As the health science industry adjusts to the realities of COVID-19, OBIO continues to advocate and work on your behalf.
Over the last two weeks, OBIO has engaged with health science companies in a variety of ways.
OBIO Updates: Via newsletter, OBIO Updates are being sent out daily to keep you updated on the latest announcements from government and business, from the federal and provincial governments, as well as relevant business news.
OBIO Industry Resources List: Updated daily to serve as a one-stop shop for all the available government and business supports that health science companies need as they address the impact of COVID-19. Click here for the OBIO Industry Resources List
Online Events: On March 26th, OBIO hosted an online panel discussion, “Guiding Your Company Through the Unexpected”, featuring experienced industry CEOs and a venture capitalist discussing how to respond and be prepared following moments of disruption. Stay tuned for our next event on April 7th.
OBIO Member Engagement: We continue to collect your stories about the impact that COVID-19 is having on your business. We have also invited companies to reach out to OBIO if they have a COVID-19 related application for their technology or are working on something new.
OBIO Advocacy: OBIO is in regular contact with government officials advocating for urgent support for the health science industry. Yesterday, OBIO sent a letter to Hon. Mary Ng, Minister for Small Business, Export Promotion and International Trade with recommendations to expand the federal government’s announced wage subsidy to include innovative health science companies that are pre-revenue as they develop their technologies, in addition to recommending that the federal government address the drying up of private equity investment. Read the full letter below.
The Honourable Mary Ng, P.C., M.P.
Minister for Small Business, Export Promotion and International Trade
125 Sussex Drive
Ottawa, Ontario
K1A 0G2 Canada
VIA EMAIL
April 2, 2020
Dear Minister Ng,
I am writing to follow-up on my letter from March 31st which outlined initial recommendations for supporting innovative health science industry during these challenging times.
As the CEO of Ontario Bioscience Innovation Organization (OBIO), I continue to hear every day from companies that are being impacted by COVID-19. While also continuing their businesses, they are working very hard to adjust to the current realities, including remapping their business plans and maintaining their relationships with their staff. At the same time, these companies are facing clinical trials that are now on hold, research facilities that have closed limiting ability to develop technologies, and investment funding drying up.
In my previous letter, I highlighted two issues in particular facing these companies: the need for an accessible wage subsidy, and investment support to allow companies to continue operations. In this letter, I would like to highlight five recommendations:
1) Create a $50-million VC Fund for Rapid Deployment to Health Science Industry
It is anticipated that it will take 12-18 months post-COVID-19 crisis for private sector investors to begin investing in Canadian health science companies. Even the strongest companies will not survive a capital drought of this duration.
Therefore, the federal government should create a $50 million emergency venture capital fund to directly invest in companies with the primary objective of expediently deploying funds. OBIO is ideally suited to fulfill the role of general partner in this emergency fund because of its successful history with the federal government in developing and supporting the industry through its landmark programs: CAAP, H2BB, MINT and EAHN.
OBIO has a unique position in the innovative healthcare landscape through its familiarity with Canadian companies in this space. It can expediently conduct due diligence on investable companies and help marshal resources to position them for follow-on investment. OBIO currently conducts these critical activities now; it can use its experience and resources in this emergency to help the best of our companies come through this crisis stronger than ever.
2) Wage Subsidy
The announced Canada Emergency Wage Subsidy (CEWS) program, which would have a very positive impact on affected health science companies, also presently excludes many innovative health science companies due to the requirement that companies demonstrate a 30% decrease in revenue because the companies are pre-revenue while they develop technologies. This remains a major concern for innovative health science companies and, as the CEWS program is developed, I strongly urge you and your government to create an opportunity for scaling, innovative companies to access this valuable program.
3) Business Credit Availability Program (BCAP)
Similar to the revenue qualification for the CEWS program, innovative health science companies that seek a loan through the Canada Emergency Business Account which are pre-revenue do not qualify under the BDC’s criteria. Given the immediate need for financial support for early-stage and scaling companies, your government should amend the restrictions and permit pre-revenue companies access to this $10-billion fund for these companies.
4) Scientific Research & Experimental Development (SR&ED)
As mentioned in my previous letter, we support recommendations made in the Canadian Venture Capital Association (CVCA) earlier letter to you. I would like to recommend a few actions in particular that your government can take to support health science companies secure the funding they need to remain operational.
SR&ED tax claims should be paid on a first in/first out, no-review basis. Many companies rely on these SR&ED claims and, by moving them forward expeditiously with a company CEO’s attestation to the claim’s legitimacy, getting them out to companies would address a pressing cash flow issue immediately.
5) Convertible Notes
The federal government should consider using organizations like the Business Development Bank of Canada (BDC) to provide convertible notes for companies that are supported by private equity investment. A matching cap of $2-million per company will allow the maximum number of companies to benefit. Given BDC’s history of administering similar programs, it would be advantageous to do so again as a way to support innovative health science companies impacted by lack of access to investment.
OBIO is already engaged and working with the federal government on supporting companies with COVID-19 technology solutions. We stand ready to work with you, your ministry and the federal government more broadly to take the necessary steps to support innovative health science companies that all of us will rely on for our future healthcare and prosperity.
On behalf of the Ontario health science industry, we appreciate everything that you and your team are doing to support individuals and businesses affected so deeply by this crisis. I appreciate your time and your attention to these matters.
Sincerely,
Gail Garland
President and CEO
Ontario Bioscience Innovation Organization (OBIO)
Cc:
The Honourable Navdeep Bains, P.C., M.P.
The Honourable Bill Morneau, P.C., M.P.
Mr. Simon Kennedy, Deputy Minister, Innovation, Science and Economic Development Canada