that has been that investors see that as a safe bet.” This risk-averse attitude among Canadian venture capitalists undermines the potential for growth in the biotech sector.

Houghton emphasized that high-risk industries like biotech are not only beneficial for individual investors but also for national economies. He stated, “We need to boost venture capital in Alberta and across Canada. It’s what’s lacking.” Without increased investment, Canadian intellectual property (IP) and economic value continue to be exported rather than developed domestically.

Building Infrastructure for Success

To address these challenges, Houghton advocates for strengthening the infrastructure that supports early-stage development. As the Chief Scientific Officer of Applied Pharmaceutical Innovation (API), he is actively working to create favorable conditions for biotech investment. API employs a team of expert drug developers who are experienced in advancing clinical candidates through Phase I and II trials.

The organization is also expanding manufacturing capabilities in Edmonton, which includes facilities for small molecule drugs and fill-finish operations. Houghton believes that this type of infrastructure reduces uncertainty and establishes clearer paths for scaling biotech ventures.

He cited API’s collaboration with researchers from the University of Alberta and the University of British Columbia on a potential RNA vaccine for hepatitis C, which aims to develop safer next-generation lipids to deliver RNA into the body. This collaborative effort exemplifies how discovery, development, and manufacturing can thrive within Canada.

Houghton, who won the Nobel Prize in 2020 for his work on the hepatitis C virus, stressed the importance of maintaining an innovation pipeline to prevent stagnation in the sector.

The responsibility also extends to government officials, who should consider adopting effective public policies that encourage early-stage innovation. Houghton pointed to the U.S. Small Business Innovation Research (SBIR) program as a successful model for supporting researchers and small companies during the critical stages of product development.

“Canada needs to be doing more to get its innovators across the Valley of Death,” he asserted, emphasizing that current efforts are insufficient.

As discussions around investor confidence and momentum continued, Houghton expressed optimism for a breakthrough in Alberta’s biotech sector. He believes that achieving a significant success story could inspire greater investment and replicate the success of high-performing companies.

“Once we have a big one in Alberta, which I’m very optimistic we can achieve over the next two to three years, I think you’ll find other people diving in to repeat the process,” he said.

The critical question remains whether Canada will view the challenges within its life sciences sector as structural limitations or as solvable challenges. The outcome of this perspective will ultimately dictate whether Canadian innovations can evolve from mere scientific achievements into impactful global contributions.

Digital Journal continues to serve as the official media partner for Life Sciences Week, facilitating important discussions on the future of Canada’s life sciences sector.