Deal Opportunities for San Francisco-Bay Area Biotechs as Australian Sector Heats Up with Investments Powering Both Start-Ups and Listed Companies
Reflects Global Biotechnology Industry's 'Robust' Growth Just Reported by Ernst & Young in Its Annual Review of the Sector
The Bay Area biotech community could do well to cast its net across the Pacific for deals in Australia where biotechs are coming off a good year in 2006 and reporting a positive March quarter in 2007. Deals and investments are up and there are healthy stock prices for listed companies, according to Fred Welz, Senior Investment Commissioner for North America and Mexico for Invest Australia, a Bay Biotech 2007 conference sponsor.
Australia is also looking for collaborators, partners and co-investors in Northern California which, according to BayBio's 2007 IMPACT report, is home to the world's largest life sciences cluster and houses one-third of the US industry.
Welz said Australia was ranked first in the Asia-Pacific as a biotech location, by Ernst and Young, and has long been a favourite for US pharma and biotechs for promising new research and products to fill pipelines.
Bioshares, a leading biotech investment news service in Australia, has recently reported that Australian life science firms raised over US$500 million in 2006, similar to 2005 levels and significantly more than in 2003 and 2004.
In addition, the market capitalisation of combined biotechnology and medical device companies in Australia more than doubled from 2003 to 2006, growing from A$10.1 billion (USD8.4 billion) in December 2003 to an estimated A$26.5 billion (USD22.1 billion) in December 2006. (Hopper and Thorburn, 2007 Bio-Industry Review, Australia & New Zealand)
Australian biotechs are growing and maturing, presenting a number of investment and partnering opportunities for BayBio companies. Bioshares recently reported an increase in the number of small cap companies capitalised at more than $100 million (US$80 million), from 19 to 25 over the past year. And the number of products in Phase II and III trials in Australia has increased over the past two years to over 60. (Hopper and Thorburn, 2007 Bio-Industry Review – Australia and New Zealand).
San Francisco-based Welz said on the eve of Bay Biotech 2007 (April 26, 2007) that analysts from leading investment houses in Australia are buoyant about the sector, which is attracting investment dollars and upbeat projections.
According to Alison Coutts, senior analyst with leading investment firm eG Capital which is hosting an investor Expo in the Bay Area May 1, 2007, the Australian biotech sector has had a remarkable pick up from around nine months ago.
“At that time we were coming out of a 18 month slump. Since then there have been a number of companies with great news and maturing product development. This was coupled with an abatement in the excitement around mining and resource stocks, which has given investors more interest to look again at biotechs,” Coutts said.
“There has been a strong rally recently in a handful of stocks including Progen Pharmaceuticals and Avexa, both of which have had strong clinical trial results. Avexa shares have nearly doubled in the last month after the company released strong phase IIb HIV data. Progen shares have risen over 200% from a year ago on the back of strong phase II data on liver cancer trials. A number of other companies, such as Acrux and ChemGenex, have also had strong price rises with the market starting to appreciate their inherent strong competitive position.”
This reflects Ernst & Young’s ‘Beyond Borders' findings in its annual review of the sector which showed that the global biotechnology industry demonstrated 'robust' growth across almost every performance indicator in 2006.
San Francisco based Alta Partners has recently invested in ChemGenex Pharmaceuticals and Genentech has partnered with the world renowned Walter and Eliza Hall Institute. Australian companies, Peplin (Phil Moody, Peplin’s CFO, is a member of BayBio’s Board of Directors) and ChemGenex Pharmaceuticals also have a presence in the Bay Area.
Bay area company Aradigm Corporation’s CEO, Dr Igor Gonda, was most recently CEO of Australian company Acrux (its lead product has successfully completed Phase 3 trials in the US and a New Drug Application has been submitted to the FDA). Dr Gonda will speak at BayBio in the Global Talent Pool (or Ocean) session at 11.15am. www.baybio.org/wt/home/BayBio07_Track2
Welz said Australia, with its strong R&D, science and skills base driving the sector, was also well positioned for continued interest from U.S., global pharma, and biotech firms. According to the Beyond Borders report, there is a reversal of recent trends, with pharmaceutical buyers gravitating towards early-stage platforms and technologies, Welz said. Australia has strong capabilities in these areas and BayBio members should look to Australia as a key plank in their global search and evaluation efforts.
Please visit Invest Australia at Bay Biotech 2007 www.baybio.org or contact Invest Australia's industry specialist based in San Francisco.
Fast Facts on Australian Biotech
About Invest Australia
Invest Australia (www.investaustralia.gov.au) is the Australian Government's inward investment agency that helps companies build their business in Australia, and offers investors a free, comprehensive and confidential service. Between July 2002 and December 2006, Invest Australia played a verified role in attracting 330 projects worth approximately $53 billion, with the potential to create more than 25,000 jobs and generate $11 billion in export earnings.
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