From the moment AbCellera Biologics Inc. went public in late 2020, chief executive Carl Hansen’s goal was to build the antibody developer into Canada’s first homegrown Big Pharma giant. But since its explosive Nasdaq debut – Vancouver-based AbCellera was briefly worth US$15.7-billion – the ticker has told a different story. Despite fleeting success with a drug developed to treat COVID-19 patients, AbCellera’s stock crashed and has only marginally recovered.
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Carl Hansen, CEO of AbCellera on the roof of his office and lab in Vancouver.Marlin Olynyk /The Globe and Mail
Mr. Hansen hopes that’s about to change. AbCellera this quarter is set to release efficacy data for a treatment it developed to reduce the frequency and severity of hot flashes experienced by women during menopause. If it works, the drug could be a blockbuster generating US$1-billion-plus in peak annual sales, the company believes. AbCellera plans to take other drugs into clinical trials soon, and has struck partnership deals with three pharma giants to develop antibodies that make white blood cells more effective at fighting disease.
“By the end of 2027, we could have the best-looking pipeline for any company below US$20-billion in market capitalization,” Mr. Hansen said in an interview about AbCellera, which is worth US$1.77-billion. ”We have the proverbial goose in place. Now it is time for some golden eggs.”
AbCellera’s stock market journey is not unique. Biotech stocks soared during the first two years of the pandemic. Then, the inflation-fuelled spike in interest rates four years ago socked publicly listed early-stage drug developers and dulled the appetites of venture capitalists. The return of Donald Trump to the White House and the appointment of Robert F. Kennedy Jr., a well-known vaccine skeptic, as Health Secretary cast uncertainty as the U.S. government cut basic science and research spending. By spring 2025, biotech share prices remained depressed. The initial public offering (IPO) market was quiet.
But across the industry, that fever has broken. The global early-stage life sciences sector is as healthy as it’s ever been. The State Street SPDR S&P Biotech exchange-traded fund, or XBI – a sector benchmark – has appreciated by 70 per cent in value in the past year, and recently topped its pandemic-level highs.
Mergers and acquisitions are up sharply, marked by a record number of large deals, and 2026 is on track to be the best year for biotech IPOs since 2021. That includes back-to-back record-setting issues by U.S. drug developers Kailera Therapeutics and Parabilis Medicines this spring. All those exits have returned capital to financiers, welcome news to developers that struggled to raise money for years.
“It’s an amazing time to be in the biotech ecosystem in any capacity,” Eric Tokat, co-president of investment banking with New York’s Centerview Partners, a leading life sciences M&A advisory firm, told attendees at the Bloom Burton & Co. healthcare investor conference in Toronto in April. The level of activity and excitement, he added, was the highest he’s seen.
The biotech revival is a global story, and Canada is playing its part. The country has rarely had as many promising, cutting-edge medical sciences companies poised at the edge of success as it does now.
“The quality of companies is better than we’ve ever seen,” said Nikhil Thatte, a partner with Toronto-based life sciences financier Lumira Ventures.
The timing couldn’t be better. Canadian researchers have made transformational medical discoveries for more than a century, including insulin, stem cells, how the GLP-1 hormone works, and antiretroviral drug 3TC, a key part of the AIDS cocktail that transformed HIV into a manageable chronic condition. However, most of the ensuing economic benefits accrued elsewhere.
There’s now a renewed determination across Canada to capitalize on our homegrown resources – including brainpower – to bolster our economic sovereignty.
But the life sciences sector is notoriously risky, and Canada’s institutional investors, including its largest pension funds, largely remain on the sidelines. Foreign pharma giants, in contrast, are flush and keen to acquire promising developers in the space. They’ve already taken out many of Canada’s leading biotechnology companies in recent years.
With Big Pharmas at the doorstep and indifferent investors at home, can our domestic sector avoid getting hollowed out and finally produce globally relevant life sciences giants?
M&A is picking up
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A clean lab in Burnaby, B.C., where Kardium makes a medical device that treats atrial fibrillation.Jimmy Jeong/The Globe and Mail
The global biotech revival is being driven by a few factors. Interest in weight loss drugs has sparked activity. Many developers are using artificial intelligence to discover and develop new drugs. Investors have been cycling out of the Magnificent Seven tech giants and into other sectors, including life sciences. China is emerging as a major source of promising molecules – including near-knock-offs of other treatments.
But the main driver has been an unleashing of significant capital into the sector, a function of its built-in cyclicality. Big Pharmas are buying biotechs – because they have to.
Every blockbuster drug comes with a countdown clock. New drug patents last 20 years from the time they’re granted, but that includes years of trials and regulatory reviews. By the time a drug gets to market, it typically has a decade or less of exclusivity before lower-priced generic copycats emerge.
The drug industry periodically approaches a “patent cliff,” when a group of blockbusters approach the end of their exclusivity at once. That’s happening now.
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Keytruda, a cancer treatment, is coming off patent protection in the coming years.Dado Ruvic/Reuters
Some of the world’s most popular drugs are coming off patent protection in the next few years, including Keytruda, a cancer treatment that generated US$31.7-billion in sales for Merck & Co. in 2025, nearly half of its total global revenue. Merck’s HPV vaccine Gardasil 9, which generated US$5.23-billion in sales last year in combination with its sister Gardasil, is also set to lose protection in 2028.
Pfizer faces two big exclusivity losses: oncology drug Ibrance next year (2025 sales: US$4.1-billion) and blood thinner Eliquis, which it jointly sells with Bristol Myers Squib Co. (BMS). Eliquis generated US$22-billion combined for the two companies last year. BMS is also set to lose exclusivity in 2028 for Opdivo, a cancer-fighting antibody that accounted for more than 20 per cent of its US$48.2-billion revenue in last year.
“Almost every large pharma has a patent cliff,” said Serge Belanger, an analyst with Needham & Co. in New York.
As patent protection vanishes, those revenues collapse. Consider BMS’s hematology drug Revlimid: It generated US$12-billion in revenue for BMS in 2021. Then generics entered the market. By 2025, that revenue had shrunk to US$2.95-billiion. Revlimid revenues fell by a further 56 per cent in the first half of 2026 compared to the same period last year.
“The major tailwind in the global sector is the insatiable need for innovative blockbuster products by pharma and related M&A activity,” said Brian Bloom, chief executive of Toronto life sciences investment bank Bloom Burton & Co. “It isn’t always as acute as it is right now,” he said, with so many cliff-bound blockbusters.
Drugmakers do have new treatments in the wings. The FDA recently approved Lipfendra, a Merck treatment for lowering cholesterol. Analysts expect peak annual sales of US$5-billion-plus.
But that’s not enough to replace Merck’s anticipated declines from Keytruda. By Mr. Tokat’s estimate, Big Pharmas have US$180-billion in annual revenue exposed to loss of patent exclusivity through 2032. And they don’t just want to replace revenues but grow the topline, as well.
“They need a lot of new revenues, and a lot of new revenues means a lot of new products,” he said. “Their productivity isn’t sufficient enough to replace those on their own.”
Hence the shopping spree – which could also include a mega-merger between pharma giants AstraZeneca Plc and BMS, which are in talks to combine, the Financial Times reported Sunday. “The Big Pharmas are out there, they need to buy, they need to do licensing deals, they need a lot of shots on goal,” said Cheryl Reicin, a partner and co-chair of life sciences with law firm Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC in Toronto.
This year, deep-pocketed pharmas have bought a record 11 companies valued at US$5-billion or more. By some industry estimates, they have US$500-billion of financial capacity for deals. Eli Lilly, the world’s most valuable pharma company, has been among the busiest buyers. There’s competition as medium-size pharmas like Biogen and Jazz Pharmaceuticals hunt for deals.
The menu is global, and that includes Canadian biotechs. There’s much to choose from.
A big 12 months for Canadian biotech
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AbCellera, the Canadian company that helped develop the first antibody therapy treatment for COVID-19, is more than doubling the size of its planned expansion in Vancouver.DARRYL DYCK/The Canadian Press
Canada’s medical sciences sector has had one of the strongest 12-month stretches in memory. Listed companies have raised $2.4-billion on public markets according to Bloom Burton – and that excludes the $1.5-billion of stock sold by generic drugmaker Apotex Health Corp. in its June IPO. Satellos Bioscience Inc., NervGen Pharma Corp. and Cybin Inc. all cross-listed to Nasdaq from Canadian exchanges.
Montreal-based pulmonary hypertension drug developer 35Pharma Inc. was sold this year to GSK plc for US$950-million ($1.3-billion), the latest in a string of 10-figure Canadian biotech buyouts that have delivered strong returns to early-stage financiers.
Xenon Pharmaceuticals Inc., one of many promising biotechs from B.C.’s Lower Mainland, raised $1-billion from a stock issue in March after reporting its epilepsy treatment significantly reduced seizure activity in human trials. The Nasdaq-listed company, valued at about US$6-billion, is applying this year to the U.S. Food and Drug Administration to take its drug to market, and running trials to show whether it can also treat mood disorders and pain. While some industry observers consider Xenon a takeover candidate, “we’ve been consistent for some time that we want to build a fully integrated company,” said chief executive Ian Mortimer.
Privately held Kardium Inc., which makes a device for treating atrial fibrillation, a common heart problem, plans to go public as early as 2027, after the Burnaby, B.C., company got FDA approval last year to market its product.
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Kardium CEO Kevin Chaplin, right, speaks to Jorden Hetherington at their labs in Burnaby, B.C.Jimmy Jeong/The Globe and Mail
Zymeworks Inc., also from Vancouver, has had a big year. Last fall its lead drug, which is being commercialized globally by Jazz and BeOne Medicines Ltd., proved in human trials to be effective at stopping the spread of a digestive system cancer. Zymeworks plans to use the cash from its partnered drugs to buy streams of royalties from other developers, starting with the US$929-million purchase in June of Theravance Biopharma Inc.
And B.C.-incorporated Definium Therapeutics (formerly Mind Medicine (MindMed) Inc.), recently unveiled positive late-stage human trial results for an LSD-based drug for depression. Definium’s stock price has soared and it raised US$800-million-plus from investors in June.
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Clarissa Desjardins, co-founder and CEO of Congruence Therapeutics.Christina Esteban Photography
Several Canadian companies have capitalized from using AI: Vancouver’s Variational AI signed a drug discovery deal with Merck last fall worth up to $349-million. Montreal-based Congruence Therapeutics is using AI to discover genetic mutations due to protein misfolding that cause diseases, targeting treatments for obesity and Parkinson’s disease, and has raised nearly US$140-million in venture capital. Congruence is led by Clarissa Desjardins, one of several repeat Canadian founders building biotechs.
Toronto-based Biossil has raised tens of millions from investors, including Peter Thiel’s Founders Fund and OpenAI. It uses AI to scavenge through the discard pile of failed late-stage drug candidates, searching for ones that could be revived as successful therapies. Biossil has already bought or licensed 11 molecules.
Not every Canadian biotech has had a great year. Shares of Quebec-based enGene Therapeutics Inc. cratered in May after it reported a drop in response rates during a trial of its bladder cancer therapy. Vancouver radiopharmaceutical developer Abdera Therapeutics shut down after generating disappointing clinical results.
Several other promising Canadian life sciences companies are at various stages of commercialization. Acuitas Therapeutics, based on the University of British Columbia campus, developed key lipid nanoparticle technology that helped effectively deliver the Pfizer-BioNTech COVID-19 vaccine. The private company’s focus now is developing targeted therapies to white blood cells to fight cancer and autoimmune diseases.
Vancouver’s Aspect Biosystems, which 3-D prints live tissue implants that can replace organ functions, expanded a multi-billion dollar partnership with Danish giant Novo Nordisk in January to develop diabetes treatments.
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Aspect Biosystems founder and CEO Tamer Mohamed at their facility in Vancouver in April.Jimmy Jeong/The Globe and Mail
NervGen, also in Vancouver, is developing an injectable peptide it hopes can help repair nerve damage in people with spinal cord injuries. And Specific Biologics, a Western University spinout, has one of the most advanced gene-editing platforms in the industry. It’s pursuing a disease-modifying therapy for Amyotrophic lateral sclerosis, (Lou Gehrig’s disease).
It’s an impressive list – but not enough to make life sciences, which accounts for about 2 per cent of GDP, a meaningful contributor to Canada’s economy. Yet.
Upcoming results could boost other Canadian biotechs
Eight-year-old Charlie has a terrible disease called Duchenne muscular dystrophy, Frank Gleeson said as he showed a picture of the boy during a presentation at April’s Bloom Burton health care conference. By 12, Charlie will lose his ability to walk. By his 20s, he won’t be able to breathe on his own. “He will not have a very long life,” Mr. Gleeson said in a solemn voice.
But, the CEO of Toronto-based Satellos Bioscience told attendees his company is just “months away from meaningful clinical data, and from being in a position to pursue approval for a drug to treat this devastating disease.”
Satellos is one of several Canadian drug developers set to deliver pivotal clinical results this year that, if successful, could deliver life-changing therapies – and send their stocks soaring.
Satellos has developed a daily pill, based on research by co-founder Dr. Michael Rudnicki, a regenerative medicine senior scientist with the Ottawa Hospital Research Institute, that may be able to stop and reverse the effects of the fatal disease, which causes muscle loss. Satellos believes its drug can regenerate muscle tissue lost due to a genetic defect, which animal studies have borne out.
The drug has proven safe in humans, and efficacy data from a study of 51 children is expected later in 2026. “So far, what we’ve seen indicates that this drug could have a profound effect on the lives of people living with this disease in that it could allow them to live their lives more fully,” said Mr. Gleeson.
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A RX1 bioprinter is seen making a 3-D tissue patch at Aspect Biosystems, in Vancouver.DARRYL DYCK/The Globe and Mail
Oppenheimer & Co. analyst Kostas Biliouris said in a report early this year that positive data could drive a 300- to 500-per-cent upward move in Satellos’s stock price.
Eupraxia Pharmaceuticals Inc. is also poised for a transformative readout. The Vancouver company has developed a balloon-like drug delivery technology the size of a grain of sand. Its polymer shell encases a drug that is slowly, steadily released for months before the device disintegrates into alcohol and water. The promise is that the technology will deliver safe, effective levels of drugs to localized areas over sustained periods.
Eupraxia initially developed its treatment for osteoarthritis, but later realized the technology was suited to another medical purpose with a larger patient base and a more critical need: treating eosinophilic esophagitis (EOE), an affliction in the esophagus that makes it painful to swallow. The current standard of care is a drug taken twice daily, but patients can’t eat or drink for hours afterward, and it often causes a fungal infection in the mouth. Most patients don’t follow the treatment regimen.
Eupraxia’s diffusers can instead be implanted during endoscopy appointments and release the same steroid gradually without the side effects.
In early 2023, Eupraxia switched its clinical focus to EOE, then cross-listed from the Toronto Stock Exchange to Nasdaq. It raised nearly $200-million in the past year. Early data has been promising, and the company is set to deliver key efficacy data by the end of 2026.
Perhaps the biggest spotlight is on AbCellera, which became a global biotech star six years ago. It developed a treatment for people hospitalized with the COVID-19 virus after isolating an antibody from a recovered patient using its multifaceted drug discovery platform. Partner Eli Lilly & Co. secured emergency authorization to take the drug to market and AbCellera got nearly US$1-billion in royalties.
But revenues tailed off quickly. So did its stock price. AbCellera’s focus on churning out antibodies for others to develop didn’t excite investors. So in 2023, AbCellera largely shifted its focus to developing its own drugs, focusing on established areas where it could address an unmet need with a differentiated treatment, while spending relatively little on research and development.
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An employee at Xenon works inside the lab in Burnaby, B.C.Tijana Martin/The Globe and Mail
For its first drug, AbCellera honed in on developing a non-hormone therapy for hot flashes in women during menopause. Two drugs, from Astellas and Bayer, have hit the market recently; both are predicted to generate peak sales of US$1-billion or more each. But they need to be taken daily and have potential side effects, including liver toxicity.
AbCellera’s product is an injectable antibody that doesn’t metabolize in the liver or have the same toxicity issues. And it’s administered monthly.
The company moved quickly. It reported no adverse events from its human safety trial in May and expects to deliver its first efficacy results from an 80-patient study that is being conducted entirely in Canada by Sept 30; a successful readout “would support moving quickly to late-stage development,” said Mr. Hansen, the CEO.
AbCellera doesn’t want to be seen as a one-molecule company primed for a takeover, as many other biotechs are. Its vision, Mr. Hansen wrote in AbCellera’s 2025 annual report, “is to build a global biotech company that can repeatedly discover, develop and commercialize breakthrough medicines for patients worldwide.”
To that end, it has at least three more molecules lined up for clinical development by 2027. “We’ve always said we are trying to build a global biotechnology company that actually matters,” said Mr. Hansen.
AbCellera “may turn out to be Canada’s Genentech,” Cantor Fitzgerald analyst Steve Seedhouse said in a May report, referring to the legendary U.S. company that kicked off the biotech revolution 50 years ago. It only needs the menopause drug to succeed “for the stock to work.”
Investment returns are strong, but where are Canadian investors?
Canada only has a handful of venture capital firms focusing on life sciences. But their returns have outclassed their peers in other innovation-focused sectors.
According to the Canadian Venture Capital and Private Equity Association, five of the top 10 exits in the past five years of Canadian venture capital-backed companies have been in life sciences. The sector accounted for 15 per cent of venture-backed exits – and 53 per cent of exit value.
(An exit doesn’t guarantee success of the underlying drug; treatments from four Canadian companies that sold for 10 figures since 2019 failed later trials.)
Biotech VCs generated average internal returns of 19.9 per cent over 10 years through 2026, or five percentage points higher than their peers who invested in the information and communications technology space, and nearly double those in clean tech, according to the Business Development Bank of Canada’s annual VC survey.
But the investors sharing in that good fortune are overwhelmingly foreign. There are just a handful of Canadian institutional funders of Canadian biotech venture capital. Most are in Quebec: Fonds de solidarité FTQ, the labour-sponsored fund; the Caisse de dépôt et placement du Québec; BDC; Fondaction; and fund manager Teralys Capital.
Investing in biotech requires technical knowledge (many fund managers have PhDs or MD degrees), patience and a good read of what Big Pharma finds interesting; few institutions here have made that investment.
Meanwhile, dozens of American and European investors have reaped most of the gains from the Canadian sector, including top global life sciences investors OrbiMed and RA Capital.
Kardium struggled to raise money in Canada to develop its distinctive heart disease technology. Its catheter is threaded up a patient’s femoral vein into the heart and expanded into a disco-ball-like globe just three centimeters in diameter. It pinpoints where erratic electrical signals originate and zaps the problem cells. The device has generated better clinical results than its rivals.
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Kardium CEO Kevin Chaplin holding a Globe Pulsed Field System medical device that treats atrial fibrillation at their labs in Burnaby, B.C.Jimmy Jeong/The Globe and Mail
But Kardium had no trouble finding leading foreign financiers willing to invest nearly $500-million, including Fidelity, T. Rowe Price Associates and Qatar’s sovereign wealth fund.
“If we want to keep growing Canadian companies, we need to figure out a source of financing so they don’t end up moving to the U.S. or selling,” said Kardium CEO Kevin Chaplin.
The absence of Canadian capital to back Canadian medical developers has been a long-standing complaint. “Everyone who knows the space knows how productive and underfunded it has been” despite the solid returns, said Peter van der Velden, executive chair of Toronto’s Lumira Ventures.
There have been some promising signs recently. New capital providers have committed to finance homegrown medical startups, including McMaster University and University of Toronto, as well as Terry Fox Foundation and Canadian Cancer Society and Toronto’s billionaire Weston family. The federal government and some provinces have launched life sciences and biomanufacturing strategies since the pandemic.
“After years of watching Canadian innovation create value elsewhere, we’re witnessing an alignment of capital, policy and ambition that finally positions Canada as a global life science leader,” said Anne Woods, managing director of health care investment banking at Royal Bank of Canada.
But Canada’s pension funds are largely absent from the domestic biotech venture capital scene.
One of the biggest life sciences investors in the country is the Canada Pension Plan Investment Board, which is drawn to the “very attractive” returns that are uncorrelated to other sectors, said Paul McCracken, managing director with CPP Investments.
However, Canada’s largest institutional investor is overwhelmingly invested everywhere but Canadian life sciences; it only has one current investment here: AI drug developer Deep Genomics.
Mr. McCracken said that CPP’s strategy is to back and co-invest alongside some of the top global financiers in the space, including Bain Capital, ARCH Venture Partners and General Atlantic. And it writes big cheques: CPP’s growth equity team looks to invest US$75-million into life sciences funds that raise US$750-million or more, and US$50-million into individual companies.
Canada’s biotech VC funds, which include Lumira, Genesys Capital, CTI Life Sciences Fund, Relentless Venture Fund, BDC spinout Amplitude Ventures, plus a new in-house BDC fund launched this year, top out at less than US$250-million in size. That is just too small to make a meaningful difference to CPP’s US$793-billion fund size.
“Given the scale of our capital, there has not yet been a match for us to become partners” in Canada, said Mr. McCracken. He adds that CPP is “actively engaged in the Canadian life sciences ecosystem” and would consider investing in the right-sized opportunities “that could meet our criteria of performance, scale and partnership.”
Mr. van der Velden argues CPP is missing out on the chance to share in solid returns at home – and support the local economy.
“The fact that CPP is doing these deals in the U.S. without thinking about Canada is just disappointing. If our pension plans can make money in this space – and the evidence is that U.S. pension plans can – then why wouldn’t they? Why wouldn’t they want to create jobs for Canadians? Why wouldn’t they want to build the next globally competitive companies? I don’t know why you wouldn’t want to make that happen.”