How Canadians manage and mismanage intellectual property (IP) lies at the heart of Canada’s innovation woes. As federal and provincial governments unroll their innovation strategies – after decades of neglect – they need to build on Canadian successes while putting aside tired and failed strategies. One groundbreaking deal announced last week points to a way forward.

These pages have oft chronicled Canada’s dismal innovation performance. We generate world-class research but fail to translate it into wealth-generating IP. Instead, we let others acquire these assets at low cost. Dan Breznitz of the Munk School of Global Affairs and Public Policy and University of Toronto colleague Mark Fox put it bluntly: “Canadians operate in a world where the deck of cards is already dealt and our competitors have all the aces.”

Last week, Celgene – an American biotech company – invested the most ever for a Canadian-discovered early-stage drug. The US$40-million down and potentially US$1-billion deal only came about because of strategic funding by governments both for “open science" partnerships and for risk-taking, IP-generating research and commercialization centres. Open science partnerships openly share data and research results with the scientific community and do not seek patent rights over their results.

The Celgene deal is the fruit of a new innovation path – from open science to Canadian IP – that involves the Ontario government-funded Ontario Institute for Cancer Research (OICR) and its commercialization partner, FACIT Inc. This "made in Canada” approach does not copy U.S. approaches, which commonly result in Canadian IP rights being transferred to foreign firms for pennies on the dollar, as we are doing in the cases of Sidewalk Labs and investments in artificial intelligence. Rather, it leaves the IP in Canada for much longer, within a locally owned company that will continue to develop the drug and conduct clinical trials here, and thus extract fuller scientific and economic value from our investments.

The catalyst for the Celgene deal was an open science partnership between OICR and the University of Toronto’s Structural Genomics Consortium (SGC).

The SGC is a Canadian success story. Its pioneering open science partnerships have attracted more than $100-million of industry investment into Canada to investigate which proteins are suitable targets for new drug discovery – all without patenting anything. With no patents at stake, the SGC, its partners and collaborators enter into contracts in a couple of weeks rather than the normal six to 18 months needed to manage IP concerns.

Five years ago, OICR embraced open science as an early innovation strategy and partnered with the SGC. Both OICR and SGC appreciated that although IP is a key pillar of the innovation economy, seeking it too early or by the wrong entity creates barriers to collaboration, leads to redundant research, introduces significant transaction costs and, perhaps counterintuitively, slows down innovation. The open science collaboration allowed knowledge, materials and data to flow freely and enabled OICR and SGC to develop a new chemical probe against the WDR5 protein and to share it freely and rapidly with research groups around the world. Those groups revealed WDR5’s therapeutic role in leukemia, breast cancer and neuroblastoma.

With seed capital in place, FACIT Inc. enabled OICR to quickly translate this knowledge into a business case for targeted drug development. Building from the know-how and materials gained through its open science partnership, OICR rapidly invented a category-busting drug against WDR5 and patented it, years ahead of schedule had it operated through a proprietary approach.

The magic of open science is that it combines incentives of hard-driving academic competition with those of the business world, and allows the partners to take on risks at low cost and quickly translate research to the commercial sector. FACIT Inc. leveraged a fairly modest (in the biotech world) $3-million in seed funding into a huge deal.

This is not the first time an SGC open science collaboration led to downstream commercial success. An open project between the SGC and the Dana Farber Cancer Institute in Boston followed a similar pattern with respect to openly shared proteins and tools. Dana Farber developed its own proprietary compounds, and then spun out a company that it sold to Roche for US$635-million in contingent payments.

Private firms likewise derive significant competitive benefits from open science partnerships. Indeed, SGC’s pharmaceutical-company funders, who are among the largest in the industry, routinely engage in similar collaborative projects with the consortium.

The WDR5 deal is the first to arise from an all-Canadian collaboration. It is a model that has now shown itself capable of creating substantial local scientific and economic benefits.

Federal and provincial governments need to build on the open science to IP success as part of a comprehensive strategy to support made-in-Canada innovation. Apart from funding research centres with Canada-first mandates such as OICR, governments need to actively support open science collaborations in all sectors of the economy through policy and funding, both of the partnerships and of the tools – contracts, training and best practices – that enable them.

This article originally appeared in the Globe and Mail.