Emerging public-private convergence centre
The Medical and Related Sciences (MaRS) project is pursuing the federal government as its newest partner. It is seeking $20 million to help it move to the next phase of its ultimate strategy of establishing a national network of facilities and services dedicated to commercializing promising intellectual property (IP). Since it won a hard-fought battle to secure prime real estate in Canada’s largest medical research community, MaRS has accumulated $145 million in financing and broken ground on the first of five buildings that will form the heart of Toronto’s recently designated Discovery District.
Driven by a high-profile college of founders and a powerful board of directors, MaRS is gaining attention nationally and globally as one of a growing number of convergence centres that seeks to leverage public investments in research. It has already convinced the Ontario government of its potential, receiving $20 million from the SuperBuild Fund in the last provincial Budget (R$, June 21/02). And MaRS was the catalyst that prompted the City of Toronto to create a so-called Discovery District to attract even more research and related activity to the area.
Although details on the provincial investment have yet to be finalized, it has helped secure additional public funding through the Toronto Biotechnology Commercialization Centre (TBCC), a group whose board of directors includes the CEOs of Toronto’s major research hospitals, three pharma companies and the Univ of Toronto. In 2000, TBCC was awarded $9 million to build a $20-million biotech incubation facility, which will be located at MaRS.
A major financing breakthrough was triggered by the signing of a lease with the University Health Network (UHN) for space in the first building, which will provide 40,000-sq-m of rentable space. It is slated for completion in late 2004. UHN originally owned the land where MaRS is being constructed and the lease enabled MaRS to raise $100 million by issuing a 30-year bond, covering the entire cost of the first building and then some.
“A big chunk of MaRS is absolutely real. Construction is going on now and next week we reach ground level,” says MaRS president and COO John Cook. “The board of directors is very happy with the strategic direction we’re taking and the big focus early this year is to secure a contribution or investment from the federal government. There are lots of indications it’s going well.”
In its initial stages, MaRS will focus on establishing a Toronto base and developing linkages with other provincial centres. An agreement has already been signed with the Univ of Guelph called MaRS L.A.N.D.I.N.G. — short for Links to Agricultural Network for Development & Innovation with Guelph. The test pilot received nearly $3 million in provincial funding from the Ontario Ministry of Agriculture and Food’s Ontario Small Town and Rural Development Initiative (OSTAR), to use information and communication technology to connect MaRS to Guelph’s concentration of agri-food research.
“MaRS has a national agenda and right now we’re putting an enormous amount of work into building relationships and synergies with economic development agencies, technology transfer and liaison offices at universities and research hospitals to create a provincial network,” says Cook. “We want to develop a virtual network in Ontario that can be extended to other provinces.”
For the time being, the main action remains in Toronto, where five buildings will ultimately be constructed. The second and third building (including a heritage structure) are next up for development, adding 25,000-sq-m at a cost of $65 million. Those buildings are also scheduled for completion by late 2004. The final phase will add a fourth and fifth building, although preliminary costs and design have yet to be finalized. They would eventually add 80,000-sq-m to MaRS’ facilities for completion by 2007.
Cooks says the model upon which MaRS is based is simple, built on a host of centrally located research and commercialization programs designed to improve the rate of commercialization in the area, the province and across Canada.
“The scale of research in Toronto is huge and there is enormous opportunity to find areas where institutions can work together more collaboratively and move past their doors to the commercialization phase,” says Cook. “With a high level of interaction, IP is moving into the eyes of investment opportunity and we can then use this as a magnet for more venture capital.”
One way MaRS hopes to stimulate appropriate cluster activity is by participating in the province’s pilot program for tax incentive zones (TIZ). In its last Budget, Ontario indicated it was willing to consider the establishment of geographical areas in which start-ups can locate and be exempt from paying certain municipal and provincial taxes.The concept has been used aggressively in Quebec for several years, and while Ontario’s version is more modest, it has the potential to accelerate the rate of convergence MaRS is designed to stimulate.
MaRS is leading a group of several municipalities in proposing a TIZ for medical and related sciences. The province received nearly 70 submissions under the pilot and is expected to announce seven successful projects later this month.
“Each city designates an improvement area that allows them to bring mechanisms into play to boost the area,” says MaRS business analyst Carolyn Dewar, adding that the MaRS-led initiative is the only multi-city proposal being considered. “Ours would have a provincial network focus to help small businesses across the province.”
MARS COMPLEMENTS PROPOSED BDDA
Some of the principal players behind the MaRS project are also involved in the promotion of another biomedical commercialization initiative, tentatively titled the Biopharmaceutical Drug Development Accelerator (BDDA) (R$, December 2/02). Dr John Evans, board chair for both organizations, says that the BDDA represents the broader biopharma industry and would provide effective support for promising IP moving towards the marketplace.
“The BDDA deals with the long-term process of going to commercialization, with people and facilities to evaluate drug prospects so they’re not sold off for royalty payments,” says Evans. “For MaRS it would be a wonderful thing if a BDDA and a source of capital existed. MaRS cannot provide that. It provides a physical and interactive platform with support services to try to facilitate the speed to market and survival of IP from SMEs going to market.”