May 12, 2020
The Honourable Navdeep Bains, P.C., M.P.
Minister of Innovation, Science and Industry
C.D. Howe Building
235 Queen Street
Ottawa, Ontario K1A 0H5
Dear Minister Bains;
On behalf of the member companies of the undersigned associations, we are writing to you regarding the announced Industrial Assistance Program (IAP) support the government is making available through the NRC IRAP. Importantly, during the application process, a number of applicants learned that a material amendment has been made to the original IAP eligibility criteria which has created confusion regarding the eligibility for some companies.
In early April the government announced a 75% wage subsidy to support Canadian businesses which have suffered a 30% reduction of revenue due to the economic downturn associated with the COVID-19 crisis. This was a very significant and welcome economic response from the government. However, the use of revenue-based criteria meant that most early stage, innovative companies in Canada were not eligible for the wage subsidy because they have no revenue and could not therefore demonstrate the required 30% loss of revenue due to the economic conditions created by the Corona virus. We subsequently wrote to you to urge the government to address this gap.
Recognizing the wage subsidy program was unavailable to most pe-commercial, innovative companies in several sectors, the government moved to address the gap with the IAP. Indeed, when the government announced the initiative, you stated, “[This program] reflects the fact that we know we need to do more to support startups and focuses on the core objective, which is about protecting Canada’s highly skilled innovators.” At the time of the announcement, we strongly and publicly stated our support for the initiative specifically because it was expressly designed to support early stage, innovative companies including many in the life sciences sector.
Program specifics were provided shortly after the public announcement and before the application process was officially opened on April 22. The initial criteria for the program posted on the IRAP website page reflected the intent of the program and stipulated that to be eligible, companies would need to demonstrate they “lack sufficient financial resources to sustain operations during the COVID-19 downturn period”. However, as companies began applying to the program, slightly amended eligibility wording was posted requiring companies demonstrate they ‘(l)ack sufficient financial resources to sustain operations from April 1, 2020 to June 23, 2020 inclusive”. The new wording materially narrows access to the program for only those companies unable to survive the immediate three-month period between April 1 and June 23. New criteria will mean most well-run biotech companies were ineligible to apply for the IAP.
The impact of the Corona Virus has resulted in lab shut downs and cut off the suppliers, contract researchers and contract manufacturers that support the research work led by start-up life science companies in Canada. Most companies have reacted prudently by stretching their balance sheets while continuing to support their staff as a means to maintaining critical teams and research efforts intact and allow the companies to re-start work when the economy is re-opened. In the near-term, these companies will not meet the amended 3-month IRAP criteria. Medium-term (6-12 months from now) when research facilities are to re-open, many of these companies will have already burned through critical cash resources trying to keep their teams together and will no longer have the resources necessary to complete the critical work required in order to raise their next rounds of investment. This dynamic will put a vital layer of early stage innovative life science companies at risk. Excluding them from the IAP at this critical time has the potential to devastate the foundation of the entire Canadian life science innovation ecosystem.
Minister, when the IRAP funding initiative was announced you stated, “[This program] focuses on the core objective, which is about protecting Canada’s highly skilled innovators. This is about retaining top tier talent in Canada because they’re going to be critical for economic recovery and economic growth as we come out of this crisis.” If anything, this crisis has demonstrated the importance of a healthy and diverse domestic biotech industry built on innovation, entrepreneurship, great science and research. Indeed, since the onset of this crisis, the Canadian biotech ecosystem has been working very closely with your department throughout the health crisis to help identify potential therapeutic and vaccine candidates. Moreover, the industry has also worked proactively to share resources including lab space, talent, equipment and supplies to ensure that companies working on COVID-19 solutions have all they need to undertake their research. When we emerge from this crisis it will be critically important there is a healthy biotech sector upon which to build and protect against future COVID-19 like challenges. By ignoring the sector at this critical time there is a risk we will lose companies instrumental in future efforts to combat other viruses and health challenges.
Since the onset of the virus, the federal government has taken very appropriate and important steps to maintain economic stability through this crisis. The diverse initiatives and programs the government has developed have been specifically designed to support different business sectors, company types and sizes. Yet despite tailoring the programs to accommodate these differences, Canada’s biotech sector has repeatedly been overlooked and unable to access meaningful support programs such as the EWS or IAP. In this context, on behalf of our member companies, we request the government take immediate action to recognize early stage biotech companies as equally important as other Canadian businesses and to put in place support measures that align with the unique business model of the companies in the sector.
Gail Garland, President & CEO, OBIO
Andrew Casey, President & CEO, BIOTECanada
Rory Francis, Executive Director, Prince Edward Island BioAlliance
Wendy Hurlburt, President & CEO,LifeSciences British Columbia
Jason Field, President & CEO, Life Sciences Ontario (LSO)
Rob Stoddard, President & CEO, BioAlberta
Scott Moffitt, Executive Director, BioNova
Anie Perrault, Executive Director, BioQuébec
Tracey Maconachie, President, Bioscience Association Manitoba (BAM)