Payments on three sets of loans are now scheduled to start next April.
THUNDER BAY — The Lake Superior Centre for Regenerative Medicine owes over a million dollars to the City of Thunder Bay and the city’s Community Economic Development Commission.
It owes a further $300,000 to Thunder Bay Ventures, a federally-funded organization.
Payments on the loans – which date as far back as 2009 – have been delayed, but the centre’s executive director is expressing confidence that money will start flowing back to the city next spring.
That’s in spite of challenges this year related to COVID-19.
RegenMed, as it is commonly known, processes donated human tissue and bone for distribution to hospitals across Canada.
Located in a building on Munro Street at Algoma Street, the tissue bank was founded in 2006 and operates a not-for-profit cost recovery model.
It currently employs 15 people, but city officials see it as a key component in developing a health sciences cluster in Thunder Bay.
Achieving that goal has required considerable patience.
Since it loaned RegenMed $400,000 in 2009 and $100,000 in 2011, the CEDC reports that only two minor interest payments were made, back in 2011.
That same year, Thunder Bay city council approved a non-repayable grant of $500,000.
In 2012 and 2013, council also approved interest-free loans totalling $550,000.
Repayment was to begin last year, but council agreed to RegenMed’s request for a two-year extension.
Monthly installments of about $5,000 are now supposed to commence next April and continue until 2031.
“We are fortunate that a lot of things have been going our way in the last few years, and we are positioned to be able to start making those payments,” said executive director David Stezenko.
RegenMed is also scheduled to start repaying its loans from the CEDC at the same time.
Those loans carry non-compounding interest of four per cent. The current agreement requires complete payment by 2025, but CEDC CEO Eric Zakrewski said “our board may agree to a longer runway, similar to the city.”
Thunder Bay Ventures has been similarly sympathetic to RegenMed’s protracted efforts to build its place in the market.
“When you’re in a startup position like they were, there’s a period of time when it’s tough for them to make payments,” said Wayne Fletcher, president of the Thunder Bay Ventures board.
Fletcher said RegenMed made “some” payments, but then “we went into – not forgiveness – but abeyance I’ll call it. We said ‘Okay, you don’t have to pay, because we know you’re going through a rough patch’ “.
Payments on the Ventures loans have been pushed back to the spring as well.
The CEDC’s Zakrewski said “Our board remains supportive of Regen. And there’s some really good jobs there. Those jobs and the core funding they get from the province every year for those doctors and scientists, the researchers, they’re slowly contributing to the economy and they’re building the product line out there.”
Building the product line is what Stezenko is counting on.
“It’s been a challenging year with the pandemic, but we’re looking good,” he said.
The challenges relate in part to the suspension of transplant surgeries across the country earlier this year, reducing the need for tissue products processed in Thunder Bay.
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Case studies will be conducted at Kent State University in Ohio, the Queen Elizabeth II Health Sciences Centre in Halifax, St. Michael’s Hospital in Toronto, and an advanced wound care treatment centre in Rainy River.
Stezenko said “The one in the US is actually starting this week, and we’re hoping a couple of the Canadian sites might be able to start in the next few weeks. And as soon as that gets going…it takes us to the downhill that allows us to start distributing these products.”
He said that, in turn, will generate the kind of revenue RegenMed needs to start paying down its debt.
Stezenko met earlier this year with representatives of the city, the CEDC, and Thunder Bay Ventures, and said he felt “blessed” by the relationship.
“To hear them say they are so proud of us, that there’s been so much potential in this biomedical cluster, and we’re the one that’s really hanging on, and by all appearances the one that’s actually gonna bring things to fruition.”
Whether its objectives are achieved sooner or later could be a moot point, as the creditors may remain reluctant to force the issue.
The CEDC’s auditors have already flagged their loan with “provision for impairment.”
Zakrewski explained “That’s an accounting thing where basically, because Regen failed to service the debt instrument on a regular basis in the past, the auditors have to essentially point that out.”
He emphasized “it doesn’t mean the board has decided to write it off or accept any form of writeoff or lesser amount. We’re still expecting payment in full over time.”
Zakrewski said all three lenders have reviewed the financials and are in alignment in feeling RegenMed is on the right track now.
He suggested the alternative to remaining patient with debt repayment is simply unpalatable.
“The alternative is to put a harpoon in them now and just kill it, and sell it off for scrap, which we won’t recover anything…So the combination of those jobs, the product line they’re developing, their business plan to go forward and grow, it’s got the support of city council and the two boards.”
While noting that the path that COVID-19 takes in the coming months remains a concern, Stezenko said he and his staff are maintaining a positive outlook about RegenMed’s growth prospects.
“It’s difficult to navigate…and obviously no one’s gonna tell this pandemic what it’s gonna do. But we’re doing our best to weather the storm, and it’s going quite well.”