Government Recovers $40 Million from Bankrupt Quebec Vaccine Producer Medicago

Ottawa – December 9, 2023

Government Recovers $40 Million from Bankrupt Quebec Vaccine

In a significant development, the federal government has successfully recouped $40 million of its initial investment in the “now-defunct Quebec-based vaccine developer, Medicago.” The Innovation Minister announced this groundbreaking recovery on Thursday, revealing that the funds were secured as part of a comprehensive deal with Medicago’s parent company.

As per the terms of the agreement, Medicago’s valuable intellectual property will remain within Canadian borders, finding a new home under a restructured entity. The federal government had injected $173 million into Medicago during the early stages of the COVID-19 pandemic. The financial support aimed to facilitate the development of a plant-based vaccine in Quebec City and the establishment of a production facility for vaccine doses.

The Procurement Department further extended a non-refundable advance of $150 million to expedite vaccine production before Health Canada granted formal approval. Despite gaining approval for use in Canada early last year, Medicago’s vaccine faced global challenges. The World Health Organization rejected the vaccine due to the company’s association with tobacco giant Philip Morris, rendering international distribution impossible.

Philip Morris held a significant stake in Medicago, approximately one-fifth of the company, until December 2022, just months before the vaccine developer ceased operations. Global demand for vaccinations dwindled, prompting the Japanese parent company, Mitsubishi Chemical Group, to shut down Medicago in February.

Under the new agreement between Canada and Mitsubishi Chemical Group, key assets such as research, intellectual property, and equipment will be transferred to a newly established entity named Aramis Biotechnologies. This venture, initiated by former Medicago employees in February, is set to operate out of Quebec City, ensuring the retention of crucial technology and expertise in Canada’s life-sciences sector.

In a statement, Innovation Minister Francois-Philippe Champagne emphasized the importance of Medicago’s technology to Canada’s life-sciences sector. He highlighted the government’s efforts to preserve jobs and expertise in Quebec through this strategic agreement.

The controversy surrounding Canada’s $150-million non-refundable payment to Medicago came under scrutiny at the House of Commons health committee this week. Andrea Andrachuk, a director general at the Procurement Department, defended the government’s decision, explaining that the investment was made in 2020 when no COVID-19 vaccine had yet received approval from Health Canada. The focus was on securing vaccine doses for Canadians amid fierce global competition for viable options.

Following the termination of Medicago’s operations, Canada and the company mutually agreed to end the contract, managing the country’s oversupply of COVID-19 vaccines. Opposition MPs questioned the initial investment, pointing out that the WHO’s tobacco policy had foreseeable implications on the global approval of Medicago’s vaccine. Andrachuk clarified that, at the time, the government’s priority was ensuring vaccine availability for Canadians.

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