Biomedical start-up aims to commercialize peptide research

A groundbreaking collaboration between Quebec and Ontario led to the creation of Encycle Therapeutics, a biomedical start-up with huge market potential.

Raphael Hofstein, president and
CEO of MaRS Innovation

It points the way ahead to the sort of pan-Canadian co-operation needed to take full advantage of global opportunity, says Raphael Hofstein, the president and chief executive officer of MaRS Innovation, a Toronto incubator of high-tech companies. (MaRS was set up to commercialize research breakthroughs from 16 universities, medical institutions and research institutes.)

Encycle offers a chemical “platform” for development of new drugs, and was launched with seed funding of $1 million from the Quebec Consortium for Drug Discovery, a non-profit group backed by that province’s pharmaceutical industry.

It started with research in the laboratory of University of Toronto pharmacology chemistry professor Andrei Yudin, and was developed in collaboration with professor Eric Marsault at the French-speaking University of Sherbrooke. Encycle is a pilot project of the Ontario-Quebec Life-Sciences Corridor, a partnership established last year by the governments of the two provinces aimed at sharing ideas, investment and opportunities.

Hofstein earned a PhD in life sciences and chemistry from the Weizmann Institute of Science in Israel, and did postdoctoral training at Harvard. He has spent the past 30 years immersed in the business side of science.

What makes Encycle’s technology so promising?

Proteins are made of smaller units called peptides, usually existing as linear chains. If they get into the bloodstream, they get degraded rapidly by enzymes and they find it very difficult to get into cells of the body. What we want them to do is become drugs. There are many useful features in peptides that can turn them into very useful therapeutics, but the key is entering the cell. Here comes the sensation: Andrei Yudin developed a technique to turn linear chains into cyclical chains. They look like doughnuts. As such, they are protected from the degradation by enzymes and they also can enter through the membrane of a cell. All of a sudden, we have a whole host of molecules accessible to us for drug development.

What is the market potential?

It’s a multi-billion-dollar market. Start with oncology. Go through metabolic disorders like diabetes. Move on to problems of the nervous system. Hopefully eventually also for Alzheimer’s. It’s really a broad-spectrum opportunity.

How many years and dollars is it going to take to get this to market?

Let’s say tomorrow morning a company expresses interest in it for a new approach in oncology, and we find the right molecule. From that point through the clinical development process and the regulatory process, I’d say anywhere between seven and 10 years and probably $100 million.

How did this venture between Quebec and Ontario come about?

Just over a year ago, at Bio, the largest conference for everybody who does biotechnology, the Minister of Economic Development of Quebec and the Minister of Research and Innovation of Ontario stood on the podium and announced they’re starting a very special relationship—a corridor between the two provinces. I stood next to a colleague of mine from Quebec, Max Fehlmann, who runs CQDM, a consortium representing pharma groups. He says, “Rafi, let’s try to fill the corridor with some substance. If we together can identify a technology that can turn into a company in Ontario and the founding scientists identify a legitimate partner in Quebec, I will fund the opportunity.” I found that particular opportunity driven by Andrei Yudin. He has a natural fit with Prof. Marsault. The two have been collaborating for a long period of time.

How does this collaboration point the way ahead for Canadian innovation?

I am a true believer in the pan-Canadian approach. On the one hand, there is multi-billion-dollar potential but at the same time, it’s going to be a very expensive exercise. Through our capabilities in Ontario and the consortium in Quebec, we can harness many companies who can assist us in pushing this opportunity up the ladder. We already have similar relationships with a group in British Columbia called CDRD [the Centre for Drug Research and Development]. We have seedlings of relationships with groups in Alberta.

What is a key challenge for academics in commercializing research?

It’s not all about money, but it’s almost all about money.

We have so much scientific money from government. What are we not doing right?

On top of research money, we need a layer of at least 10% to 20% earmarked for commercialization.

Israel is seen as being especially strong in commercializing research. What does it do that Canada could learn from?

First, it has a robust program for incubation that is close to $200 million a year, primarily going to start-up companies. Plus, it creates funds that are a combination of public-private money. I can tell you at least of one. We call it Orbimed Israel. There’s a $250 million fund for early stage in medical sciences, with emphasis on drug development, with 20% contribution of the government to be complemented by institutionals such as pension funds as well as industry.

How do incubators such as MaRS help academics create start-up companies that will survive and grow?

It’s a combination of financial and technical support. Scientists know to articulate the idea and its benefit. They don’t really have the skill set to describe the product that could eventually become commercialized.

What is one thing Canada could do to take advantage of global high-tech opportunities?

If we were to look at things from a pan-Canadian perspective, it would accelerate everything.

What would you do in that regard?

Engage in a dialogue with key opinion leaders in the different provinces and discuss who can contribute to a central bucket. Encycle is part of a revolution. Quebec transferring funds to Ontario? Think of it.

This interview has been edited and condensed.