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Shortage of lab space stunting Ottawa biotech sector’s growth, Virica founder says

David Sali

January 30, 2024

Founded in 2018, Virica has operated out of a small lab at the University of Ottawa Heart Institute since 2021.

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Ottawa risks seeing its best and brightest biotech startups leave for greener pastures because the city lacks the infrastructure to help turn promising ideas into viable commercial products, a prominent scientist and entrepreneur says. “At the end of the day, there’s a lot of innovation, but there’s not a lot of places for those innovators to go,” Jean-Simon Diallo, the founder and CEO of Ottawa-based Virica Biotech, told Techopia in a recent interview. “There are some real gaps moving from innovation towards building businesses.” A major obstacle for burgeoning biotech enterprises looking to scale up is the scarcity of dedicated lab space in the nation’s capital suitable for companies like his, Diallo said. Founded in 2018, Virica has operated out of a small lab at the University of Ottawa Heart Institute since 2021. Diallo spent more than a year trying to find an R&D facility in Ottawa big enough to accommodate his growing staff of more than 30 before finally securing 4,000 square feet of lab space at Carleton University’s state-of-the-art Health Sciences Building. The firm plans to open its new gene therapy research and manufacturing hub at Carleton this spring. “We’re now in a larger, more modern space, and we’re pretty excited,” said Diallo, whose startup signed a three-year, multimillion-dollar agreement with Carleton that will see Virica help finance ongoing research at the university, as well as provide $15,000 in annual funding for scholarships to support students from groups that have traditionally been underrepresented in the sciences.

Limitations of the ecosystem

But the circumstances that allowed Virica to land its new home also illustrate the limitations of the capital’s biotech ecosystem. The space became available only after the former occupant, Ottawa-born Turnstone Biologics, moved out last summer when the company decided to consolidate its operations in San Diego, where it is now based. Diallo said Virica was “very close to moving to Montreal” before it received a $790,000 grant from the provincial government last spring and began hunting for a new office in the National Capital Region. The firm looked at leasing a building in the west end, but that facility would have needed a costly fit-up to provide the proper ventilation, power capacity and other prerequisites for producing Virica’s speciality – cell enhancers that optimize viral vectors, which deliver new genes that are designed to repair defective genes responsible for diseases such as cancer, muscular dystrophy and hereditary blindness. “We would have had to invest a significant capital expenditure to actually outfit some space in Kanata somewhere, which costs millions,” Diallo explained. He said relocating to Carleton’s campus was “the only option that didn’t require substantial capital investment.” Maria DeRosa, dean of Carleton University’s faculty of science, said Virica has been conducting research at the school and collaborating with its scientists for years, making the new partnership “the perfect fit.” Having access to a “move-in ready” lab will allow Virica to focus on its core mission – getting its product to market – rather than being forced to pour precious capital into creating a proper work space, she added. “You can’t understate how valuable that is for a company that’s trying to grow,” DeRosa said. “If you want to do science research, you can’t just move into any office.”

Looking for support in Ottawa

Virica, which closed a multimillion-dollar funding round in the fall of 2021 and is now in the midst of another major fundraising drive, is in “a good position” financially, Diallo said. But he fears that the next generation of Ottawa biotech entrepreneurs might not be so fortunate. Like many young Canadian companies in the field, Virica had to look south for investors willing to back its technology. Diallo worries that dependence on U.S. capital markets will push some biotech ventures to leave Canada and take their precious IP with them. “We’re really looking for Canadian support, and we just haven’t seen it,” he said. “That’s been really disappointing.” Diallo said the problem is particularly acute in Ottawa. Turnstone, once a rising star in the local biotech sector, now trades on the Nasdaq but no longer calls the city home. Most other local biotech startups have yet to really make their mark on the global scene. “You need a critical mass of those people at some point, and I don’t think we have that,” Diallo argued. “There’s no place for (biotech researchers and entrepreneurs) to congregate. “All those people will basically leave the city, or they won’t turn their innovations into businesses. They’ll license it to somebody, and then it just disappears. We still haven’t managed to convince the outside world that Ottawa is a really good place to invest and build biotech in.”

A role for post-secondary institutions

DeRosa and Diallo hope the capital’s world-renowned post-secondary institutions will have a significant say in changing that narrative. Both Carleton and the University of Ottawa are making moves to become bigger players in biotech. Carleton, for example, plans to devote a portion of the remaining 2,000 square feet in Turnstone’s former lab in the Health Sciences Building to a startup incubator it will operate in partnership with Capital BioVentures, a not-for-profit organization that’s trying to grow the nascent sector. “If we lose all of these great companies with great ideas, it’s a loss for our educational institutions, not just our businesses,” DeRosa said. “I think the more success stories that we can have coming out of Ottawa, then the more compelling case we have … to say, ‘OK, this is something we should be focusing on.’ “We’ve got a lot of great stories happening here. We are training amazing students. I would love for them to stay in Ottawa.”