Economic development mandate

The backers of a proposed organization dedicated to leveraging recent investments and expertise in vaccine research in western Canada are seeking $40 million in federal and provincial funding to establish Vaxcel: The Western Canadian Vaccine Cluster. The initiative plans four pilot projects and targets two key gaps in the development pipeline to attract the funding and companies required to bring vaccine R&D to market. If efforts are successful, the initiative could expand nationally.

Vaxcel intends to leverage more than $350 million in investments in western Canadian vaccine-related infrastructure, including $140 million in InterVac, located beside the Vaccine and Infectious Disease Organization (VIDO) on the Univ of Saskatchewan campus. InterVac is one of the largest Containment Level 3 vaccine R&D facilities in North America and is scheduled to open later this year, although it is still in the hunt for sufficient, long-term operating funds.

Vaxcel proponents are in discussions with the federal government (Western Economic Diversification - WD) and the four western provinces to secure base funding. They are aiming for self-sufficiency after five years once royalties and milestone payments kick in.

"Half of Canadian vaccine intellectual property is in the west and spin-off expertise is also strong," says Dr Andrew Potter, director of VIDO/InterVac. "Vaxcel has an economic development mandate and a number of new companies will come out of it and strengthen existing companies. We plan to launch by the end of the year."

Once considered commodities with low margins, vaccine development and production become a hot market globally in the past decade and has expanded into new markets with $22.1 billion in sales in 2009 — an amount that's expected to reach $35 billion by 2014 and $100 billion by 2024. Yet gaps persist, primarily in the areas of late-stage discovery and early pre-clinical development.

Canada ranks high in the area of vaccine R&D but it lacks coordination and receptor capacity and therefore the critical mass to effectively compete with industry leaders in the US and Europe. In fact, private sector receptors have decreased in recent years due to the recession and industry consolidation, while venture capital is focusing further up the value chain.

In order to deliver discoveries in a commercially viable form to receptors, Vaxcel will target the gaps in the vaccine development continuum and leverage the strong bonds that already hold western-based vaccine R&D and related activities together.

"This is a fantastic opportunity for the four provinces to work together. We're willing partners with a common vision," says Dr Lorne Babiuk, VP research at the Univ of Alberta and former head of VIDO. "If you look at the expertise, infrastructure, linkages and connections with biopharma around the world, we have a lot more than other regions. We need to capitalize, coordinate and move forward."

Vaxcel plans to secure $10 million from WD and $7.5 million from each of the four western provinces to support its activities over the first five years, augmented by revenue derived from commercial services. Provincial funding will be spent in the respective provinces to avoid any inter-jurisdictional wrangling over who is benefitting the most.

"Every province worries that their money will go to the other provinces so we decided the money from each province will stay to develop vaccines there," says Babiuk.

The jockeying between the western provinces doesn't compare to a previous attempt to coordinate vaccine R&D at a national level. Discussions several years ago failed as each province sought to protect its own turf, says Potter, adding that the experience in western Canada is proving far more fruitful.

"We all know each other well but getting the first funder is the key," he says. "We started in Saskatchewan and two other provinces and will be speaking with the fourth province in the coming weeks."

launch with public support

Vaxcel's initial public funding will be used to cover operations and launch projects with high commercial potential. The longer term strategy is to progressively replace public funding with a growing revenue stream from royalties, milestone payments, licensing fees and investments in individual projects.

Sources of external funding will become clearer once Vaxcel's pilot projects are launched. Projects selected for their commercial potential include a vaccine for Hepatitis C virus in humans, mycobaterial diseases in animals, influenza A virus with novel adjuvants in humans and emerging infectious diseases in animals and humans.

"There's a clear opportunity for Canada to be big in this absolutely important area of vaccine development … If you think research is expensive, try disease," says Babiuk, who notes that research to eradicate small pox cost $300 million which resulted in an estimated savings of $300 billion. "We have to articulate to society that it's an investment. We need to prevent rather than react. People often don't realize how effective vaccines have been."

Vaxcel will also enhance the activities of another federal initiative for vaccine development. PREVENT received $15 million through the Centres of Excellence for Commercialization and Research (CECR) program in 2008 to accelerate commercialization of promising vaccine technologies in Canada and establish preclinical and early clinical platforms for potential vaccines. And while it's funding is slated to expire in 2013, it's likely to be renewed if it can demonstrate significant progress.

"PREVENT will be involved. It's located in our institution (U of S)," says Potter, who stepped down as its CEO last year. "PREVENT started from scratch and five years does not leave much time although it's doing a good job assembling technologies and communicating priorities."

The same applies to Vaxcel, which is projecting a self-sustaining revenue stream after FY15-16.

"That's the best case scenario. These things are hard to do and tend to take longer and cost more," says Babiuk. "I'm confident that when proof of concept comes, we'll get a lot of royalties and payments. Big multinationals will also pick up a lot of the costs."

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