Saskatoon-based BioStar has found a Canadian company can’t go it alone in the expensive business of developing leading edge animal and human health products.
So the biotechnology company, spun off from the Veterinary Infectious Disease Organization almost 20 years ago, last week announced it is being bought by MetaMorphix Inc., a privately held agricultural biotechnology company in Baltimore, Maryland.
BioStar also said it has sold its line of commercial animal health vaccines, including EcoStar 2RC, Somnu-Star and Pneumo-Star, to Novartis Animal Health Canada Inc.
Stephen Acres, BioStar president, said the company’s three broad research directions had become too expensive.
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“Just the magnitude of the financing that you have to raise on an ongoing basis outstripped our ability to do it,” he said.
It decided to spin off its genetically engineered animal vaccines business and sell it to Novartis.
Other research focused on animal and human applications of technology that stimulates the immune system. In humans, efforts were aimed at developing products to fight cancer. In animals, it could increase production efficiency without the use of hormones or antibiotics.
To carry on with this side of the business, which it calls immuno-pharmaceutical, BioStar merged with MetaMorphix, a company with similar research goals.
“The new company will have greater strength and will really be able to carry on and exploit more fully the technology in that particular area,” Acres said.
He said BioStar had been “quite successful” in raising money in Canada – $26 million since 1993.
“But when you get a number of drugs into the development pipeline, the costs become very high,” he said, noting that to get an animal health drug developed and registered in Canada and the United States, it costs about $10 to $12 million. BioStar had four products in the pipeline.
Faster pace
By narrowing the company’s focus, merging with an American company with its own research strengths and access to the larger U.S. capital markets, BioStar could develop more quickly, Acres said.
Although MetaMorphix has bought BioStar and will make it a subsidiary, the Canadian company is the more developed entity. Acres said MetaMorphix plans to continue BioStar’s research operations in Saskatoon although the integration plan is not complete.
He said Canadian farmers who have used BioStar vaccines should notice little or no disruption in service now that Novartis has the products.
“And the other products that are in development with MetaMorphix are still two or three years away from market, but they will get there faster than they otherwise might have,” he said.
