FACIT, an award-winning venture capital firm specializing in the commercialization of innovations to diagnose and treat cancer, has launched a partnership with the University of Toronto’s Temerty Centre for Artificial Intelligence Research and Education in Medicine (T-CAIREM). The two organizations intend to spawn biotechnology companies built on the potential of artificial intelligence (AI), bringing to market — and, more importantly, bringing to patients — new approaches to some old, persistent health problems.

FACIT stands for “Fight Against Cancer Innovation Trust”, an appropriate descriptor for the growing cohort of strategies addressing some of the most complex illnesses we face. The eponymous venture firm was created in 2014 by the Ontario Institute for Cancer Research (OICR), as a direct response to an ongoing lack of seed funding for Canadian life sciences start-ups, which was fuelling the regular export of promising intellectual property to entrepreneurs outside the country, where the necessary support could be found.

“FACIT is a bit of a public-private partnership, that’s what we liken ourselves to,” Connie Chen, FACIT’s Senior Director of Strategy and Corporate Development, told Research Money. “Our parent is a translational institute, and we are a for-profit group, but with a public sector mindset, because we’re funded by the government and our mandate is to create economic impact, not just financial gains.”

Almost immediately, FACIT demonstrated what was possible with such a strategy. The firm backed Fusion Pharmaceuticals, a firm based on precision medical therapy using radioactive compounds, based on a platform technology from McMaster University’s Centre for Probe Development and Commercialization. In 2015 FACIT helped establish a clinical-stage company called Turnstone Biologics, which by 2018 had made it to the top 10 of the University of Toronto Impact Centre’s Narwhal List of fast-moving technology firms.

According to Chen, it is easy to get excited about such enterprises, which are part of a $10 trillion global market in health care. Nevertheless, lead times in this sector are exceptionally long, calling for “patient” capital to wait for the ultimate return on any investment. Above all, she added, success will only come with an emphasis on the “D” in R&D, rather than simply continuing to conduct research on a potential product.

“If you’re trying to get to the patients, you need to get to the market,” said Chen. “We build those companies and we give them the capital to do that development work that it needs.”

FACIT has developed a commercialization model focusing on product development, first and foremost. The process may sometimes be at odds with the desire of researchers, who prefer to keep refining their discoveries, but investors are much more interested in those discoveries after any associated commercial or regulatory risks have been substantially reduced.

“You need to have someone who will actually pay for it and pay for that development, so you’re more likely to get there,” Chen explained, pointing to the example of Propellon Therapeutics. FACIT established this virtual firm in 2016 to foster the development of a unique protein to treat blood cancers, such as leukemia.

Early interest in the initial discovery ascribed little value to Propellon's asset, Chen recalled, noting this to be a common problem at this stage of development. FACIT therefore stepped in, putting $3.2 million into the enterprise, so  the protein’s commercial potential and medical potential could be clearly identified for pharmaceutical firms and other investors. That work was subsequently taken up by Triphase Accelerator, created by OICR to make cancer treatments more market-ready. Finally, in 2019, New Jersey-based Celgene paid US$40 million to obtain the rights to this product, featuring an option to pay another US$940 million in contingent development, regulatory, and sales milestones.

While Chen acknowledged this major deal will see some Canadian IP leave the country, she insisted FACIT’s mandate should not compromise the success of the company or assets it backs. More importantly, this undertaking provided valuable experience for the participants, who gained a first-hand understanding of what product development looks like.

“You can’t really put a price on that,” she said. “It’s hard to quantify. Having more professionals exposed to that whole process is good for Canada. It creates more entrepreneur-researchers, and makes them hungry to do more things.”

And if you continue to operate in this way, she added, there will be enough domestic expertise and infrastructure to justify keeping IP in Canada.

“When you do that, you have greater access to clinical trials, greater access to experimental medicine, and greater access for patients. It may not always last, but there’s greater likelihood for a hub to remain in Canada. You build on that, you have momentum in that cycle, when you have success generating more success.”

Chen pointed to the partnership with T-CAIREM as another move in this direction, this time with an eye on up-and-coming prospects in AI.

“We all know it’s coming,” she said. “But having a business model and how you commercialize something, for AI, is a lot more difficult than people expect.”

Much of that difficulty emerges as researchers learn that their work does not have the commercial possibilities they had hoped it would, or may not be able to compete with similar work elsewhere in the world. Nor do potential investors share FACIT’s interest in building a thriving Canadian life sciences sector.

“They don’t care about our economy,” she said, “they just want products. And it’s okay to give them products, if you can keep them here for longer, so that you can share in the wealth when that product does need to go to a bigger pasture.”

Ultimately, she concluded, the “D” in R&D is a matter of ensuring that Canada does not simply give away promising IP because we lack the expertise or the capital to realize the economic value of innovation created here.

“In life sciences, the valley of death is in the beginning. You can’t get things seeded. It’s too late for a CIHR grant, and way too early for a VC. That’s the spot we’re trying to fill.”

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