Vancouver
Life sciences summary
Life sciences rises in the west
British Columbia (BC)’s life sciences sector is in the midst of a substantial renaissance as a new class of firms moves to the forefront and re-establishes the best-in-class life sciences cluster that had originally taken root in the province during the 1990s. Back then, local heavyweights such as QLT, Inex Pharmaceuticals, AnorMed, Abgenix Biopharma, Angiotech Pharmaceuticals and Stemcell Technologies (which remains to this day and is the province’s largest in terms of number of employees) helped establish BC’s life sciences sector on the national and global stage.
While many of these companies no longer exist, the legacy they left behind provided a fertile foundation for the next generation of biotechnology firms that have grown in place today. This vibrant ecosystem was originally supported by locally based venture capital firms, including GrowthWorks, Ventures West and the BC Advantage Fund through 1990s and into the 2000s, which helped the sector grow and flourish. However, by the end of the 2000s, much of BC’s life sciences sector had slipped off the radar after being acquired or going out of business. However, educational institutions such as the University of British Columbia (UBC) helped support and incubate the next generation of firms that have since come to dominate the Canadian life sciences scene in recent years. According to Ali Ardakani, vice-chair of Life Sciences BC, in a February 2021 column for Business in Vancouver newspaper, the “critical difference between current and past biotech companies is that current successful organizations are mostly platform companies with broad pipelines and partnerships versus single product companies.”
The recent rise in the sector’s profile in both the province and in Canada has been rapid and profound and was supercharged by COVID-19 thanks to many of BC’s life sciences companies being at the forefront of developing innovative products, services and solutions to address the pandemic. Vancouver-based AbCellera, founded in 2012 out of a UBC lab, had the largest-ever IPO by a Canadian biotech company, raising more than US$550 million in December 2020. And AbCellera is just one of a new cast of players in BC’s burgeoning life sciences sector that includes three of the largest biotech companies in Canada with greater than $1 billion in market capitalization: AbCellera, Aurinia Pharmaceuticals and Zymeworks. Other notable firms in BC include Kardium, Amgen, Xenon Pharmaceuticals and Chinook Therapeutics. Venture capital firms such as Versant Ventures, BDC Capital and Quark Venture also continue to play an important role.
Vancouver quick stats
US $555M
Vancouver-based AbCellera Biologics had the largest-ever IPO by a Canadian biotech company in 2020
$2B
BC’s biotech companies raised a record $2 billion in 2020
18,000
People employed in life sciences in 2020, one of BC’s fastest-growing sectors with employment increasing 5.9% from 2018 to 2020
3
Of Canada’s largest biotech companies with market caps exceeding $1 billion are located in BC
New development
Of lab space triggered by recent success of BC life sciences firms
Venture capital finding west-coast opportunities
According to the BC Life Sciences Update 2021 produced by the Greater Vancouver Board of Trade and Life Sciences BC, BC’s biotech companies raised a record $2 billion in 2020. While private capital plays a very important role in the BC life sciences sector, federal and provincial government grants also help to support early-stage scientific innovation, as have a resilient network of educational institutions. UBC research has spun off more than 125 new life sciences companies, including AbCellera, Acuitas Therapeutics and Precision NanoSystems. BC’s life sciences sector has recorded several notable deals since 2019.
The M2 building in the Main Alley development will be home to Zymeworks
Source: Westbank
Notable financing deals:
- December 2020 – AbCellera went public and raised US$555 million — the largest-ever IPO for a Canadian biotech firm – and then in early 2021 received nearly $200 million in royalty revenue for its COVID-19-fighting antibody co-developed with Eli Lilly & Co.
- September 2020 – Virogin Biotech completed Series-C financing for US$62 million
- August 2020 – Chinook Therapeutics raised US$106 million in private placement financing
- July 2020 – Victoria-based Aurinia Pharmaceuticals raised US$200 million
- July 2020 – ESSA Pharma raised US$49 million in public offering
- March 2020 – Burnaby-based Xenon Pharmaceuticals raised $115 million
- January 2020 – Zymeworks completed a $320.8-million public financing
- December 2019 – Neoleukin Therapeutics announced pricing of public offering: $100 million
- December 2019 – Victoria-based Aurinia Pharmaceuticals announces US$250 million in financing
- November 2019 – A2 Biotherapeutics, Innovative Targeting Solutions and former Amgen executive teamed up to launch A2 Biotherapeutics with Series-A financing: $57 million
- November 2019 – Vancouver-based Sierra Oncology announced closing of financing for $103 million
- September 2019 – Vancouver-based Terramera closed Series-B financing for $60 million
- August 2019 – Vancouver-based Chinook Therapeutics raised Series-A financing totalling $65 million
- June 2019 – Zymeworks announced closing of public offering valued at $264 million
Sources: 1) Lifesciences 2020: Innovation in Motion A New Era, and 2) Business in Vancouver newspaper
Key players in the sector
BC’s life sciences sector is unique in Canada in that the majority of large firms are not branch offices of global life sciences companies, which have historically located in Ontario and Québec. Those life sciences firms in BC that are part of large multi-nationals were typically local firms that were acquired.
Notable BC life sciences firms include:
- Stemcell Technologies
- Kardium
- AbCellera Biologics
- Zymeworks
- Amgen
- Xenon Pharmaceuticals
- Aurinia Pharmaceuticals
- Verathon Medical Canada
- Burrard Pharmaceuticals
- Aspect Biosystems
- bioLytical Laboratories
- ABM Applied Biological Materials
- Response Biomedical
- SignalChem Biotech
- Neovasc
- Kinexus Bioinformatics
- Chinook Therapeutics
Tale of the tape: BC’s life sciences sector
According to the provincial government’s June 2020 profile of the life sciences sector, there are approximately 1,120 companies in BC (categorized in three groups: “research testing and medical laboratories”, “medical devices and equipment” and “drugs and pharmaceuticals.”) Most of the companies (93%) have less than 50 employees. There were 18,000 people employed in the sector in 2020, which is one of BC’s fastest-growing sectors with employment increasing by 5.9% between 2018 and 2020. The provincial life sciences sector, which is located primarily in Metro Vancouver, recorded almost $5.4 billion in revenue and produced $1.6 billion in GDP in 2018, according to the provincial government.
The province exported $484 million in life sciences goods and services in the same year. BC’s life sciences sector is the third largest in Canada in terms of sector employment, wages, revenue and GDP behind Ontario and Québec. Government support for the BC life sciences sector has largely come at the federal level with the province providing additional support through the $100-million BC Tech Fund and by funding various institutional research centres, universities and other like initiatives as well as working closely with Life Sciences BC.
Impact on commercial real estate market
The specialized nature of lab and biotech space has led to a limited supply in BC due to high construction costs and the cyclical nature of the province’s life sciences sector since the 1990s. While an initial effort in the 1990s to create a life sciences/tech hub along Great Northern Way in Vancouver, anchored by the then-new 160,000-sf head office of QLT at 887 Great Northern Way constructed in 1999, did not succeed at the time. However, the building has remained a key source of lab space for the many smaller companies that venture forth from the halls of academia and make up the majority of the sector.
According to the Altus Group 2021 Canadian Cost Guide, lab space costs between $585 to $830 per square foot to construct in Vancouver, surpassed only by data centres (tier III) as the most expensive form of development. In comparison, a class A office building up to 30 storeys in Vancouver is estimated by Altus to cost $270 to $340 per square foot to build. Converting existing vacant office space, which was already at a premium pre-pandemic and typically unable to accommodate the required ceiling heights as well as mechanical and HVAC systems needed for lab space, has generally been considered too costly for many of the smaller early-stage life sciences companies in BC, many of which historically benefit from low overhead costs thanks to occupying lab space at local post-secondary institutions.
Leasing activity by life sciences firms in Metro Vancouver since 2017 has largely comprised small deals between 2,000 sf to 7,000 sf in Vancouver, punctuated occasionally by larger deals from heavyweights such as AbCellera, Zymeworks and Response Biomedical. More established firms such as Amgen and Stemcell Technologies, both with existing locations in Burnaby, have typically remained in place due to a lack of options elsewhere in the market and the costs associated with securing new premises. However, the recent successes of some of BC’s largest life sciences firms have triggered new development.
In the case of AbCellera, the firm recently occupied a new build-to-suit development it preleased more than two years ago as well as kicking off construction of 380,000 sf of new office/lab space in 2021 with two additional build-to-suit projects. Zymeworks is the lead tenant in a new building scheduled for completion in the third quarter of 2021 with a prelease commitment of almost 80,000 sf. The success and increased profile of BC life sciences firms combined with the construction of the new $1.9-billion St. Paul’s Hospital and health campus, which kicked off in March 2021 and is set to open in 2026, is adding more lab space to accommodate the life sciences sector. The 11-storey hospital and surrounding medical precinct is located on 18.4 acres in Vancouver’s False Creek Flats. It will provide additional lab and biotech space as part of the Clinical Support and Research Centre (CSRC), part of phase two of the hospital’s redevelopment and will reportedly accommodate approximately up to 680,000 sf of density on a 114,000-sf site. Additional mixed-use development projects surrounding the precinct have already been announced.
110 West 4th Ave: Source: AbCellera
Credit: Image provided by Francl Architecture
150 West 4th Ave: Source: AbCellera
Credit: Image provided by TKA+D
Developers have clearly realized there is a demand for lab space and many offerings, particularly those located in areas where zoning permits both office and light industrial uses such as Mount Pleasant in Vancouver, are being proposed. The challenge will be providing the necessary (but expensive) amount of specialized space for these firms at a price point that can be met by the many smaller firms that make up the majority of BC’s life sciences sector. This can be achieved through federal and provincial government programs that incentivize the construction of lab space by the private sector and/or the construction of purpose-built facilities such as CSRC that can house these small firms and serve as an incubator until they are ready to go out on their own.
BC has a rich history of success in its life sciences sector and has a vibrant and innovative core of companies that have risen in prominence in recent years but will require the support of all levels of government as well as the development industry to build the economic and physical structures to support the sector for years to come.
