BioAlberta Annual Report 2013

Extending Elevating Evolving

Table of Contents 2 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 Message From the President 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

2 BioAlberta Annual Report 2013 Message From the Co-Chairs 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

Extending Elevating Evolving 3 Advocacy

4 BioAlberta Annual Report 2013 Evolving Policy Environment in Alberta 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 BioAlberta is the and knowledgeable team that represents core industry sectors. Voice of the Life 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 Sciences Industry these key industry interests that will ensure an environment conducive to the Alberta Life in Alberta Sciences industry’s long-term success.

The Advocacy Platform for Alberta’s Life Sciences Industry

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) Advocacy 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%

Very Important Important Not Important Not Applicable 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.

Extending Elevating Evolving 5 Top Three Industry Issues Access to 1. Improving the investment climate through globally competitive Highly Qualified Personnel mechanisms such as matching funding models and enhanced In October 2012, Dr. Ray Bergstra, venture capital environment Co-Chair, BioAlberta Policy “Canada-wide, those of us in the innovation sectors must advocate for programs that Committee, presented the leverage public monies by private investment, such as the Alberta Enterprise Fund and committee’s findings to a global Federal VCAP programs, establishment of longer term (i.e., stable over multiple election audience at “Building Alberta’s cycles) government funding mechanisms, and an outward, global focus on determining Bioindustrial Talent Pool”, and implementing best practices in our industries.” a workshop hosted by the Dr. Shermaine Tilley, Partner, CTI Life Sciences Fund Biorefining Conversions Network. In Dr. Bergstra’s words, “Labour 2. Continuing to improve tax-based incentives for companies, issues are one of four key elements including Angel tax incentives and Flow-through shares of BioAlberta’s Advocacy Platform and certain targets for recommendations “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 have been identified within three key to claim the industry isn’t supported. Specifically I look at Innovative Trauma Care where areas namely education, professional our Angel group has almost $1.1M invested from 20 plus investors. development and streamlining immigration to increase the availability But there is no doubt we could see more. Four provinces now have an investor tax credit, of skilled people within the Life as well as a number of states in the US. Tech could be stimulated in the same way the Sciences Industry in Alberta.” 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

6 BioAlberta Annual Report 2013 Marketing

Extending Elevating Evolving 7 Extending Industry Outreach,

Rick Smith, BioAlberta Co-Chair (Left) with Dr. Phil Coggins, President & CEO, Parvus Therapeutics Inc., 2012 TechRev Elevating Industry Profile Innovator (Right) 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 2012 National 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 2012 AdvaMed 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 Chris Micetich, President & CEO, Fedora Pharmaceuticals Inc. presenting companies at the event, including Aquila Diagnostic Systems Inc., Innovative Trauma Care at 2012 National Biotechnology Week Inc., Surface Medical Inc., and Zephyr Sleep Technologies Inc.

Publication 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.

8 BioAlberta Annual Report 2013 BioAlberta AGM and Awards Gala 2012 Celebrating 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.

Recipients of 2012 BioAlberta Awards

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

The 2012 Gala reception

2012 Fireside chat panel

Extending Elevating Evolving 9 Bangalore India BIO 2013 “With the creation of a favourable In February 2013, BioAlberta, in partnership with the National Research Council of Canada - business environment, the Indian Industrial Research Assistance Program, organized the first Western Canadian mission to the biotech and healthcare sectors 13th annual Bangalore India BIO conference, held in the city of Bangalore, Karnataka. combined will be able to grow Seven Canadian SMEs participated with close to 850 international delegates from at a rate of 25-30% and potentially 20 countries and eight Indian states, and pursued a range of business opportunities generate revenues of $100 US Billion in the Indian market. by year 2025.” Association of Biotech Led Enterprises (ABLE) India, Roadmap Report 2012.

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

Meetings at the Canadian Café

Official opening of the “Canadian Alberta Booth Café”, BIO 2013 at the BIO Exhibition Floor BIO International Convention 2013 Over 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.

10 BioAlberta Annual Report 2013 Alberta Reception at BIO 2013 More than 200 individuals from 94 organizations and seven countries were brought together (Left to Right) Hon. Thomas Lukaszuk, John Helou, President Pfizer, Pamela Valentine, to “Meet Alberta Opportunities” at the 6th Annual Alberta Reception, organized by BioAlberta COO Alberta Innovates Health Solutions, and sponsored by Alberta Innovates Technology Futures, Alberta Innovates Health Solutions, & Hon. Fred Horne at Alberta Reception, and Janssen Inc. Guests included multinationals, investment firms, government, universities, BIO 2013 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.

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

The 7th annual tournament brought over 70 golfers to Business happens network in June 2013 Guests at the Alberta Reception, at BioAlberta events. 2013 World Congress

World Congress on Industrial Biotechnology 2013 In 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: “BioAlberta’s active participation • Alberta Enterprise and Advanced Education in the Bioeconomy Alberta Team • Alberta Environment and Sustainable Resource Development helped the team continue to grow • Alberta Agriculture and Rural Development Alberta’s profile and impact at the • Alberta Innovates Bio Solutions 2013 World Congress. BioAlberta • Alberta Innovates Technology Futures led logistics for the team including the Alberta Reception, which was • Alberta International and Intergovernmental Relations a highlight of the conference. The • Biorefining Conversions Network reception provided a key opportunity Bursaries were awarded to a group of promising Alberta SMEs to support their participation for networking with clients from at the event including, Ceapro Inc., Symbiotic EnviroTek Inc., and TerraVerdae BioWorks Inc. Canada, North America and around Companies gleaned relevant market intelligence and created targeted business development the world, and for increasing Alberta’s leads. profile as a key jurisdiction for The Alberta reception, with over 180 attendees, marked yet another major highlight on bioindustrial development.” BioAlberta’s agenda to elevate the bio-industry’s international profile. Additionally, BioAlberta Dr. Christine Murray, Director, Agricultural co-hosted the Canadian reception along with BIOTECanada and other partners, with over 200 Technologies, Alberta Innovates Bio Solutions attendees participating.

Extending Elevating Evolving 11 Industry Development

12 BioAlberta Annual Report 2013 Elevating Industry Through Partnerships, Training, and Programs Partnering Committee The BioAlberta Partnering Committee provides solutions that address Amanda Stadel, President, the challenges faced by the Life Sciences Industry in their business BioAlberta, at the GSK session development efforts. 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.

Industry Industry guests Development at the Merck event Daniel Böck, GSK presenting an overview of GSK partnership interests Engaging Multinational Partners BioAlberta welcomed industry development representatives from gold partners Merck “Over the last year we have had the Canada Inc. and GlaxoSmithKline Inc. (GSK) to Alberta. Sessions were organized to elevate opportunity to work with the BioAlberta our members’ presence and capabilities to our large pharmaceutical partners. team on a number of events and are In November 2012, Steve Xanthoudakis, Director, Licensing and External Research for Merck impressed with the professional approach Research Laboratories provided an overview of Merck’s strategic R&D goals and their latest as well as the strong support provided by therapeutic and technology areas of interest, during a breakfast session in Edmonton. the organization…this made achieving our objectives of meeting with BioAlberta Later, in April 2013, GSK provided a breakfast presentation in Calgary, entitled “Enabling research institutions and companies patients to … do more, feel better and live longer.” Daniel Böck, Director, Business much more efficient. BioAlberta adds Development, outlined GSK’s initiative to do more than solely provide medicines, and great value to the industry by bringing addressed the many facets of the patient’s journey and areas of expertise on which they us all together and enabling us to explore wish to focus. potential collaboration opportunities.” Both Merck and GSK followed their presentations with a series of one-on-one meetings “Keep up the great work.” with Alberta companies where specific partnership interests were discussed. Rav Kumar, Ph.D. V.P. R&D Operations/Business Development, GSK Extending Elevating Evolving 13 Industry Training and Development During 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, Industry participating at “Connecting the pieces... listen and learn how to perfect their investor pitches. to investors” seminar

Randy Thompson, CEO, VA Angels engaging the audience

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 Dave D. Hood, In May 2013, BioAlberta partnered with the Alberta Industrial Heartland Association and presenting to the Alberta Agriculture and Rural Development to showcase the various biofuel and biochemical Alberta audience 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.

14 BioAlberta Annual Report 2013 Programs Medical Product Development Program (MPDP) The MPDP has committed over $2.5M to support medical product innovation in Alberta. 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 Jason Acker, CTO, Aquila Diagnostic • Circle Cardiovascular Imaging Inc. Systems Inc., with Trudy Callaghan, Automated myocardial tissue identification in Cardiac Computed Tomography (CT) images Principal at Odvod Media • 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 “The IBO grant was very valuable for and optimization of Oral Appliance Therapy Aquila. It allowed Aquila to work with a top team of professionals at Odvod IBO Grant Program to develop a new tagline: Results. Right. Innovation + Brand = Opportunity Now, and a trademarked system name: The second annual IBO Grant was awarded to Aquila Diagnostic Systems Inc. at the The Accutas. Odvod also helped us polish 13th annual AGM and Gala. Awarded to a BioAlberta member company, this grant our promotional material and tweak our facilitates the development of the recipient’s market presence and brand. Odvod Media, logo and got us thinking about how to a gold partner and an avid supporter of the Alberta’s life sciences industry, provided brand ourselves as a medical diagnostics the 2013 marketing services. company.”

David Alton, CEO Aquila Diagnostic Systems Inc.

Extending Elevating Evolving 15 Sanofi BioGENEius Challenge Canada (SBCC) 20 Years of Encouraging Scientific Talent in Youth Nationally “The SBCC not only provided me the SBCC is a unique training opportunity for high school students to develop skills opportunity to pursue research at the in biotech research. BioAlberta has coordinated the program provincially since 2000; during University of Calgary, but also allowed me this time over 280 projects, researched by 700 students have been supported by more than to share that scientific passion with other 180 volunteer mentors from both academia and industry in Alberta. like-minded high schoolers from across Program alumni are pursuing a range of careers within biotech and healthcare, and many Canada. This is the ultimate learning are recipients of prestigious science and technology accolades such as: University of experience that lets us broaden our Alberta’s Youth Investment Award, Canada’s Top 20 under 20 Award, Alberta Science and scope of learning and apply it to real world Technology’s Leader of Tomorrow Award, Alberta Centennial Medal and ASTech Award. medical problems. SBCC has encouraged The 2013 competition proved hugely successful for Alberta; Arjun Nair, a Grade 11 Calgary me to pursue research in the future student, won the Regionals, secured first place at the Nationals and represented both Alberta it has definitely opened my eyes to the and Canada internationally at the International BioGENEius Challenge competition held at remarkable impact research has on lives the 2013 BIO International Convention. Arjun’s project marked an advance in photo-thermal of many.” therapy for treatment of cancerous tumours and was supported by the University of Calgary. Arjun Nair, Regional and National winner, SBCC 2013

Jon Fairest, Past President & CEO Sanofi Canada (left), Financial Statements and Hon. Dr. Kellie Leitch, Minister of Labour and Minister of Status of Women (Right) awarding Arjun Nair 1st place at Nationals SBCC Team Alberta 2013

Miriam Belsheim

Sannon Parrott

Undergraduate Scholarship Program To 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:

Jesse Hill 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

16 BioAlberta Annual Report 2013 Financial Statements

Extending Elevating Evolving 17 Independent Auditors’ Report To the Members of the Alberta Biotechnology Association (operating as BioAlberta)

Report on the Financial Statements including the assessment of the risks of material misstatement of We have audited the accompanying financial statements of the the financial statements, whether due to fraud or error. In making Alberta Biotechnology Association, which comprise the statement those risk assessments, the auditor considers internal controls of financial position as at June 30, 2013, and the statements relevant to the entity’s preparation and fair presentation of the of changes in net assets, revenue and expense and changes in financial statements in order to design audit procedures that unrestricted assets and cash flows for the year then ended, and are appropriate in the circumstances, but not for the purpose of a summary of significant accounting policies and other expressing an opinion on the effectiveness of the entity’s internal explanatory information. controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting Management’s Responsibility for the Financial Statements estimates made by management, as well as evaluating the overall Management is responsible for the preparation and fair presentation of the financial statements. presentation of these financial statements in accordance with We believe that the audit evidence we have obtained is sufficient Canadian accounting standards for not-for-profit organizations, and appropriate to provide a basis for our audit opinion. and for such internal controls as management determines is necessary to enable the preparation of financial statements that Opinion are free from material misstatement, whether due to fraud or error. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Association as at Auditor’s Responsibility June 30, 2013, and the results of its operations and its cash flows Our responsibility is to express an opinion on these financial for the year then ended accordance with Canadian accounting statements based on our audit. We conducted our audit in standards for not-for-profit organizations. 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. John H. C. Pinsent Professional Corp. An audit involves performing procedures to obtain audit evidence Chartered Accountant about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, Edmonton, Canada August 27, 2013

18 BioAlberta Annual Report 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.

Extending Elevating Evolving 19 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

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

20 BioAlberta Annual Report 2013 Statement of Changes in Net Assets Year ended June 30 2013 2012

Invested Internally in capital Unrestricted restricted assets net assets 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

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

Extending Elevating Evolving 21 Notes to Financial Statements June 30, 2013

1. PURPOSE OF THE ORGANIZATION Contributions restricted for the acquisition of equipment having The Alberta Biotechnology Association (the “Association”) a limited life are initially recorded as deferred contributions in is a not-for-profit organization incorporated under the Societies the period in which they are received and, when expended, are Act of Alberta on October 15, 1998. The Association was transferred to unamortized deferred capital contributions and formed to provide leadership towards the creation of a strong, amortized to revenue over the useful lives of the related assets. viable biotechnology industry in Alberta by promoting the Program sponsorship fees are recognized in the period in which growth of biotechnology businesses and firms and providing an the related program is conducted. Program fees received in authoritative voice within Alberta, nationally and internationally advance of the program are deferred. on industry issues. The Association is not subject to income tax. Membership and partnership fees are recognized over the membership and partnership term. Membership and partnership 2. SIGNIFICANT ACCOUNTING POLICIES terms extending past the year-end are deferred. Basis of presentation Contributed services These financial statements have been prepared in accordance Contributed services and donated goods are not recognized with Canadian accounting standards for not-for-profit in the financial statements, as the fair value cannot be organizations. The accounting policies applied this year are reasonably estimated. consistent with those of the previous year as explained in Measurement uncertainty note 9. These financial statements have, in management’s opinion, been properly prepared within the reasonable limits of The preparation of financial statements in accordance with materiality and within the framework of the accounting policies generally accepted accounting principles requires management summarized below. to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial Cash and cash equivalents statements, and the reported amounts of revenues and The Association considers all bank accounts, liquid investments expenditures during the reporting period. Actual results with maturities of three months or less and bank loans with no could differ from management’s best estimates as additional fixed terms of repayment to be cash and cash equivalents. All information becomes available in the future. amounts held for investment purposes are valued at the lower of cost and fair market value. 3. FINANCIAL INSTRUMENTS Investment in GIC The carrying values of cash and cash equivalents, investments Investments in Guaranteed Investment Certificates are non- in GIC’s, accounts receivable and accounts payable and accrued redeemable financial instruments that are held to maturity. liabilities approximate their fair values due to the relatively short Interest is paid annually at the rate prescribed in the GIC. period to maturity of the instruments. The Association is exposed Revenue recognition to the following risks arising from these financial instruments. The Association follows the deferral method of accounting Credit risk for contributions. Restricted contributions are recognized as Financial instruments that subject the Association to credit risk revenue in the year in which the related expenses are incurred. consist primarily of cash and cash equivalents and accounts Unrestricted contributions are recognized as revenue when receivable. The Association provides services to a diverse received or receivable if the amount to be received can be membership base and its credit risk is not concentrated in any reasonably estimated and collection is reasonably assured. one particular member or group.

22 BioAlberta Annual Report 2013 Notes to Financial Statements (cont’d) June 30, 2013

4. DEFERRED SPONSORSHIP, MEMBERSHIP FEES AND GRANTS 7. INTERNALLY RESTRICTED NET ASSETS The Association bills its members an annual fee which coincides The purpose of the internally restricted fund is to sustain basic with the fiscal year of the Association. A total of $2,578 (2012 – operations and core member services during a short- term $2,415) of membership fees were deferred at the end of June 30, economic downturn or a temporary lapse in funding; to provide 2013, representing prepayment of membership fees for the fiscal for wind-down costs in the event of funding withdrawal and to 2014 year. In addition, $51,000 (2012 – $46,000) in partnership provide a source of funds, over and above potential insurance fees and $603,179 (2012 – $810,112) of project grants were reimbursement, for capital asset replacement in the event of a deferred as at June 30, 2013. disaster. The fund was established in 2005 for $325,000 with an additional $75,000 transferred to the fund in fiscal 2006, On May 15, 2012, the Minister of Western Economic $100,000 in fiscal 2009 and $100,000 in fiscal 2011. The fund Diversification Canada granted approval to amend the original balance as at June 30, 2013 was $600,000 (2012 – $600,000). 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 8. GOVERNMENT FUNDING Government of Alberta granted approval to amend the original The Association has recognized funding under the following agreement regarding its funding of the MPDP up to $1,390,000. government grants: As of June 30, 2013, $603,179 (2012 – $810,112) of the funds 2013 2012 received under the MPDP were deferred. Related revenue will be realized as costs associated with the delivery of the program are Alberta Enterprise and incurred in subsequent years. Advanced Education $ 350,000 $ 400,000 During the current year, the Association realized $498,308 National Research Council Canada - Industrial Research (2012 – $597,240) of revenues and $498,308 (2012 – $597,240) Assistance Program 48,000 30,000 of expenses related to the delivery of programs associated with the MPDP grant. $ 398,000 $ 430,000

On February 20, 2013, the Association entered into an agreement with 5. INVESTMENT IN GIC Alberta Enterprise and Advanced Education to obtain continued core As of June 30, 2013, the Association held $250,000 funding. Under this grant, the Association received $350,000 (2012 – $250,000) in Guaranteed Investment Certificates (2012 – $400,000) during fiscal 2013. having an interest rate of 1.65% and maturing July 22, 2014. On November 20, 2011, the Association entered into an agreement with the National Research Council of Canada (“NRC”) under the Industrial 6. COMMITMENTS Research Assistance Program (IRAP) to obtain funding of up to $58,000. Aggregate base payments required under all operating leases over Under the initial terms of the agreement, NRC would provide up to the next five years and in aggregate are as follows: $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 2014 $ 64,806 to $48,000 in fiscal 2013. In 2013, $48,000 (2012 – $30,000) were 2015 16,170 provided by NRC and included in government grant revenues. 2016 2,394 The funds from grants are not externally restricted as they are provided to the Association for general operations consistent with its business 2017 and thereafter – plan and budget. $ 83,370

Extending Elevating Evolving 23 Notes to Financial Statements (cont’d) June 30, 2013

9. TRANSITION OF ACCOUNTING STANDARDS Total Funding Committed to the Program to March 31, 2014 FOR NOT-FOR-PROFIT ORGANIZATIONS Effective July 1, 2012, the Association adopted the requirements Western Economic Diversification Canada $ 975,000 of the CICA handbook and adopted Canadian accounting standards Government of Alberta 1,390,000 for not-for-profit organizations. This framework is in accordance $ 2,365,000 with Canadian generally accepted accounting principles (GAAP). These are the Association’s first financial statements prepared in WD’s funding is provided to the Association on a reimbursement accordance with this new standards framework which has been basis. WD has committed $975,000 over five years ending March applied retrospectively. The accounting policies set out in the 31, 2014, with $1,390,000 committed by the Government of significant accounting policy note (note 2) have been applied in Alberta for the same period. Of the $975,000 committed by WD, preparing the financial statements for the year ended June 30, $751,297 has been disbursed to the Association as of June 30, 2013 and in preparation of an opening balance sheet at June 30, 2013. Project expenses must be incurred and audited before WD 2012 – which is the Association’s date of transition. allocates the funding to the Association. During the year ended June 30, 2013, the Association expended $498,308 (2012 – The adoption of Canadian accounting standards for not-for-profit $597,240) related to the program and recognized the same organizations had no impact on the previously reported assets, amounts as revenue. liabilities and net assets of the Association, and accordingly, no adjustments have been recorded in the comparative statement of The funding from the Government of Alberta is provided to the financial position, statement of revenue and expense and changes Association in advance of incurring program expenses and held in in unrestricted net assets, statement of changes in net assets or trust by the Association. However, provincial allocations can only statement of cash flows. be distributed with audit clearance and matching funds from WD until WD funding for the project ceases. Any amounts which are 10. MEDICAL PRODUCT DEVELOPMENT PROGRAM not expended in the current fiscal year will be held in trust and deferred to the next fiscal year. On July 7, 2009, the Association received Ministerial approval for a Medical Product Development Program grant from Western 11. PRIOR YEAR COMPARATIVES Economic Diversification Canada (WD) for a maximum project cost of $975,000. On May 15, 2012, the Minister granted approval to Certain 2012 comparative balances were reclassified to conform amend the Agreement on the Association’s request to modify the with the presentation adopted in the current year. expected cash flow as follows:

Maximum amount 2010 $ 86,721 2011 213,536 2012 254,615 2013 300,000 2014 120,128 $ 975,000

24 BioAlberta Annual Report 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.

Extending Elevating Evolving 25 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)

26 BioAlberta Annual Report 2013 Membership 2012-2013

Abbott Laboratories Ltd. (Silver) Deloitte & Touche LLP (Platinum) Oncolytics Biotech Inc. ACAMP Dentons Osteometabolix Pharmaceuticals Inc. ACCUMOL Inc. Dow AgroSciences Canada Inc. (Silver) Parlee McLaws LLP Advance-Tek Consulting Inc. Drug Development & Innovation Centre (DDIC) Parvus Therapeutics Inc. Afinix Life Sciences Inc. D-TEX Inc. PBR Laboratories Inc. Ag-West Bio Inc. Edmonton Economic Development Corporation Pfizer Canada Inc. (Gold) AIHS Team for SMART Neuralprostheses Edmonton Northlands Poultry Research Centre, The (PROJECT SMART) Eli Lilly Canada Inc. (Silver) QiQ Inc. Akshaya Bio Inc. EMD Inc. (Silver) Quest PharmaTech Inc. Alberta Agriculture and Rural Development Enerkem Radient Technologies Inc. Alberta Enterprise and Advanced Education Epsilon Chemicals Ltd. Resverlogix Corp. (Patron) Ernst & Young LLP Sanofi Aventis Group (Silver) Alberta Glycomics Centre Exciton Technologies Inc. Shire Canada Inc. Alberta Innovates - Alberta Research and Genome Alberta SinoVeda Canada Inc. Innovation Authority Genzyme Canada Inc. (Gold) SmileSonica Inc. Alberta Innovates - Bio Solutions (Silver) GlaxoSmithKline Inc. (Gold) Surface Medical Inc. Alberta Innovates - Health Solutions (Platinum) Gowling Lafleur Henderson LLP SynInnova Inc. Alberta Innovates - Technology Futures (Silver) GrowSafe Systems Ltd. Taiga BioActives Inc. Alberta International and Intergovernmental Hannibal Ventures Inc. Takeda Canada Inc. Relations Himark bioGas Inc. Tangent Design Engineering Services Alzheimer’s Innovation Institute Hoffmann-La Roche Limited TC Scientific Inc. AMGEN Canada Inc. (Silver) iHear Unicare Inc. TEC Edmonton Aqua Air Systems Ltd. IMBiotechnologies Ltd. Technology North Corporation Aquila Diagnostic Systems Inc. Innovate Calgary UCB Canada Inc AstraZeneca Canada Inc. (Gold) Innovative Trauma Care Inc. University of Lethbridge ATB Financial Innovotech Inc. ViaGen Inc. ATGCell Inc. Institute for Reconstructive Sciences VWR International Ltd. AVAC Ltd. (Gold) in Medicine (iRSM) W. A. Cochrane & Associates Inc. Bennett Jones LLP Intellectual Capital Corporation Inc. (ICCI) WAI BioProcess Solutions Best Environmental Technologies IntelligentNano Inc. Wax-it Histology Services Inc. Best Management Services Inc. Janssen Inc. (Silver) Western Economic Diversification Canada (Patron) BioNeutra Inc. Keystone Labs Inc. Zymetrix Inc. Biorefining Conversions Network (Silver) KMT Hepatech Inc. BioTalent Canada (Silver) Matter Industrial Design Individual Members BIOTECanada McCarthy Tétrault LLP (Gold) Braconnier, Paul Biovantage Inc. Merck Canada Inc. (Gold) Cox, David (Dr.) Canada’s Research-Based Pharmaceutical Meros Polymers Inc. Desai, Pete (Dr.) Companies (Rx & D) Metabolomic Technnologies Inc. Dias, Vernon (Dr.) Canadian Bio-Systems Inc. Monsanto Canada Inc. Gourley, Al Canadian Strategy Group Inc. (CSG) MTN Consulting Associates Huestis, Garth CanBiocin Inc. NAEJA Pharmaceutical Inc. Lai, Chien-Tsai CEAPRO Inc. NanoSpeed Diagnostics Inc. McKay-Carey, Mary Jane ChemRoutes Corporation NATIONAL Public Relations Philip, Bern Chenomx Inc. Northern Alberta Clinical Trials and Research Rimes, Bob Circle Cardiovascular Imaging Inc. Centre (NACTRC), The Sherburne, Craig K. Clinexus, A Division of Alberta Innovates Northern Alberta Institute of Technology Smith, Rick Technology Futures (novaNait) Swanson, Eric (Dr.) Contract Laboratory Inc. Novartis Pharmaceuticals Canada Inc. (Silver) Tauh, Poonam (Dr.) CQI Consulting Ltd. Odvod Media Corp. (Gold) Welsh, Michael

Extending Elevating Evolving 27 Board of Directors Staff BioAlberta 2012-2013 Amanda Stadel 314 Capital Place, Paul Braconnier President 9707 110 Street Executive-in-Residence, TEC Edmonton Heather Pontikes Edmonton, Alberta, Canada Ross Bricker Manager, Events and Membership T5K 2L9 Phone: 780.425.3804 Managing Director, RB Limited Sanah Jowhari Fax: 780.409.9263 David Cox (Co-Chair) Manager, Medical Product [email protected] Retired Biotechnology Executive Development Program www.bioalberta.com Al Gourley Bev Pederson BioAlberta has been the central voice and organizing Corporate Director and Consultant Financial & Human Resources Coordinator hub for the life sciences industry in Alberta since Ed Knash Donna Parker 1998. It is a private, not-for-profit industry association Vice President, ATB Corporate Financial Services Administrative Coordinator with more than 140 members. The association’s activities are focused on advocacy, promotion and Christopher Micetich networking. In its advocacy efforts on the national President and CEO, NAEJA Pharmaceutical Inc. Consultants stage, BioAlberta joins forces with other life science organizations such as its counterparts in other and Fedora Pharmaceuticals Inc. Medical Product Development Program provinces and BIOTECanada. Rick Pawluk (MPDP) BioAlberta’s core life sciences membership includes: Partner, McCarthy Tetrault LLP Travis Colley MPDP Technical Director ·· Academic and Research Institutions Ryan Radke* ·· Agriculture President, BioAlberta Darren Jakal ·· Environmental Jacqueline Shan MPDP Technical Director ·· Government President and CEO, Afinix Life Sciences Inc. ·· Health-BioPharma ·· Industrial Rick Smith (Co-Chair) ·· Medical Devices Retired Biotechnology Executive ·· Nutraceuticals ·· Support Services Daniel Brennan Partner, NATIONAL Public Relations Jeremy Webster Go Social with BioAlberta Partner, Deloitte & Touche LLP LinkedIn http://www.linkedin.com/company/ *resigned March 2013 bioalberta-alberta-biotechnology- association- Twitter www.twitter.com/BioAlberta or @BioAlberta Facebook www.facebook.com/BioAlberta BioAlberta Beat (blog) www.bioalberta.com/bioalberta-beat YouTube Channel youtube.com/bioalberta

28 BioAlberta Annual Report 2013