March 20, 2015

Looking Inside the Biotech Black Box (Part 5)


Theratechnologies Case Study – early company history

In the Theratechnologies (TSX: TH) case study which I will cover in the next several blogs, I will ask four main questions.


In order to get the background to answer the first question, the key source of information is the AIFs found at The oldest AIF from this source is for the fiscal year ended November 30, 1997. I have outlined below some information from the early AIFs – and added some questions and comments.

From 1991 to 1993, R&D work in various medical fields had been carried out for the Corporation’s subsidiaries at the University of Montreal at a total cost of $93 million and financed, off-balance sheet, by research and development venture capital companies.

The biotech industry was in its infancy at this time. The only successful products were the recombinant protein replacement therapies, including hGH, EPO, G-CSF and factor VIII. There were also major clinical failures, including monoclonal antibodies to treat sepsis.

The Corporation was incorporated on October 19, 1993. The Corporation resulted originally from the combination of companies and their subsidiaries involved in R&D in the medical field. In accordance with the management’s strategic plan, the Corporation sold its non-strategic assets and simplified its corporate structure.

The objective was to invest in a series of promising medical discoveries and move forward with the most promising at the end of the 3 years. We do not know if the original group of medical discoveries was selected on a scientific (academic?) or commercial or combined basis. We do not know how the $93 M in R&D expenses was allocated. We do know that it is very difficult, if not impossible, to combine drug, device and diagnostic R&D in a single company (another company which unsuccessfully tried this approach was Allelix). We do know that it is very difficult to select or kill R&D projects in a significantly academic environment.

In July, 1997, the Corporation created Andromed to commercialize the devices and medical technologies that the Corporation had developed, namely Stethos®, a fully electronic stethoscope, the Stethos® clinical system, the SEQUS® software and PSRD (Patient Self Reporting Diary).

Why was Andromed and its products not chosen as the core business for Theratechnologies? The answer was probably the market potential for its products – medical device products typically have much smaller market potentials than drug products. Many Canadian medical device companies have approved products, sales and even small profits but have never had the cash, share price or momentum to substantially grow either organically or by acquisition.

Eight years later in December, 2005 Andromed Inc. (TSX Venture: AD) announced the completion of the sale of its principal assets to an arm’s length acquirer. The consideration paid by the purchaser was $4 million. Andromed subsequently changed its name to Sonomed and in June, 2007 became SND Energy (Calgary-based).

In January, 1998, the Corporation became a shareholder of Ecopia, which was to sequence the genome of microorganisms and endeavor to identify new antibiotic and anti-proliferative (anti-cancer) substances.

Why was Ecopia and its products not chosen as the core business for Theratechnologies? The answer was probably the more advanced stage of development of the ThGRF technology.

Ecopia (TSX: EIA) became a public company in October, 2000.

In March 2007, Ecopia and privately-held Caprion Pharmaceuticals completed an amalgamation to form Thallion Pharmaceuticals. Thallion completed an equity financing for gross proceeds of $45 million at this time.  Caprion’s proprietary proteomics technology platform business unit known as Caprion Proteomics, which included the CellCarta technology platform, was not part of the transaction.

In August, 2013, BELLUS Health Inc. (TSX: BLU; formerly Neurochem) acquired Thallion for a purchase price of $6.3 M.

PDP: the Corporation filed an application with the HPB in December 1997, with a view to commence clinical trials for PDP.

Theralux™ was based on the ex-vivo photodynamic purging (PDP) of diseased cells. It targeted cancers affecting bone marrow, namely chronic myeloid leukemia (CML) and non-Hodgkin’s lymphoma (NHL) as well as graft-versus-host disease (GvHD) and certain autoimmune disorders. Theralux™ was tested in a Phase I/II clinical trial in CML (finished in 2001). A pivotal clinical trial was started for NHL.

Celmed Biosciences Inc. was created in June 2001 following a strategic review. Supported by Technology Partnerships Canada ($4.6 million) for the clinical development of Theralux, the Solidarity Fund QFL and the Société générale de financement du Québec (SGF) provided aggregate capital funding of $60 million.

In December, 2006, Celmed was acquired by Kiadis Pharma B.V. Based on information on the Kiadis web site (, the PDP technology is still in clinical development – 17 years after the first clinical trial.

The first question at the beginning of this blog was ‘why did the company choose tesamorelin as its lead drug candidate’, which we looked at indirectly by asking why other technologies were not chosen. Three technologies were not abandoned but moved into separate companies – Andromed, Ecopia and Celmed – which were independently financed. The direct answer is that the ThGRF technology, including tesamorelin, was the most clinically advanced, could build on the wealth of clinical knowledge about hGH, and had the largest market potential.

In the next blog, I will outline the tesamorelin clinical development program in order to address the second question – what decisions were made along the path to regulatory approval?

[The author and his immediate family members may have long or short positions in the shares of some companies mentioned in or assessed during the preparation of this blog. Past share price performance may not be an indicator of future share price performance. This blog does not consider the investment objectives, financial situation or particular needs of any particular person. Investors should obtain professional advice based on their own individual circumstances before making an investment decision.]

As with all our posts, please see our full legal disclaimer.