Extending Elevating Evolving - BioAlberta

Extending Elevating Evolving

BioAlberta Annual Report 2013

Table of Contents2 Message From the President

3 Message From the Co-Chairs

4 Advocacy

7 Marketing

12 Industry Development

17 Financial Statements

27 Membership 2012-2013

28 Board of Directors

28 Staff

28 Consultants

Extending Elevating Evolving 1

Welcome to BioAlberta’s 2013 Annual Report and a year, in retrospect, that brought with it many opportunities to extend our reach, elevate our presence and evolve within a changing environment.

As indicators globally start to show a renewed interest in the life sciences industry and financially the sector has started to rebound, provincially, our local industry is also showing signs of rejuvenation. A number of our companies have achieved the next steps in their evolution, including financings, partnerships and commercialization of technologies.

And as the life sciences industry starts to gain more attention globally, providing innovative solutions to the issue of healthcare sustainability, new countries such as India and China are coming to the forefront as potential players within the sector. With this in mind, BioAlberta extended its reach this year, and, with a number of our member companies, we explored opportunities and potential collaborations at Bangalore India BIO, creating a platform from which to build on in years to come.

BioAlberta was also present at the annual BIO International Convention, held this year in Chicago, along with a number of our member companies, in addition to a significant government presence, including Deputy Premier Lukaszuk and, for the first time, the Minister of Health, Fred Horne. BIO was also the venue for the International BioGENEius Challenge, a global event for student scientists. BioAlberta has been the Alberta regional coordinator for thirteen years for the Sanofi BioGENEius Challenge Canada (SBCC) and this year, we were delighted to have an Alberta student win first place at the national SBCC competition held in Ottawa, following which the student went on to represent Canada at the International BioGENEius Challenge. It will be through events like these, and other focused initiatives, that we will elevate our presence both at home and away, promoting Alberta’s life sciences industry as the hub with which to do business.

This last year has also seen a number of changes in the provincial landscape that have had both direct and indirect impact on our industry and its growth. We embrace these changes, as the province sets its goals on achieving excellence in research, innovation and commercialization.

BioAlberta is also beginning a new chapter in its evolution. As the incoming President of the association, I look forward to working alongside you, our members, academia and government, as we collaborate to establish an environment that is conducive to achieving our goals.

The success of the life sciences sector will be important to the future economic diversification of Alberta. We hope you will join us on this journey.

Regards,

Amanda Stadel President

Message From the President

BioAlberta Annual Report 2013 2

Since BioAlberta’s inception in 1998 our industry has grown to include companies focused on biotechnology and it’s applications targeting human health challenges, medical device solutions for critical diagnostic and therapeutic needs, agricultural and industrial biotechnology applications driving production and economic benefits, as well as businesses focused on environmental and natural health subsectors.

The evolution of our industry represents a growing demand for innovative products and technologies that will ultimately help address the challenges of an expanding and aging global population.

Similarly BioAlberta has also continued to evolve and today our dedicated board members represent each of the main subsectors of the life sciences industry in Alberta. Our three pillars of activity –Advocacy, Marketing, and Industry development – are tailored to meet the business needs and interests of our members. The ongoing dialogue between our members and our association has established that our role remains as the recognized voice for the industry with our key stakeholder groups. Provincially, nationally and globally, we continue to advocate for a regulatory environment that ensures the continued growth of the life sciences industry, allowing the commercialization of innovative technologies that will improve the health of Albertans and citizens globally.

On behalf of the Board of BioAlberta, we would like to extend our gratitude to all of our membership, our partners and our sponsors for your continued commitment and confidence in our association. We are passionate about this industry and remain committed to working with you as we begin a new year with new opportunities!

Dr. David Cox Rick Smith Co-Chair Co-Chair

Message From the Co-Chairs


Advocacy


BioAlberta’s Policy Committee was created to strengthen BioAlberta’s advocacy role in light of the evolving policy environment in Alberta. The committee is comprised of a dedicated and knowledgeable team that represents core industry sectors.

A comprehensive, succinct, four-themed advocacy platform was synthesized from industry’s input. It was then verified through an industry-wide survey. The following is a summary of these key industry interests that will ensure an environment conducive to the Alberta Life Sciences industry’s long-term success.

Evolving Policy Environment in Alberta

Data from the Life Sciences in Alberta, State of Industry 2013 Report produced by Deloitte and BioAlberta. Data normalized for responses that were applicable to the respondents.

Very Important Important Not Important Not Applicable

Support Life Science through tax-based instruments

Introduce an Angel tax incentive

Introduce flow-through shares

Sustainable funding for research and commercialization

Improve investment climate through globally competitive mechanisms such as matching funding models and enhanced venture capital environment

Introduce an SBIR (Small Business Innovation Research Program)

Streamlined application process for all provincial life science funding programs

Enhance established funding programs (i.e. vouchers, AVAC)

Build a supportive environment for innovation and commercialization

Better access to the local market for our companies

Enhance technology transfer from universities, colleges and institutions

Better environment for conducting clinical trials in Alberta

Access to highly qualified personnel

Funding programs for labour training to attract and retain highly skilled workforce for Life Science SMES

Government and industry partnerships to increase availability of highly qualified personnel (eg. internships)

Introduce life science in cross-curricular learning from grades 7 to 12

Streamline immigration efforts and programs to make attraction of qualified personnel easier

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

The Advocacy Platform for Alberta’s Life Sciences Industry

BioAlberta is the Voice of the Life Sciences Industry in Alberta

Advocacy


1. Improving the investment climate through globally competitive mechanisms such as matching funding models and enhanced venture capital environment “Canada-wide, those of us in the innovation sectors must advocate for programs that leverage public monies by private investment, such as the Alberta Enterprise Fund and Federal VCAP programs, establishment of longer term (i.e., stable over multiple election cycles) government funding mechanisms, and an outward, global focus on determining and implementing best practices in our industries.”

Dr. Shermaine Tilley, Partner, CTI Life Sciences Fund

2. Continuing to improve tax-based incentives for companies, including Angel tax incentives and Flow-through shares “One of the things to be most excited about in Alberta is the ability to get financing. When you look at how much money goes into the sector from private investors it’s hard to claim the industry isn’t supported. Specifically I look at Innovative Trauma Care where our Angel group has almost $1.1M invested from 20 plus investors.

But there is no doubt we could see more. Four provinces now have an investor tax credit, as well as a number of states in the US. Tech could be stimulated in the same way the energy industry was by the flow through share program.”

Randy Thompson, Founder and CEO, VA Angels

3. Adding sustainable funding sources, such as a Small Business Innovation Research Program

“Canada is known for strong early-stage R & D companies, and certain federal and provincial funding incentives for start-ups exist such as NRC-IRAP, SR&ED and Alberta Innovates Vouchers. Additional and more sustained funding programs are required to help bridge the funding valley of death and thereby expedite translational research and commercialization activities. The US Small Business Innovation Research Program, SBIR, offers one such (proven) sustained funding model to emulate.”

Dr. Aubrey Mendonca, CEO, ChemRoutes Corporation & Co-Chair, BioAlberta Policy Committee

Top Three Industry IssuesAccess to HighlyQualifiedPersonnelIn October 2012, Dr. Ray Bergstra, Co-Chair, BioAlberta Policy Committee, presented the committee’s findings to a global audience at “Building Alberta’s Bioindustrial Talent Pool”, a workshop hosted by the Biorefining Conversions Network.

In Dr. Bergstra’s words, “Labour issues are one of four key elements of BioAlberta’s Advocacy Platform and certain targets for recommendations have been identified within three key areas namely education, professional development and streamlining immigration to increase the availability of skilled people within the Life Sciences Industry in Alberta.”


Marketing


Throughout the year, BioAlberta implemented a wide range of local and international marketing initiatives to enhance Alberta’s Life Sciences Industry’s reach and profile.

National Biotechnology Week 2012National Biotechnology Week is dedicated to celebrating and creating awareness about Canadian biotechnology excellence. In September, BioAlberta and AVAC Ltd. co-hosted a reception in Edmonton to celebrate the achievements of various Alberta-based companies with presentations from Exciton Technologies Inc., Fedora Pharmaceuticals Inc., Metabolomic Technologies Inc., and Cleankeys Inc. In Calgary, BioAlberta participated at the TechRev Innovators event where Parvus Therapeutics Inc. was named the 2012 TechRev Innovator.

AdvaMed 2012AdvaMed is a leading MedTech event for the global medical technology industry. 2012 saw a record participation of 2,400 attendees from over 900 organizations and 24 countries. BioAlberta participated in the Canadian mission and facilitated the participation of Alberta companies at the event, including Aquila Diagnostic Systems Inc., Innovative Trauma Care Inc., Surface Medical Inc., and Zephyr Sleep Technologies Inc.

Extending Industry Outreach, Elevating Industry ProfileRick Smith, BioAlberta Co-Chair (Left)

with Dr. Phil Coggins, President & CEO, Parvus Therapeutics Inc., 2012 TechRev Innovator (Right)

Chris Micetich, President & CEO, Fedora Pharmaceuticals Inc. presenting at 2012 National Biotechnology Week

The 2013 Edition of BioAlberta’s Annual Publication, BIOZINE, was released at the 2013 BIO International Convention, Chicago, in April.This year’s publication featured innovation within Alberta’s Specialty Chemical and Agricultural Sectors.

Publication


BioAlberta AGM and Awards Gala 2012Celebrating its 13th anniversary, the BioAlberta AGM and Awards Gala brought together over 130 key stakeholders and industry players to Calgary in November 2012. Some of the key highlights included:

• A panel discussion based on the theme “Milestones = Momentum – Celebrating steps along the way.” Participants included, GrowSafe Systems Ltd., Parvus Therapeutics Inc., and Patrick Wu, University of Calgary iGEM student.

• Mr. Art Froehlich, a 35 year-veteran in both Canadian and International Agri-business and Agri-marketing was inducted into the Alberta Bioindustry Hall of Fame.

• A special tribute was paid to the visionary, Honourable Mr. Peter Lougheed, also one of the inaugural Bioindustry Hall of Fame inductees. As past Premier of Alberta, Hon. Peter Lougheed founded the Alberta Heritage Fund and the Fund for Medical Research, both of which have substantially impacted our industry to date.

• The tradition to recognize distinction within the industry continued; 2012 awardees included:

* 2012 Scientific Achievement & Innovation Award – Dr. David Bressler, Biorefining Conversions Network.

* 2012 Company of the Year Award – Circle Cardiovascular Imaging Inc.

* 2012 IBO Marketing Grant – Aquila Diagnostic Systems Inc.

The 2012 Gala reception

2012 Fireside chat panel

2012 Hall of Fame Inductee Art Froehlich (Left), with BioAlberta Co-Chair, Rick Smith (Right)

Recipients of 2012 BioAlberta Awards


Bangalore India BIO 2013In February 2013, BioAlberta, in partnership with the National Research Council of Canada - Industrial Research Assistance Program, organized the first Western Canadian mission to the 13th annual Bangalore India BIO conference, held in the city of Bangalore, Karnataka.

Seven Canadian SMEs participated with close to 850 international delegates from 20 countries and eight Indian states, and pursued a range of business opportunities in the Indian market.

“With the creation of a favourable business environment, the Indian biotech and healthcare sectors combined will be able to grow at a rate of 25-30% and potentially generate revenues of $100 US Billion by year 2025.”

Association of Biotech Led Enterprises (ABLE) India, Roadmap Report 2012.

BIO International Convention 2013Over 13,000 leaders from 62 countries participated at the bio-pharmaceutical convention in Chicago, Illinois in April. BioAlberta organized the attendance of a large Alberta delegation, including Honourable Thomas Lukaszuk, Deputy Premier and Minister of Enterprise and Advanced Education, and Honourable Fred Horne, Minister of Health.

Once again, BioAlberta partnered with Alberta Innovates Health Solutions to award bursaries to support companies’ participation at BIO. These included Akshaya Bio Inc., Meros Polymers Inc., and Radient Technologies Inc. Additionally, BioAlberta partnered with BIOTECanada to organize Alberta’s presence on the trade show floor under the “Canadian Café” banner.

Alberta companies were provided an opportunity to showcase and present at the Canada Café. Those who presented included, Akshaya Bio Inc., Meros Polymers Inc., Radient Technologies Inc., KMT Hepatech Inc., Ceapro Inc., and Resverlogix Corp.

BioAlberta continued to maintain its strong social media presence throughout the conference and partnered with a prominent official BIO blogger to conduct live radio interviews with Alberta participants, for dissemination through its social media channels.

CEO Panel Representing Multinational Bio-pharma at the 2013 Bangalore India BIO

Official opening of the “Canadian Café”, BIO 2013

Meetings at the Canadian Café

Alberta Booth at the BIO Exhibition Floor


Alberta Reception at BIO 2013More than 200 individuals from 94 organizations and seven countries were brought together to “Meet Alberta Opportunities” at the 6th Annual Alberta Reception, organized by BioAlberta and sponsored by Alberta Innovates Technology Futures, Alberta Innovates Health Solutions, and Janssen Inc. Guests included multinationals, investment firms, government, universities, provincial partner organizations and Canadian and international trade offices.

This year at the Alberta event, Pfizer Canada Inc. and the Government of Alberta officially announced the launch of the Alberta-Pfizer Translational Research Collaboration Fund, an initiative to support innovative and commercially viable research projects within the province.

“BioAlberta’s active participation in the Bioeconomy Alberta Team helped the team continue to grow Alberta’s profile and impact at the 2013 World Congress. BioAlberta led logistics for the team including the Alberta Reception, which was a highlight of the conference. The reception provided a key opportunity for networking with clients from Canada, North America and around the world, and for increasing Alberta’s profile as a key jurisdiction for bioindustrial development.”

Dr. Christine Murray, Director, Agricultural Technologies, Alberta Innovates Bio Solutions

World Congress on Industrial Biotechnology 2013In June 2013, BioAlberta facilitated the presence of over 30 Alberta delegates at the World Congress, in Montreal, Canada, a conference that attracted over 1,200 investors, innovators and bio-industrial players from 37 countries. BioAlberta participated with several members of the Bioeconomy Alberta Team to showcase Alberta opportunities, including:

• Alberta Enterprise and Advanced Education

• Alberta Environment and Sustainable Resource Development

• Alberta Agriculture and Rural Development

• Alberta Innovates Bio Solutions

• Alberta Innovates Technology Futures

• Alberta International and Intergovernmental Relations

• Biorefining Conversions Network

Bursaries were awarded to a group of promising Alberta SMEs to support their participation at the event including, Ceapro Inc., Symbiotic EnviroTek Inc., and TerraVerdae BioWorks Inc. Companies gleaned relevant market intelligence and created targeted business development leads.

The Alberta reception, with over 180 attendees, marked yet another major highlight on BioAlberta’s agenda to elevate the bio-industry’s international profile. Additionally, BioAlberta co-hosted the Canadian reception along with BIOTECanada and other partners, with over 200 attendees participating.

(Left to Right) Hon. Thomas Lukaszuk, John Helou, President Pfizer, Pamela Valentine, COO Alberta Innovates Health Solutions, & Hon. Fred Horne at Alberta Reception, BIO 2013

Guests at the Alberta Reception, 2013 World Congress

Dr. Christine Murray, Alberta Innovates Bio Solutions and Doug Cameron, International Intergovernmental Relations at the Alberta Reception, 2013 World Congress

Business happens at BioAlberta events.

The 7th annual tournament brought over 70 golfers to network in June 2013

Innovation Open Golf Tournament 2013


Industry Development


Partnering CommitteeThe BioAlberta Partnering Committee provides solutions that address the challenges faced by the Life Sciences Industry in their business developmentefforts.The committee effectively “connects” members to investors, government, multinational companies and support service organizations. The programs developed enable members to form partnerships, access funding, obtain discounts and participate in a range of training and development services.

Engaging Multinational PartnersBioAlberta welcomed industry development representatives from gold partners Merck Canada Inc. and GlaxoSmithKline Inc. (GSK) to Alberta. Sessions were organized to elevate our members’ presence and capabilities to our large pharmaceutical partners.

In November 2012, Steve Xanthoudakis, Director, Licensing and External Research for Merck Research Laboratories provided an overview of Merck’s strategic R&D goals and their latest therapeutic and technology areas of interest, during a breakfast session in Edmonton.

Later, in April 2013, GSK provided a breakfast presentation in Calgary, entitled “Enabling patients to … do more, feel better and live longer.” Daniel Böck, Director, Business Development, outlined GSK’s initiative to do more than solely provide medicines, and addressed the many facets of the patient’s journey and areas of expertise on which they wish to focus.

Both Merck and GSK followed their presentations with a series of one-on-one meetings with Alberta companies where specific partnership interests were discussed.

Elevating Industry Through Partnerships, Training, and Programs

“Over the last year we have had the opportunity to work with the BioAlberta team on a number of events and are impressed with the professional approach as well as the strong support provided by the organization…this made achieving our objectives of meeting with BioAlberta research institutions and companies much more efficient. BioAlberta adds great value to the industry by bringing us all together and enabling us to explore potential collaboration opportunities.” “Keep up the great work.”

Rav Kumar, Ph.D. V.P. R&D Operations/Business Development, GSK

Industry guests at the Merck event

Daniel Böck, GSK presenting an overview of GSK partnership interests

Amanda Stadel, President, BioAlberta, at the GSK session

Industry Development


Industry Training and DevelopmentDuring the year, BioAlberta hosted a number of seminars and workshops with key partners and affiliates to facilitate industry education and training within areas such as Intellectual Property, Regulation, Marketing, and Financing.

Along with gold partner McCarthy Tétrault LLP, in September 2012, seminars were hosted in both Calgary and Edmonton to discuss Patent and Regulatory issues, as well as the latest trends and developments in life sciences licensing.

In October 2012, Trudy Callaghan, President of gold partner, Odvod Media, trained members in Edmonton on the use of marketing to drum up interest for their technology breakthroughs.

In March 2013, BioAlberta partnered with the Specialty Chemical Ingredient Initiative (SCI), Alberta Agriculture and Rural Development to develop and host a day-long seminar, “Connecting the pieces…to investors”, where almost 70 participants from the specialty bio-based chemical subsector gained insight into the investment landscape. VA Angels led discussions on start-up investment and how to raise the right capital with the right partners.

BioAlberta was also pleased to continue a working relationship with VA Angels. Members continue to attend their monthly investor forums in both Edmonton and Calgary to watch, listen and learn how to perfect their investor pitches.

Extending Partnerships with the US Department of Defense One of the largest investors in medical research and development, the US federal government, has in certain cases funded product development cycles to the order of $30M in non-dilutive monies. In February 2013, BioAlberta and NRC-IRAP offered a workshop on life sciences funding opportunities where 20 Alberta biotechs participated in targeted one-on-one meetings with Mr. Dave Hood, formerly with the US. Department of Defense.

Expanding Bioindustrial Opportunities In May 2013, BioAlberta partnered with the Alberta Industrial Heartland Association and Alberta Agriculture and Rural Development to showcase the various biofuel and biochemical developments within Canada and overseas. Close to 100 participants within the sector came to Fort Saskatchewan, and discussed how to leverage opportunities within chemical, petrochemical and oil and gas areas in Alberta.

Industry participating at “Connecting the pieces... to investors” seminar

Dave D. Hood, presenting to the Alberta audience

Randy Thompson, CEO, VA Angels engaging the audience


Programs

Medical Product Development Program (MPDP)TheMPDPhascommittedover$2.5Mtosupportmedicalproduct innovationinAlberta.Administered by BioAlberta and funded by the Governments of Canada and Alberta, this grant program supports the development and commercialization of medical devices and technologies at Alberta-based companies. Of the 20 projects funded between 2010 and 2012, over 80% have resulted in new patents, and several products are poised to enter the market or are already selling globally.

The following companies and projects were successful in securing the 2013 round of program investment:

• Biomotion Ltd. Commercialization of an enhanced stimulator for preventing pressure ulcers

• Circle Cardiovascular Imaging Inc. Automated myocardial tissue identification in Cardiac Computed Tomography (CT) images

• IMBiotechnologies Ltd. Occlusion® manufacturing improvements and development of next generation products

• Innovative Trauma Care Inc. Development of ITClipTM device

• Innovotech Inc. Development of unique silver-containing products as antimicrobial/antibiofilm agents, including incorporation into medical devices

• SmileSonica Inc. Development and testing of a unique intra-cavity ultrasound imaging gel product

• Technology North Corporation TN ActiveCareTM/ TN ActiveFamilyTM enhancement projects targeting the Autism disease market

• Zephyr Sleep Technologies Design and development of an innovative connector system for ongoing tracking and optimization of Oral Appliance Therapy

IBO Grant ProgramInnovation + Brand = OpportunityThe second annual IBO Grant was awarded to Aquila Diagnostic Systems Inc. at the 13th annual AGM and Gala. Awarded to a BioAlberta member company, this grant facilitates the development of the recipient’s market presence and brand. Odvod Media, a gold partner and an avid supporter of the Alberta’s life sciences industry, provided the 2013 marketing services.

“The IBO grant was very valuable for Aquila. It allowed Aquila to work with a top team of professionals at Odvod to develop a new tagline: Results. Right. Now, and a trademarked system name: The Accutas. Odvod also helped us polish our promotional material and tweak our logo and got us thinking about how to brand ourselves as a medical diagnostics company.”

David Alton, CEO Aquila Diagnostic Systems Inc.

Jason Acker, CTO, Aquila Diagnostic Systems Inc., with Trudy Callaghan, Principal at Odvod Media


Financial Statements

SanofiBioGENEiusChallengeCanada(SBCC)20YearsofEncouragingScientificTalentinYouthNationallySBCC is a unique training opportunity for high school students to develop skills in biotech research. BioAlberta has coordinated the program provincially since 2000; during this time over 280 projects, researched by 700 students have been supported by more than 180 volunteer mentors from both academia and industry in Alberta.

Program alumni are pursuing a range of careers within biotech and healthcare, and many are recipients of prestigious science and technology accolades such as: University of Alberta’s Youth Investment Award, Canada’s Top 20 under 20 Award, Alberta Science and Technology’s Leader of Tomorrow Award, Alberta Centennial Medal and ASTech Award.

The 2013 competition proved hugely successful for Alberta; Arjun Nair, a Grade 11 Calgary student, won the Regionals, secured first place at the Nationals and represented both Alberta and Canada internationally at the International BioGENEius Challenge competition held at the 2013 BIO International Convention. Arjun’s project marked an advance in photo-thermal therapy for treatment of cancerous tumours and was supported by the University of Calgary.

Undergraduate Scholarship ProgramTo support our commitment toward training and skills development within the industry, BioAlberta has established a number of scholarships across the province. The 2012-13 recipients are as follows:

University of Lethbridge – Miriam Belsheim Scholarship in Agricultural Biotechnology

Mount Royal University – Sannon Parrott Scholarship in Marketing

University of Alberta – Jesse Hill Scholarship in Science

“The SBCC not only provided me the opportunity to pursue research at the University of Calgary, but also allowed me to share that scientific passion with other like-minded high schoolers from across Canada. This is the ultimate learning experience that lets us broaden our scope of learning and apply it to real world medical problems. SBCC has encouraged me to pursue research in the future it has definitely opened my eyes to the remarkable impact research has on lives of many.”

Arjun Nair, Regional and National winner, SBCC 2013

SBCC Team Alberta 2013

Jon Fairest, Past President & CEO Sanofi Canada (left), and Hon. Dr. Kellie Leitch, Minister of Labour and Minister of Status of Women (Right) awarding Arjun Nair 1st place at Nationals

Sannon Parrott

Miriam Belsheim

Jesse Hill


Financial Statements



Independent Auditors’ Report To the Members of the Alberta Biotechnology Association (operating as BioAlberta)

Report on the Financial StatementsWe have audited the accompanying financial statements of the Alberta Biotechnology Association, which comprise the statement of financial position as at June 30, 2013, and the statements of changes in net assets, revenue and expense and changes in unrestricted assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal controls as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,

including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the Association as at June 30, 2013, and the results of its operations and its cash flows for the year then ended accordance with Canadian accounting standards for not-for-profit organizations.

John H. C. Pinsent Professional Corp. Chartered Accountant

Edmonton, Canada August 27, 2013


Statement of Financial Position As at June 30

2013 2012

Assets

Current

Cash and cash equivalents [note 4, Schedule 1] $ 1,079,183 $ 1,268,624

Investment in GIC [note 5] 250,000 255,891

Accounts receivable [Schedule 1] 171,597 46,274

Prepaid expenses 23,862 19,289

$ 1,524,642 $ 1,590,078

Liabilities

Current

Accounts payable and accrued liabilities [Schedule 1] $ 110,194 $ 82,190

Deferred sponsorship, membership fees and grants [note 4, Schedule 1] 731,757 858,527

$ 841,951 $ 940,717

Commitments [note 6]

Net Assets

Unrestricted net assets $ 82,691 $ 49,361

Internally restricted net assets [note 7] 600,000 600,000

682,691 649,361

$ 1,524,642 $ 1,590,078

On behalf of the board:

Al Gourley (Treasurer) BioAlberta Audit Committee Chair Corporate Director and Consultant

The accompanying notes are an integral part of these financial statements.


Statement of Revenue and Expense and Changes in Unrestricted Net Assets Year ended June 30

2013 2012

Revenue

Government grants [note 8] $ 398,000 $ 430,000

MPDP grant [note 4 and 10, Schedule 2] 498,308 597,240

Program fees 238,474 197,229

Partnership program fees 207,286 226,315

Membership fees 53,810 57,601

Interest income 7,788 8,957

Service agreement fees – 12,000

$ 1,403,666 $ 1,529,342

Expenses

Wages and benefits $ 397,568 $ 446,487

Program fee costs 333,226 333,330

MPDP project costs [note 4 and 10, Schedule 2] 498,308 597,240

Insurance 4,807 4,827

Interest 471 75

Rent 60,683 59,685

Travel 27,637 31,547

Office 17,575 25,864

Professional fees 9,000 10,250

Information technology and networking 11,497 5,738

Telephone 9,564 14,440

$ 1,370,336 $ 1,529,483

Excess (deficiency) of revenue over expenses for the year $ 33,330 $ (141)

Unrestricted net assets, beginning of year 49,361 49,502

Unrestricted net assets, end of year $ 82,691 $ 49,361



Statement of Changes in Net Assets Year ended June 30

2013 2012

Invested in capital assets

Unrestricted net assets

Internally restricted net assets Total Total

Balance, beginning of year $ – $ 49,361 $ 600,000 $ 649,361 $ 649,502

Excess (deficiency) of revenue over expenses – 33,330 – 33,330 (141)

Balance, end of year $ – $ 82,691 $ 600,000 $ 682,691 $ 649,361

Statement of Cash Flows Year ended June 30

2013 2012

Operating Activities

Excess (deficiency) of revenue over expenses for the year $ 33,330 $ (141)

Changes in non-cash working capital:

Accounts receivable (125,323) 101,203

Prepaid expenses (4,573) (6,616)

Accounts payable and accrued liabilities 28,004 (56,556)

Deferred sponsorship, membership fees and grants (126,770) 105,513

Cash provided by (used in) operating activities $ (195,332) $ 143,403

Investing Activities

Investment in GIC $ 5,891 $ (5,891)

Cash provided by (used in) investing activities $ 5,891 $ (5,891)

Increase (decrease) in cash during the year $ (189,441) $ 137,512

Cash and cash equivalents, beginning of year 1,268,624 1,131,112

Cash and cash equivalents, end of year $ 1,079,183 $ 1,268,624

Supplemental Information:

Interest received $ 11,626 $ 12,347

Interest paid $ 471 $ 75



1. PURPOSE OF THE ORGANIZATION

The Alberta Biotechnology Association (the “Association”) is a not-for-profit organization incorporated under the Societies Act of Alberta on October 15, 1998. The Association was formed to provide leadership towards the creation of a strong, viable biotechnology industry in Alberta by promoting the growth of biotechnology businesses and firms and providing an authoritative voice within Alberta, nationally and internationally on industry issues. The Association is not subject to income tax.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

These financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations. The accounting policies applied this year are consistent with those of the previous year as explained in note 9. These financial statements have, in management’s opinion, been properly prepared within the reasonable limits of materiality and within the framework of the accounting policies summarized below.

Cash and cash equivalents

The Association considers all bank accounts, liquid investments with maturities of three months or less and bank loans with no fixed terms of repayment to be cash and cash equivalents. All amounts held for investment purposes are valued at the lower of cost and fair market value.

Investment in GIC

Investments in Guaranteed Investment Certificates are non-redeemable financial instruments that are held to maturity. Interest is paid annually at the rate prescribed in the GIC.

Revenue recognition

The Association follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue in the year in which the related expenses are incurred. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured.

Contributions restricted for the acquisition of equipment having a limited life are initially recorded as deferred contributions in the period in which they are received and, when expended, are transferred to unamortized deferred capital contributions and amortized to revenue over the useful lives of the related assets.

Program sponsorship fees are recognized in the period in which the related program is conducted. Program fees received in advance of the program are deferred.

Membership and partnership fees are recognized over the membership and partnership term. Membership and partnership terms extending past the year-end are deferred.

Contributed services

Contributed services and donated goods are not recognized in the financial statements, as the fair value cannot be reasonably estimated.

Measurement uncertainty

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from management’s best estimates as additional information becomes available in the future.

3. FINANCIAL INSTRUMENTS

The carrying values of cash and cash equivalents, investments in GIC’s, accounts receivable and accounts payable and accrued liabilities approximate their fair values due to the relatively short period to maturity of the instruments. The Association is exposed to the following risks arising from these financial instruments.

Credit risk

Financial instruments that subject the Association to credit risk consist primarily of cash and cash equivalents and accounts receivable. The Association provides services to a diverse membership base and its credit risk is not concentrated in any one particular member or group.

Notes to Financial Statements June 30, 2013


4. DEFERRED SPONSORSHIP, MEMBERSHIP FEES AND GRANTS

The Association bills its members an annual fee which coincides with the fiscal year of the Association. A total of $2,578 (2012 – $2,415) of membership fees were deferred at the end of June 30, 2013, representing prepayment of membership fees for the fiscal 2014 year. In addition, $51,000 (2012 – $46,000) in partnership fees and $603,179 (2012 – $810,112) of project grants were deferred as at June 30, 2013.

On May 15, 2012, the Minister of Western Economic Diversification Canada granted approval to amend the original agreement wherein the federal government granted the Association up to $975,000 to deliver a Medical Products Development Program (“MPDP”). On March 29, 2012, the Government of Alberta granted approval to amend the original agreement regarding its funding of the MPDP up to $1,390,000. As of June 30, 2013, $603,179 (2012 – $810,112) of the funds received under the MPDP were deferred. Related revenue will be realized as costs associated with the delivery of the program are incurred in subsequent years.

During the current year, the Association realized $498,308 (2012 – $597,240) of revenues and $498,308 (2012 – $597,240) of expenses related to the delivery of programs associated with the MPDP grant.

5. INVESTMENT IN GIC

As of June 30, 2013, the Association held $250,000 (2012 – $250,000) in Guaranteed Investment Certificates having an interest rate of 1.65% and maturing July 22, 2014.

6. COMMITMENTS

Aggregate base payments required under all operating leases over the next five years and in aggregate are as follows:

2014 $ 64,806

2015 16,170

2016 2,394

2017 and thereafter –

$ 83,370

7. INTERNALLY RESTRICTED NET ASSETS

The purpose of the internally restricted fund is to sustain basic operations and core member services during a short- term economic downturn or a temporary lapse in funding; to provide for wind-down costs in the event of funding withdrawal and to provide a source of funds, over and above potential insurance reimbursement, for capital asset replacement in the event of a disaster. The fund was established in 2005 for $325,000 with an additional $75,000 transferred to the fund in fiscal 2006, $100,000 in fiscal 2009 and $100,000 in fiscal 2011. The fund balance as at June 30, 2013 was $600,000 (2012 – $600,000).

8. GOVERNMENT FUNDING

The Association has recognized funding under the following government grants:

2013 2012

Alberta Enterprise and Advanced Education

$ 350,000

$ 400,000

National Research Council Canada - Industrial Research Assistance Program

48,000

30,000

$ 398,000 $ 430,000

On February 20, 2013, the Association entered into an agreement with Alberta Enterprise and Advanced Education to obtain continued core funding. Under this grant, the Association received $350,000 (2012 – $400,000) during fiscal 2013.

On November 20, 2011, the Association entered into an agreement with the National Research Council of Canada (“NRC”) under the Industrial Research Assistance Program (IRAP) to obtain funding of up to $58,000. Under the initial terms of the agreement, NRC would provide up to $30,000 in fiscal 2012 and $28,000 in fiscal 2013 to assist with the costs of the BioPartnering Workshop and various marketing costs. On January 4, 2013, the agreement was amended with NRC agreeing to provide up to $48,000 in fiscal 2013. In 2013, $48,000 (2012 – $30,000) were provided by NRC and included in government grant revenues.

The funds from grants are not externally restricted as they are provided to the Association for general operations consistent with its business plan and budget.

Notes to Financial Statements (cont’d) June 30, 2013


9. TRANSITION OF ACCOUNTING STANDARDS FOR NOT-FOR-PROFIT ORGANIZATIONS

Effective July 1, 2012, the Association adopted the requirements of the CICA handbook and adopted Canadian accounting standards for not-for-profit organizations. This framework is in accordance with Canadian generally accepted accounting principles (GAAP). These are the Association’s first financial statements prepared in accordance with this new standards framework which has been applied retrospectively. The accounting policies set out in the significant accounting policy note (note 2) have been applied in preparing the financial statements for the year ended June 30, 2013 and in preparation of an opening balance sheet at June 30, 2012 – which is the Association’s date of transition.

The adoption of Canadian accounting standards for not-for-profit organizations had no impact on the previously reported assets, liabilities and net assets of the Association, and accordingly, no adjustments have been recorded in the comparative statement of financial position, statement of revenue and expense and changes in unrestricted net assets, statement of changes in net assets or statement of cash flows.

10. MEDICAL PRODUCT DEVELOPMENT PROGRAM

On July 7, 2009, the Association received Ministerial approval for a Medical Product Development Program grant from Western Economic Diversification Canada (WD) for a maximum project cost of $975,000. On May 15, 2012, the Minister granted approval to amend the Agreement on the Association’s request to modify the expected cash flow as follows:

Maximum amount

2010 $ 86,721

2011 213,536

2012 254,615

2013 300,000

2014 120,128

$ 975,000

Total Funding Committed to the Program to March 31, 2014

Western Economic Diversification Canada $ 975,000

Government of Alberta 1,390,000

$ 2,365,000

WD’s funding is provided to the Association on a reimbursement basis. WD has committed $975,000 over five years ending March 31, 2014, with $1,390,000 committed by the Government of Alberta for the same period. Of the $975,000 committed by WD, $751,297 has been disbursed to the Association as of June 30, 2013. Project expenses must be incurred and audited before WD allocates the funding to the Association. During the year ended June 30, 2013, the Association expended $498,308 (2012 – $597,240) related to the program and recognized the same amounts as revenue.

The funding from the Government of Alberta is provided to the Association in advance of incurring program expenses and held in trust by the Association. However, provincial allocations can only be distributed with audit clearance and matching funds from WD until WD funding for the project ceases. Any amounts which are not expended in the current fiscal year will be held in trust and deferred to the next fiscal year.

11. PRIOR YEAR COMPARATIVES

Certain 2012 comparative balances were reclassified to conform with the presentation adopted in the current year.

Notes to Financial Statements (cont’d) June 30, 2013


Schedule 1 – Statement of Financial Position – Medical Product Development Program As at June 30

2013 2012

Assets

Current

Cash and cash equivalents $ 504,476 $ 797,881

Accounts receivable 91,112 –

$ 595,588 $ 797,881

Liabilities

Current

Accounts payable $ 9,764 $ 49

Deferred grants 603,179 810,112

$ 612,943 $ 810,161

Net Assets

Unrestricted net assets * $ (17,355) $ (12,280)

$ 595,588 $ 797,881

* Represents GST refunds recognized at the BioAlberta entity level.


Schedule 2 – Statement of Revenue and Expense and Changes in Net Assets – Medical Product Development Program Year ended June 30

2013 2012

Revenue

Program funding $ 206,933 $ –

WED funding 287,537 239,209

Alberta Government funding – 354,641

Interest income 3,838 3,390

$ 498,308 $ 597,240

Expenses

Personnel and technical support $ 180,924 $ 175,740

Infrastructure 21,003 18,453

Marketing and events 2,253 16,003

Travel 6,179 3,512

Project costs 255,765 383,532

Round 4 specific costs 32,184 –

$ 498,308 $ 597,240

Excess (deficiency) of revenue over expenses for the year $ – $ –

Unrestricted net assets, beginning of year (12,280) (6,773)

Transfer of unrestricted funds (5,075) (5,507)

Unrestricted net assets, end of year $ (17,355) $ (12,280)


Abbott Laboratories Ltd. (Silver)ACAMPACCUMOL Inc.Advance-Tek Consulting Inc.Afinix Life Sciences Inc.Ag-West Bio Inc.AIHS Team for SMART Neuralprostheses

(PROJECT SMART)Akshaya Bio Inc.Alberta Agriculture and Rural DevelopmentAlberta Enterprise and Advanced Education

(Patron)Alberta Glycomics CentreAlberta Innovates - Alberta Research and

Innovation AuthorityAlberta Innovates - Bio Solutions (Silver)Alberta Innovates - Health Solutions (Platinum)Alberta Innovates - Technology Futures (Silver)Alberta International and Intergovernmental

RelationsAlzheimer’s Innovation InstituteAMGEN Canada Inc. (Silver)Aqua Air Systems Ltd.Aquila Diagnostic Systems Inc.AstraZeneca Canada Inc. (Gold)ATB FinancialATGCell Inc.AVAC Ltd. (Gold)Bennett Jones LLPBest Environmental TechnologiesBest Management Services Inc.BioNeutra Inc.Biorefining Conversions Network (Silver)BioTalent Canada (Silver)BIOTECanadaBiovantage Inc.Canada’s Research-Based Pharmaceutical

Companies (Rx & D)Canadian Bio-Systems Inc.Canadian Strategy Group Inc. (CSG)CanBiocin Inc.CEAPRO Inc.ChemRoutes CorporationChenomx Inc.Circle Cardiovascular Imaging Inc.Clinexus, A Division of Alberta Innovates

Technology FuturesContract Laboratory Inc.CQI Consulting Ltd.

Deloitte & Touche LLP (Platinum)Dentons Dow AgroSciences Canada Inc. (Silver)Drug Development & Innovation Centre (DDIC)D-TEX Inc.Edmonton Economic Development CorporationEdmonton NorthlandsEli Lilly Canada Inc. (Silver)EMD Inc. (Silver)EnerkemEpsilon Chemicals Ltd.Ernst & Young LLPExciton Technologies Inc.Genome AlbertaGenzyme Canada Inc. (Gold)GlaxoSmithKline Inc. (Gold)Gowling Lafleur Henderson LLPGrowSafe Systems Ltd.Hannibal Ventures Inc.Himark bioGas Inc.Hoffmann-La Roche LimitediHear Unicare Inc.IMBiotechnologies Ltd.Innovate CalgaryInnovative Trauma Care Inc.Innovotech Inc.Institute for Reconstructive Sciences

in Medicine (iRSM)Intellectual Capital Corporation Inc. (ICCI)IntelligentNano Inc.Janssen Inc. (Silver)Keystone Labs Inc.KMT Hepatech Inc.Matter Industrial DesignMcCarthy Tétrault LLP (Gold)Merck Canada Inc. (Gold)Meros Polymers Inc.Metabolomic Technnologies Inc.Monsanto Canada Inc.MTN Consulting AssociatesNAEJA Pharmaceutical Inc.NanoSpeed Diagnostics Inc.NATIONAL Public RelationsNorthern Alberta Clinical Trials and Research

Centre (NACTRC), TheNorthern Alberta Institute of Technology

(novaNait)Novartis Pharmaceuticals Canada Inc. (Silver)Odvod Media Corp. (Gold)

Oncolytics Biotech Inc.Osteometabolix Pharmaceuticals Inc.Parlee McLaws LLPParvus Therapeutics Inc.PBR Laboratories Inc.Pfizer Canada Inc. (Gold)Poultry Research Centre, TheQiQ Inc.Quest PharmaTech Inc.Radient Technologies Inc.Resverlogix Corp.Sanofi Aventis Group (Silver)Shire Canada Inc.SinoVeda Canada Inc.SmileSonica Inc.Surface Medical Inc.SynInnova Inc.Taiga BioActives Inc.Takeda Canada Inc.Tangent Design Engineering ServicesTC Scientific Inc.TEC EdmontonTechnology North CorporationUCB Canada IncUniversity of LethbridgeViaGen Inc.VWR International Ltd.W. A. Cochrane & Associates Inc.WAI BioProcess SolutionsWax-it Histology Services Inc. Western Economic Diversification Canada (Patron)Zymetrix Inc.

Individual MembersBraconnier, PaulCox, David (Dr.)Desai, Pete (Dr.)Dias, Vernon (Dr.)Gourley, AlHuestis, GarthLai, Chien-TsaiMcKay-Carey, Mary JanePhilip, BernRimes, BobSherburne, Craig K.Smith, RickSwanson, Eric (Dr.)Tauh, Poonam (Dr.)Welsh, Michael

Membership 2012-2013


Board of Directors 2012-2013

Paul Braconnier Executive-in-Residence, TEC Edmonton

Ross Bricker Managing Director, RB Limited

David Cox (Co-Chair) Retired Biotechnology Executive

Al Gourley Corporate Director and Consultant

Ed Knash Vice President, ATB Corporate Financial Services

Christopher Micetich President and CEO, NAEJA Pharmaceutical Inc. and Fedora Pharmaceuticals Inc.

Rick Pawluk Partner, McCarthy Tetrault LLP

Ryan Radke* President, BioAlberta

Jacqueline Shan President and CEO, Afinix Life Sciences Inc.

Rick Smith (Co-Chair) Retired Biotechnology Executive

Daniel Brennan Partner, NATIONAL Public Relations

Jeremy Webster Partner, Deloitte & Touche LLP

*resigned March 2013

StaffAmanda Stadel President

Heather Pontikes Manager, Events and Membership

Sanah Jowhari Manager, Medical Product Development Program

Bev Pederson Financial & Human Resources Coordinator

Donna Parker Administrative Coordinator

ConsultantsMedical Product Development Program (MPDP)

Travis Colley MPDP Technical Director

Darren Jakal MPDP Technical Director

BioAlberta314 Capital Place,

9707 110 Street

Edmonton, Alberta, Canada

T5K 2L9

Phone: 780.425.3804

Fax: 780.409.9263

[email protected]

www.bioalberta.com

BioAlberta has been the central voice and organizing hub for the life sciences industry in Alberta since 1998. It is a private, not-for-profit industry association with more than 140 members. The association’s activities are focused on advocacy, promotion and networking. In its advocacy efforts on the national stage, BioAlberta joins forces with other life science organizations such as its counterparts in other provinces and BIOTECanada.

BioAlberta’s core life sciences membership includes:

· Academic and Research Institutions

· Agriculture

· Environmental

· Government

· Health-BioPharma

· Industrial

· Medical Devices

· Nutraceuticals

· Support Services

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