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Bayer investing in Toronto-based stem-cell research company

Drug maker Bayer AG and biotech venture-capital firm Versant Ventures are investing $225-million to create a Toronto-based stem-cell research company, a move with the potential to establish Canada as a global centre for the commercialization of regenerative-medicine therapies.

The amount being poured into the company represents the second largest Series A biotechnology investment in the history of the industry, said Brad Bolzon, a managing director of Versant Ventures.

“It’s a very bold move,” he said in an interview Friday. “We think we’re on the cutting edge of the next generation of stem-cell therapies.”

The new company, called BlueRock Therapeutics, will fuel research and development on a massive scale, with a particular focus on treatments for heart conditions and degenerative illnesses such as Parkinson’s disease, according to officials with Bayer and Versant. The official announcement will be made Monday at an event including federal Innovation Minister Navdeep Bains and Ontario Premier Kathleen Wynne.

“We really see a great potential with stem-cell therapies to basically provide cures,” said Juergen Eckhardt, head of Bayer Venture Investments.

The hope is to bring together top Canadian researchers, such as Gordon Keller, director of the McEwen Centre for Regenerative Medicine at Toronto’s University Health Network (UHN) and one of the world’s leading stem-cell experts, and create a commercialization pipeline. Dr. Keller is known for figuring out a way to turn pluripotent stem cells – which have the ability to act like any cells in the body – into specialized heart cells that could help replace damaged tissue in heart-attack patients. His research, combined with a well-funded biotechnology company, could be instrumental in taking laboratory discoveries into a clinical setting, said Bradly Wouters, executive vice-president of science and research at UHN.

“I think it really represents almost a watershed moment in the transition from this being an idea to this being a real therapy for patients,” Dr. Wouters said.

He added that the research being done in Toronto by Dr. Keller and others is the reason this new regenerative-medicines firm is setting up shop in Canada.

Mr. Eckhardt agreed that after looking around the world, they found the best researchers in Toronto.

“That’s why we want to work with them,” he said.

While Canada has long been a leader in this field of research – stem cells were discovered in Toronto in the early 1960s – the country has struggled to commercialize treatments. But the creation of a global regenerative-medicines company based here could be a game changer, said Michael May, CEO of the Centre for Commercialization of Regenerative Medicine, a not-for-profit organization that supports the manufacturing of stem-cell research discoveries and is involved in the development of the new company.

“This is Canada’s chance to have a globally relevant health-sciences company on a global scale,” said Dr. May.

He added that the company will also be a job creator, with 50 positions expected to be filled at BlueRock Therapeutics in the coming months.

“This is a real company with a lot of horsepower behind it,” Dr. May said.

The partnership between a major pharmaceutical company and a venture-capital firm represents what is increasingly the new model for drug development around the world. Whereas drug companies once conducted the vast majority of their research and development in-house, they are increasingly turning to small firms.

“Pharma companies are doing more and more deals with biotech companies and venture firms,” said Cédric Bisson, partner at Montreal-based Teralys Capital, which is an investor in Versant.

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