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Winnipeg Free Press - PRINT EDITION

Tough times for tech firms in city

By: Martin Cash

Posted: 11/22/2012 1:00 AM | Comments: 0

It's not yet necessary to post a sign in Winnipeg telling the last person out of the life sciences and medical device labs to turn out the lights.

But it's getting close.

Regardless of how much it makes sense, IMRIS is leaving for Minneapolis by next summer, extracting 130 jobs and one of the slickest, sexiest, home-grown technology companies from the market.

The worrisome part is that IMRIS is not alone.

In the last month alone, two other Winnipeg companies -- albeit much smaller ones -- have basically made the same move.

All sorts of rumours are flying as to why it's happening. Many believe a key for all three companies is that they want a U.S. presence to increase their profiles among U.S. investors.

Last month, Diamedica Inc., a 10-year-old Winnipeg company that is developing novel diabetes treatments, opened a new headquarters in Minneapolis. Although it only has about four employees, the company CEO, Rick Pauls, has said he expects that number to grow to 20. It is likely to close its Winnipeg shop.

Also last month, Monteris Medical Inc., another decade-old company that has developed technology to treat deep-seated brain tumours, also moved much of its operation to Minneapolis. It will retain its research and development and about 20 people in Winnipeg.

Monteris' newly hired CEO was based in Minneapolis and now that the privately owned company has its sales and marketing operation in Minneapolis, the CEO will only have to commute to Winnipeg every other week.

And it does not stop there.

Cangene Inc., a company that not so long ago had bragging rights as one of the most profitable biotech companies in Canada, is shrinking its Winnipeg footprint rapidly.

At the beginning of the year, the company announced layoffs of about 120 people, reducing its Winnipeg workforce to about 500.

An unconfirmed report has that number down to 300 now and sources in the real estate sector say the company is testing the market to see if there are buyers for one of its three Winnipeg facilities.

Cangene officials were not available. The company's CEO is based near Philadelphia, as is its newly hired vice-president of sales and marketing.

"That's a dangerous street to be on," said one Winnipeg executive in the life sciences business, referring to the dynamic that sometimes occurs when a company migrates to where the CEO is based.

Winnipeg's shrinking technology sector was impacted by the announced closure of the NRC's Institute of Biodiagnostics and layoff notices to more than 50 Winnipeg scientists in April and then another 40 biologists, chemists and other scientists who worked on the federal government's Experimental Lakes Area project in May.

It has been a bad year to be in the science business in Winnipeg.

And things may very well get worse before they get better.

That's because access to capital for the kind of small startups that were springing up 10 years ago is no longer available. And there's little hope in sight.

Dawson Reimer, president of Medicure Inc., which benefited from a big loan from the province to help restructure last year, said, "Back then, I think there were about a dozen (life sciences) startups that were active. I can only think of one now."

Reimer notes the impact labour-sponsored funds had in those days. Irrespective of their return to investors, those funds kickstarted the industry. IMRIS, Diamedica and Monteris all received funds from either Crocus or Ensis/Growthworks.

In Saskatchewan, those kinds of retail funds are still raising $50 million per year to invest in that province.

It is a critical void for Manitoba's knowledge-based startups.

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition November 22, 2012 B7

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About Martin Cash

Martin Cash joined the Free Press in 1987 as the paper’s business columnist.

He has spent two decades chronicling the city’s business affairs.

Martin won a citation of merit from the National Newspaper Awards in 2001 for his coverage of the strike and subsequent multi-million-dollar union settlement at the Versatile tractor plant. He has also received honours and awards for his work on agriculture and technology development in Manitoba.

Martin has written a coffee-table book about the commercial and industrial make-up of the city, called Winnipeg: A Prairie Portrait.

Martin Cash on Twitter: @martycash

martin.cash@freepress.mb.ca

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