Based in Mississauga, Ontario, and with an office in Vancouver, Amorfix Life Sciences Ltd. is both a diagnostics and therapeutics company.
Since its founding as a spinoff of the University of Toronto by then-professor Dr. Neil Cashman and Mr. Vigen Nazarian, a business development manager with the university’s Innovations Foundation at the time, Amorfix has specialized in the detection and treatment of neurodegenerative diseases. The company specializes in early screening for prion-caused brain-wasting diseases such as variant Creutzfeldt-Jakob disease (vCJD), the human version of mad cow disease (bovine spongiform encephalopathy or BSE), and Alzheimer’s. Like vCJD, Alzheimer’s has been attributed to prions, perhaps most prominently in Toronto-based coroner Murray Waldman’s book Dying for a Hamburger (2004).
In 2007, Amorfix received a highly coveted Technology Pioneer Award from the Davos Economic Forum, despite having fewer than 30 employees at the time. Amorfix, now with a staff of over 35, mainly in high-specialty occupations, recently announced it is ready to run in vivo trials of its screening for Abeta, a protein associated with Alzheimer’s that occurs in cerebrospinal fluid.
In August 2008, Medical Technology Watch Canada spoke with Vigen Nazarian, now the firm’s Vice-president of Strategic Alliances, about how Amorfix went public.
In about 2003, when the BSE crisis was decimating Alberta’s beef industry, Dr. Cashman discovered a technology that could be “the Holy Grail,” as Mr. Nazarian describes it, for detecting misfolded proteins in vivo. The technology had obvious applications in both veterinary and human medicine. The food and feed supplies could be safe, and diseases that are now only identifiable by post mortem could be halted in their tracks. The technology could also significantly increase the pool of blood donors, since current restrictions in North America prevent those who have spent significant portions of time in Western Europe before 1997 from giving blood for fear of spreading vCJD.
After identifying a diagnostic approach, Cashman’s team applied for and received $150,000 from the Canadian Institutes of Health Research (CIHR) Proof of Principle Fund, as well as support from National Sciences and Engineering Research Council of Canada (NSERC) and the Industrial Research Assistance Program of the National Research Council (NRC-IRAP).
Mr. Nazarian highlights the importance of these early-stage contributions from government and institutions: “It would be unnatural for private investors to chip in at that point, because it’s so early in the process. That’s why government and universities will always have a role at this phase.”
After more than a year of work, Dr. Cashman was able to prove the concept, but demonstrating the viability of the project in vivo required large amounts of money, and from sources other than CIHR, for instance. With few other ways to fund in vivo trials in Canada, Amorfix was born as a company; and the only route the founders saw to start up was through a reverse takeover or CPC. [You can read more about this process in our interview with Richard Lockie in this issue.
“You go to a public market to raise capital for what your needs are, typically by listing on the TSX Venture Exchange. The company accumulates what it can, usually about a million dollars, then becomes what it wants to be from its generic form. This is not so common for life-sciences companies in Canada (Vancouver-based QLT is one exception), but is widespread among resource companies, for example.”
While there are positive aspects to raising funds for a health-technology firm publicly, there can also be more danger:
“Any time you raise money in a public arena, you must disclose information widely, and shareholders’ expectations change; the value can drop as much as twenty per cent a day. This isn’t the case with venture capital, where investors take a longer view, and the climate is less reactionary and volatile. Venture capitalists, however, also want to run the company in a way they think will benefit them, and typically those who found a company financed this way end up with less equity.”
Another caution with trading publicly: it’s important not to exaggerate investors’ hope only to dash them.
“The worst thing you can do is to over-promote the company in the market. This leads to inflated stock values. The best scenario is to gradually building confidence in your investors.”
The flip side is that raising money from investors forces not only greater accountability — increasingly at issue with both corporate hierarchies and growing suspicions surrounding fraudulent or forged data — and more creativity.
As to how best to constitute one’s start-up, Nazarian says it depends very much on the nature of the company, its management, and the science behind it, and there is no one-size-fits-all formula.
“If your management can prioritize where to spend, it doesn’t matter what form you take. But in the real world, there are many factors that might make these decisions for you.”
Such concerns can be both technical and financial. Starting up in a timely way, for instance, is sometime more important than doing it perfectly.
“You don’t know who else is working on the same opportunity,” says Nazarian. “If a mode of investment is available, and if you are honest with investors about the risks of your project, it’s always good to proceed.” Nazarian cites the 1983 example of the near-simultaneous discovery of HIV by researchers at the Institut Pasteur, Paris, and at the National Institutes of Health in Bethesda, Maryland.
“If you’re in the sciences, it boils down to a first premise: applying a solution to a problem. Everyone wants to be the first to find that cure or that diagnostic test, and the bottom line is to have a profound impact on human health.”
Further Reading:
You can read up on Amorfix Life Sciences Ltd. here:
http://www.amorfix.com/
To find out more about QLT, click:
http://www.qltinc.com/Qltinc/main/mainhome.cfm
