Sir Michael Houghton Urges Shift in VC Mindset to Boost Canadian Biotech

Canada’s life sciences sector is facing significant challenges in translating research into commercial products, according to Nobel Laureate Sir Michael Houghton. During a discussion at Life Sciences Week in Edmonton, Houghton emphasized the need for a shift in venture capital (VC) mindset to address the persistent gap in funding for early-stage biotechnology ventures.

Despite Canada’s impressive record in life sciences research, the country struggles to secure the private capital necessary to bridge the gap between scientific discovery and product development. Houghton spoke virtually from California, highlighting the “Valley of Death”—a term used to describe the critical stage between laboratory breakthroughs and commercial viability.

Canada’s Gap in Commercialization

Houghton pointed out that while Canada excels in basic scientific research, it falls short in developing these inventions into marketable products. “Canada has strong science at the basic level,” he stated, “but the ability to develop those inventions into products really has not been in Canada, traditionally.”

This gap has led Canadian researchers and entrepreneurs to seek opportunities elsewhere, particularly in the United States and Western Europe, where pharmaceutical companies have more established pathways for translating research into commercial success. “There are no so-called knowledge users and receptors,” Houghton explained, referencing the exit of major pharmaceutical firms from Canada, which has limited avenues for commercialization.

The Life Sciences Week event brought together researchers, entrepreneurs, and health leaders to address these challenges and explore opportunities for growth.

Investment Culture and Structural Changes

Houghton noted that part of the hesitation in Canadian investment culture stems from a preference for the resource sectors, particularly oil and gas, which are perceived as safer investments. “One of the strengths of Canada is its oil and gas industries,” he said. “But the slight negative of that has been that investors see that as a safe bet.”

He argued that this cautious approach has broader implications for the national economy. “We know that these high-risk industries in biotech pay off enormously. Not just for the investors, but for the national economies,” Houghton added. He called for increased venture capital investment in Alberta and across Canada to enhance the country’s innovation landscape.

The absence of substantial VC funding is pushing Canadian intellectual property and economic value abroad, as companies seek better support systems in other markets.

Improving Infrastructure for Innovation

To mitigate these challenges, Houghton emphasized the importance of strengthening infrastructure that supports early-stage development. As chief scientific officer of Applied Pharmaceutical Innovation (API), he is focused on creating conditions that make biotech investment more viable.

API is working on building large-scale manufacturing capabilities in Edmonton, which includes facilities for small molecule drugs and fill-finish processes. This infrastructure, according to Houghton, reduces uncertainty and establishes clearer pathways for scaling biotech innovations.

He highlighted collaborative efforts with researchers from the University of Alberta and the University of British Columbia on a potential RNA vaccine for hepatitis C, which aims to use safer next-generation lipids to enhance delivery methods. Houghton, who received the Nobel Prize in 2020 for his role in the discovery of the hepatitis C virus, stressed the importance of keeping innovation within Canada to prevent the stalling of the country’s scientific pipeline.

Learning from Global Models

Houghton also addressed the role of public policy in fostering innovation, acknowledging the support already provided by Alberta and the federal government. He suggested that Canadian policymakers should look to successful models, such as the U.S. Small Business Innovation Research (SBIR) program, which provides crucial funding for early-stage research and development.

“Many people in the U.S. consider [SBIR] to be the main driver of U.S. innovation and products and the economy,” Houghton noted, advocating for similar initiatives in Canada to help innovators navigate the Valley of Death.

Future Outlook for Canadian Biotech

As the conversation shifted to momentum and investor confidence, Houghton expressed optimism about the potential for a significant breakthrough within the next few years. “What we really need in biotech is a big success,” he said. “Once we have a big one in Alberta, I think you’ll find other people diving in to repeat the process.”

The prospect of developing successful biotech companies within Canada could not only boost local economies but also establish a sustainable model for ongoing innovation. This requires a collective willingness to invest in high-risk ventures and a shift in mindset towards embracing the potential of biotechnology.

The challenge lies not only in addressing structural limitations but also in fostering an environment that encourages innovation and value creation within Canada. As Houghton’s insights highlight, the future of Canadian life sciences depends on the ability to transform its scientific achievements into impactful global solutions.