Torys Business Brief focuses on key issues and actionable knowledge for businesses to emerge from the COVID-19 crisis resilient and well-positioned for the future. Each episode of Torys Business Brief features in-depth, accessible interviews with Torys lawyers, moderated by Munk Debates convener Rudyard Griffiths. These episodes are accredited for CPD purposes.
What lessons can be learned from the pandemic for the life sciences industry? Hear from Torys partners Eileen McMahon and Cheryl Reicin and researcher Dr. Shaf Keshavjee, Surgeon-in-Chief of the Sprott Department of Surgery at the University Health Network and Director of the Toronto Lung Transplant Program, as they discuss how the crisis has caused the industry to move at a pace never seen before. They share their thoughts on what may lie ahead, and what changes government and industry can make to advance an “innovation culture” in Canada’s life sciences sector.
A full episode transcript follows.
Rudyard Griffiths (00:01): Hello, and welcome to Torys Business Brief. I’m Rudyard Griffiths. You may know me as the convener of the Munk Debates, where we bring together the world’s sharpest minds and brightest thinkers to debate the top issues of the day. As the host of Torys Business Brief, my role is to provide you, the listener, with compelling conversation about the legal challenges the COVID-19 pandemic presents for businesses and business leaders.
RG (00:26): We are all taking stock of the ongoing effects of the pandemic. As the world continues to respond, businesses have wide ranging issues to consider. This podcast will equip you with actionable knowledge your business can use to emerge from the current crisis resilient and ready to thrive. To do this, I’ll be drawing on the expertise and insights of the lawyers working at the firm named Corporate Law Firm of the Year by Chambers And Partners, Torys LLP.
RG (01:17): On today’s Torys Business Brief, we talk to Torys partners Eileen McMahon and Cheryl Reicin and special guest, Surgeon-In-Chief of the University Health Network, Dr. Shaf Keshavjee. Together, the trio will dive into the legal issues around the development of vaccines and drugs and other medical devices as well as what innovation in a post-COVID world could look like in this important sector.
RG (01:46): Eileen McMahon is a partner at Torys and Chair of the Intellectual Property and Food and Drug Regulatory practices. She is recognized nationally and internationally for her expertise in life sciences law, and is the only regulatory lawyer to be ranked in Band 1 by Chambers for Life Sciences. Eileen is a board trustee at CAMH where she chairs the foundation’s research committee.
RG (02:12): Cheryl Reicin is a partner and Chair of Torys Life Sciences Group, a cross-border group in Canada and New York. She focuses on Canadian and U.S. business aspects and commercialization of biotech, medical devices, health tech, health services, including financing, M&As, licensing, and distribution agreements. She has won numerous life science awards, including most recently the LMG Life Sciences Financing and Transactional Lawyer of the Year award. She is a trustee of the Hospital of Sick Children and a director of the SickKids Foundation.
RG (02:51): Last but not least. Dr. Shaf Keshavjee. Dr. Keshavjee is Surgeon-In-Chief of the Sprott Department of Surgery at the University Health Network. He’s also the director of the Toronto Lung Transplant Program, a lung transplant surgeon, as well as a scientist and entrepreneur. Dr. Keshavjee developed the technique to preserve lungs for transplantation that is used worldwide today.
RG (03:17): He was named UHN’s inventor of the year in 2019 for his invention of the Toronto ex vivo lung perfusion system, the EVLP. His innovation in thoracic surgery has been recognized with numerous awards, including the order of Ontario, an Officer of the Order of Canada. Dr. Keshavjee’s latest innovation relates to rapid diagnosis in the emergency department of a patient’s lung injury in response to COVID-19, a spinoff from a diagnostic test that he developed to rapidly assess health status of donor lungs for transplantation. Eileen, Cheryl, Dr. Keshavjee, welcome to Torys Business Brief.
Shaf Keshavjee (04:00): Good morning.
Cheryl Reicin (04:02): Good morning.
Eileen McMahon (04:02): Good morning.
RG (04:03): Cheryl, Eileen, Dr. Keshavjee, thank you for coming on Torys Business Brief. Well, I’m really looking forward to this conversation. Life sciences are critical to our response, not only to the pandemic and its health effects, but also to the future of our economy as we find new ways to stimulate growth and productivity in a post-COVID world.
RG (04:26): I want to begin our conversation by asking you, Dr. Keshavjee, when we think back on the last couple of months of your experiences as a frontline worker in the University Hospital Network here in Toronto, Canada, what is the one big lesson or take away from that experience in terms of how the life sciences could be made to be more innovative, how we could generally do a better job supporting this vital industry?
SK (05:00): Well, one of the most exciting or encouraging things that happened is healthcare is something that, even though we had to slow down on and focus on physical distancing and cutting down exposure, we couldn’t stop our business. We still had to look after the sickest patients and save lives. So, we had to innovate very quickly.
SK (05:24): And some of the changes that we implemented in lightspeed that was taking years and decades to do, just happened because needless barriers fell out of the way. Things like communicating with patients by video and telephone and so on. I mean, we’ve been tripping over privacy laws and permissions and which technologies to use. Suddenly, it was like you had to look after a patient and you had to use the technology and it’s there. And so, we all became very facile and our patients too, in being able to communicate that way.
RG (06:06): Cheryl, let me come to you next. From your perspective as someone who’s helping entrepreneurs like Dr. Keshavjee, companies, businesses, what is a lesson—a valuable lesson—that we can pull away from this crisis to help us create that innovation culture that we knew pre-crisis that frankly, Canada, that at times was struggling with when it comes to life sciences?
CR (06:33): So, there’s three things. The first is the investment in early stage innovation. So, there’s a lot of money once a company gets over a market cap of $500 million, but at the early stage, the politicians haven’t had the cover to be able to continue to invest because these innovations take many, many years. I’m hoping that with this crisis, that the public, and therefore the politicians, will see that they can invest, and they have to invest in late stage.
CR (07:12): The second is we saw the regulatory agencies around the world, the FDA in the U.S., Health Canada here, move very quickly. Now you can’t move this quickly when there’s not a crisis because you have to be careful. But you can move quicker than they normally do. And Eileen will be able to tell you a little more about that.
SK (07:35): I think Cheryl, to the other point you make is moving slowly does not equate to moving carefully. And I think one of the points you’re bringing out, is everybody, including regulatory, learned to move quickly because of the urgency. So why could we not move quicker in normal times and still be careful? The speed of moving does risk some errors, but going slowly does not equate to careful. It may just be inefficient at times.
SK (08:06): That’s a really interesting insight. And Eileen, maybe just to bring you in on that point, because there seems this inherent tension between obviously a culture of safety and wanting to protect patients and wanting to introduce new technologies and devices and therapies in a responsible and rigorous way. But, at the same time, I sense I’ve heard this not just from people like Dr. Keshavjee but the medical community generally, that they feel that innovation is at times slowed, if not really outright challenged by the regulatory framework that these new developments, these new insights have to be created in and is that overly burdensome pre-crisis?
EM (08:49): Well, what we’ve learned from this crisis, as Dr. Keshavjee and Cheryl have indicated, is that we can be nimble and move quickly when we need to. I think the lesson here is that we can get products to market more quickly. To address some of the safety issues, perhaps if you don’t have all the evidence that you need by a particular date, you can attach conditions to the authorization or approval.
EM (09:21): So, indicate post-approval, you’ve got to come back to me, the regulatory agency, with extra data, but I think the point is well made that we do have the ability to be nimble. We do have the ability to pivot, and I would like to see that we can leverage that on a going forward basis.
RG (09:42): Great insight. Cheryl, can you build on that? How do you feel we’re doing as a society to strike that balance between safety on one hand of responsible development of new technologies versus having that underlying culture of innovation that actually allows breakthroughs to occur?
CR (10:03): Right. So, on a related point, there has to be a culture of local support. So right now, there’s a lot of talk about isolationists and that we need to support our local industries. And I want to say that particularly with many of our medical device clients that have had medical devices, they’ve tried to sell those devices to the same hospitals in which they have been invented and locally. And they haven’t been able to, maybe because there hasn’t been funding or maybe other reasons.
CR (10:45): But when you have companies that are selling into the Mayo Clinic, Johns Hopkins, Columbia, and then a new customer will say, “Well, how come your local hospitals aren’t buying it?” That’s not a good thing. So, some of these companies that are small companies now are the ones that are actually building the respirators and ventilators. But they could have been more established companies and been ready to go quicker if there had been some local support. So, I think it’s a combination of more funding for research, less regulatory barriers in terms of the health regulatory and also just local support for purchasing and supporting these early inventions.
SK (11:41): And Cheryl, why do you think we don’t have that local support here? Is it a Canadian thing or is it risk aversion or is it conflict of interest management? Why do you think that support has been insufficient?
CR (11:58): Perhaps funding. And maybe, again, maybe now there will be a new emphasis on funding and building up our local industries. And frankly, we need to do this unless we plan on being Saudi Arabia and focusing on oil and gas. That hasn’t been such a good bet the last few months.
EM (12:22): Cheryl, just to pivot on that point for a moment. We talk about innovation; in some ways, don’t we trumpet successes too early? So, in other words, if we look at the COVID vaccine, and there was a press release in the Globe about how the NRC developed the technology for a vaccine, but then licensed it on a non-exclusive basis to China with no compensation back to Canada. And so, there was great fanfare because Canada gets to participate in one arm of the clinical trial. But shouldn’t our fanfare and trumpeting be reserved for real home runs? So where are our home runs and why can’t we get to some home runs in the life sciences sector?
CR (13:12): Well, Eileen, it’s a great question and a good point, but just remember, we do have some recent home runs and we are, in terms of our culture, 30 years behind the United States. And that’s because of the way of legislation in the U.S. allowed for certain patents coming out of the university, starting already in the 70s. So, Canada is now new at the focus on commercialization, but I think we’re progressing very quickly. And what I’m seeing in the last few years is many of the most highly regarded VCs in the U.S. calling us and saying, “There’s great innovation in Canada. We want to see it. We want to be part of it.” So, I really think that this is the beginning of a very good decade for health innovation in Canada.
RG (14:13): Dr. Keshavjee, you’re, again, on the proverbial frontlines of trying to develop innovative therapies and techniques within a single-payer system. So are you optimistic that the system is going to learn from this experience and provide researchers and inventors like yourself with more freedom, with faster approvals, or is there a risk that the system snaps back to what the system knows best, which is, at times, a top down, fairly bureaucratic approach to healthcare delivery, to healthcare care innovation, to the whole set of issues that big organizations like UHN confront in our single payer system.
SK (14:59): I think if the system snaps back to where we were, we’ve lost a big opportunity that this crisis has presented to us to become better and be more successful. And I think all of us as leaders need to look at how do you use this opportunity to be better, to be better prepared for things like this. But basically, use the opportunity. And I work in a very privileged space in the sense that at UHN, we taught the world how to do lung transplant. We did the first lung transplant in the world successfully. We taught them lung preservation, they’re using our technique worldwide.
SK (15:40): And now, a complete transformation of the whole field of transplantation, taking organs outside of the body, repairing them and transplanting them, transplanting an organ that is made to look like the recipient. So these are sort of leading edge technologies where I think more examples like this are going to give investors more confidence in Canadian biotech and medical development.
CR (16:08): And I believe that we see individual investors wanting to get more involved in this area as those who are wealthy individuals begin to understand without health, we have nothing. We don’t have an economy, either. So, this is sort of a scary area to invest in because there’s so much that’s complicated to understand in terms of the science, in terms of regulatory approvals.
CR (16:40): But we’re looking, and we are finding ways to get that expertise into the hands of individual investors by having them peer together in groups to get that expertise. And I think that will be very important in terms of funding it at the early stages. Because again, at the later stages, there’s not a problem. The biotech index this year is up 7%.
EM (17:09): Which is very encouraging. And so Shaf and Cheryl, you’ve both spoken about leveraging this opportunity so that we do have a transformation. I just wanted to remind the team here that back in 2016 and the budgets of the Federal Government—2017 and 18—there was a lot of emphasis placed on developing an innovation economy in Canada, in particular in relation to life sciences. So, we do have that impetus that was led in part by the Federal Government.
EM (17:49): But then we have today’s reality that when COVID struck and we were trying to source PPE, devices, drugs ex Canada, we struggled. And if we look at the list of products currently approved, whether for PPE, devices, etc., in this COVID environment, most of the companies on that list are manufacturers ex Canada. And so to my mind, we have this gap between our desire to arrive at an innovation economy and life sciences and the reality where today we don’t have, with a few exceptions, we don’t have manufacturing of vaccines in Canada today. We don’t have manufacturing of drugs.
EM (18:40): And so that’s what I see as a challenge in part. How do we get ourselves to that state where from a self-sufficiency point of view, we can at least have some of our own supply if we have the next crisis, whether it’s aging baby boomers or the next pandemic? Or even arising from COVID itself. When will Canadians get this vaccine, when will Canadians get the drugs to treat this pandemic?
CR (19:09): So, Eileen, I think it’s an excellent point. And I think that there has to be an emphasis of building up manufacturing capability in Canada, so that we haven’t. However, given the size of the country, we’re never going to be able to have all of it, right? Canada has the population size of California. So, California doesn’t do all of it’s manufacture. And so, what we do in agreements, when we have distribution agreements in Canada, and it’s interesting the name of this, because it has nothing to do with nations, but we put in most favored nations clause.
CR (19:51): We need to start doing that more and more. And what it means is if there’s any other distributor in any other place of the world that has better terms, we get those same terms. And if there’s a supply shortage, you’re going to have to prorate it based on population or based on orders. So, from a legal perspective, there are things we can do, but I think you’re right. I think we need a dual strategy, knowing that we’re not going to manufacture everything here, but we do need some backup and we need more than we have right now.
RG (20:27): So, let’s hear from Dr. Keshavjee because this is an interesting question about balance and opportunity. Where do you come down, Dr. Keshavjee, on how much we need to re-insource, bring these supply chains back to Canada? To what extent does that actually foster innovation? Should that same quantum of effort be applied to something else that might have more of a stimulative effect when it comes to life sciences in Canada? Again, you’re in the trenches, you’re doing this day in, week out, year in and year out. What’s your view?
SK (21:03): Well, I sort of listen to this and think Cheryl’s right. Look, we can’t do it all on our own and we’re not big enough, but our partnership with the U.S. is also something that we could leverage better. And for mass production, things like PPE and so on, we need to be better prepared for disasters like this.
SK (21:26): But, on the other hand, in the high-end, biomedical research and technology, we are innovating. We’re coming up with new developments and discoveries, but we’re not monetizing it as well as we should. The question really is, is the Canadian investment community waking up to that? And I think the work that Eileen and Cheryl does gets them aware of what’s happening here. I mean, on every scale, the University of Toronto, UHN is in top 10, top 20 in the world. And most of that’s because of our research and obviously medical care.
SK (22:09): So we need to get that out there more, but more importantly, Canadians often used to have a sort of insecurity about the healthcare system in Canada and thinking, “Oh, when you’re sick, we should run to the Mayo Clinic or run to the Cleveland Clinic or something like that.” But now they’ve realized what makes Mayo Mayo or Stanford Stanford has been philanthropy in a big way and building up those institutions.
SK (22:34): And now they’re investing in Canadian institutions to show that coming to Toronto General is as good or better than the Mayo in many ways. So in the same way, in backing research and taking risk in investment in new technologies, I think Canadians have to have more faith in Canadians. And the more examples we can bring forward, hopefully will build that.
RG (23:30): Let’s play king for a day, for a second. And just go around the horn to each of you. Let’s say each of you give our listeners a sense of two or three ideas that if you were in charge that you would implement tomorrow to create the kind of preconditions that we’ve been discussing up to this point in our conversation. And maybe, Eileen, I could start with you.
RG (23:52): Are there a few what you think are quick and maybe they’re not easy, but they could be impactful policy changes that governments and industry could enact to foster more innovation, to foster more depth and resiliency on the part of our life sciences community.
EM (24:13): So, my first thought would be let’s champion our rock stars. As Dr. Keshavjee just indicated, we’re top 10, top 20 in the world, U of T, UHN and other leading institutions and researchers in Canada. Let’s champion our rock stars and promote them to create innovation in life sciences in Canada. Because there is a gap between our research and, for example, patent applications filed.
EM (24:48): If we take patent applications filed, Canada accounts for only 2% of patent applications filed at the U.S. patent office. And so that’s one indicia where I think we’d really need to bridge the gap. Let’s champion our rock stars.
EM (25:08): Patent applications as a barometer, let’s try to get our technologies protected so that we can leverage that, both as we develop in Canada and as we develop internationally. And my third suggestion would be let’s enjoy being nimble. Let’s see if we can get ourselves out of the way, whether that is having to do with funding that often would take months and months. And now Dr. Keshavjee can get funding for certain projects in a matter of days. Whether that has to do with approvals within institutions to get projects moving quickly, whether that has to do with regulatory support, let’s develop that sense of urgency around life sciences so we can have some success.
RG (25:57): Great insights. Cheryl, same question to you. Three big ideas, three focused policies. Your practice straddles Canada and the United States. So, it might be interesting to think of some learnings or innovations when it comes to policy around life sciences in the U.S. that Canada could learn from or add to or make more relevant and more meaningful to innovators like Dr. Keshavjee.
CR (26:23): Well, just remember, on the investor side, remember we have these flow-through shares for oil and gas and mining companies. And these companies are very similar to biotech in that there are a lot of misses and the hits are big. And the same investors who are willing to take those risks will invest in oil, gas, and mining.
CR (26:49): We’re a little bit at a disadvantage. It’s not only that we don’t have the advantage, but if you have a choice of getting immediate tax benefits or not getting immediate tax benefits, you’re inclined to go with more of an oil, gas, or mining. So, I think we need to, at the very least, put life science investments on a flat plane here so that they can invest. I agree, in terms of we need to be able to focus on our stars.
CR (27:23): Now, Canada, as an American, I can say the culture here is very different. We’re very democratic. And we give out funding to many in small little amounts. But the small little amounts can’t get us very far. So, you have a bunch of things that don’t go so far. So, I also agree that you need, at the national level when we’re giving out the funding, to have an international board of experts who can advise as to what inventions are likely to have the biggest impact in the shortest period of time.
CR (27:58): Now, once you have those big hits, the government and the public will be willing and happy to invest more and more. So especially at the beginning, invest in those stars. The next thing I would say is in terms of Health Canada, and Eileen will have more to say about it, stop being a follower. We are a separate country and we can’t just wait for the FDA for everything.
CR (28:28): And I would say, lastly, especially in the medical device side, let’s support our local companies and give local purchases so that someone doesn’t need to go to the Mayo Clinic. And when there’s customers in the U.S. or in Europe or in Asia, they don’t say, “How come the people who know you the best locally aren’t buying from you?”
RG (28:53): Dr. Keshavjee, to come to you, I remember having a conversation with David Naylor when he was President of the University of Toronto and one of his laments was the same one being expressed by Cheryl and Eileen, which is that, as a country, we don’t reinforce and invest in success and that we tend to, for political reasons, we’re very regionalized, we spread funds out. And as a result, we don’t get that critical mass that allows real winners to emerge. Is that your experience also? Or is that just not really the right way to think about the challenge that we face in terms of funding and how it’s deployed?
SK (29:34): Yeah, no, I think what David Naylor said and what Cheryl said are the same thing and they’re exactly right. We do tend to say that every province has to get their little bit and make sure that it goes to the French speaking and English speaking, goes to the west and the east. And we’re not really having the courage and conviction to pick the winner to run with.
SK (29:58): I think the Canada First Research Excellence Fund was along the right idea. Pick one thing that we could lead the world in Canada and fund that big. So, the biggest grant I was ever part of is that grant. We got $114 million for regenerative medicine and saying, “I’m going to design new organs.” Organs for design was the part because we are leading the world and we can go further with a big hit like that.
SK (30:26): But otherwise I spend most of my time writing grants and applying for money than actually doing the work. And even when you get a grant, you get 60 cents on the dollar of what it takes to do the work. So, it is spreading it too thin and not really looking at, okay, what are we going to get over the finish line in the world?
SK (30:49): And I also think in terms of the business development access, things like SRED programs or BDC and stuff sort of come and go. It’s there, it’s not there, they used to have it, they don’t have the funding now, and it’s not a sustained push to say, “Get these companies out of the water.”
RG (31:10): A great message and an important one for all of us to think on in terms of the lessons learned from this crisis and what could be different. What’s the good that we can extract for it? Just in our remaining moments, I want to end with Cheryl and Eileen and what’s the mood out there right now? Is this an optimistic moment for life sciences? Are people excited about the pace of change that we’ve seen in the last two months?
RG (31:37): Or is there a residual worry here that we are going to go back to business as usual? And we may not really learn the good lessons that we can extract from COVID-19 and our collective response to it. And Cheryl, let me start with you and then I’ll give Eileen the last word.
CR (31:56): Right now, the life science industry is extremely optimistic and extremely profitable. I mean, the recent IPOs—IPOs yes—during the COVID crisis that have been launched in the U.S., some of them are up already this year over 300%. And as I mentioned before, the average increase since the time of the IPOs launch that have been launched in 2020 is up 75%. So, I would say very optimistic right now and really looking forward to the future.
RG (32:37): Well, Eileen, I want to give you the last word on what’s been a fascinating conversation about life sciences, its state-in-play today and the potential for some meaningful policy and change and part of the investment community in supporting this critical piece of both Canada’s response to the pandemic but also, as Cheryl and you’ve pointed out, a critical piece to our future prosperity. So please Eileen, sum up this conversation for us. What do you want listeners to really take away as the key message?
EM (33:12): Well, this is a highly optimistic time for the life sciences industry, because we can leverage our knowledge based on COVID to date. So highly optimistic time. Telemedicine, personalized medicine, the industry is working together at a pace we’ve never seen, trying to arrive at a solution, multiple solutions, multiple vaccines, multiple possible drugs and trials.
EM (33:42): That’s highly optimistic for all of us. We should be incredibly grateful for the innovation that is going on within this industry, and that has gone on historically, in addition to being incredibly grateful for that innovation arriving at the front lines to people like Dr. Keshavjee and his team. We hope that one day that innovation will arrive there to help them.
EM (34:07): And so, I’d really love for us to leverage this for an opportunity for Canada to arrive at a true innovation economy in life sciences and where we use insulin, of course, it is an example of our success. But I’d love to have multiple other home runs from discovery, to R&D, to commercialization in life sciences. And so, if we could get there, that would be a huge win from this pandemic that we’ve all gone through.
RG (34:42): Wow. Eileen, thank you. Cheryl, Dr. Keshavjee, this has, again, been a hugely informative conversation. Each of you bringing your own considered expertise and analysis and insights. And I think more importantly, it’s left us with a sense of optimism, a real sense of potential for life sciences coming out of this crisis and our collective response to COVID-19.
RG (35:05): So, on behalf of Torys Business Brief, thank you all of you for coming on the program today.
CR (35:10): Thank you.
SK (35:10): Thank you.
EM (35:10): Thank you, Rudyard.
RG (35:14): That wraps up this episode of Torys Business Brief. You can read more on some of these issues in the piece “Pandemics mandate to Innovate: A turning point for life sciences”. You can find this essay by visiting torys.com/quarterly.
RG (35:27): On our next podcast, we’ll speak with Torys partners, David Bish, and Torys Calgary partner. Kyle Kashuba. David and Kyle will discuss what they’re seeing in terms of restructuring considerations and insolvencies as a result of the COVID-19 pandemic.
RG (36:07): Thank you for listening to Torys Business Brief. I’m your host, Rudyard Griffiths.
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