Queensland's ClubBio2003 – Passion, People & Products
In brief: We interrupt our current series on research collaboration structuring to bring this report from Senior Associate, Lorien Beazley on last week's ClubBio2003. ClubBio is an annual conference for the Queensland biotechnology industry. Under the theme Passion, People & Products and at the Gold Coast last Friday the industry reflected on the last 12 months.
Part 3 of our series on structuring research collaborations in Australian biotechnology will return next issue with a detailed review of strategies for commercialisation.
Another year over
At last year's ClubBio the mood was positive and there was a clear focus on planning for the future. Then the message was that venture capitalists were being very selective, investors were risk averse and the IPO window was firmly shut. In the last 12 months there have been some gains:
- venture capital funding is still selective however they are being criticised for being desperate to back winners and missing opportunities. Further, more VC funds are on their way. Gary Pace, CEO of QRxPharma, discussed Scientiaus Fund I, a $250 million early stage venture capital fund (currently raising capital in Australia and overseas) specialising in investing in the outcomes of research from Australia's premier R&D catchments;
- investors are still risk averse but paradoxically so since, according to Prof. Michael Vitale from the Australian Graduate School of Management, in the past 7 years the total amount of "professional" VC money put into the Australian biotechnology industry was $130 million while Australians bet $118 million in a single day on Tuesday's Melbourne cup; and
- "the [IPO] window is open if you didn't know," says David Blake, co-editor of BioShares. Since then Alchemia's announced [see AFR 10 November 2003, page 17] a $21 million initial public offering (30 million new shares at 70¢).
But Canadian Laurence Bremner, COO of Melbourne based BioComm, made it clear that Australia is still 5-6 years behind the Canadian biotechnology industry. According to Bremner, if the Australian industry is to thrive, there is some work to be done.
Where's the beef?
So what is being done? As usual at these conferences, a vast majority of speakers echoed what has been said before: a successful industry needs good people (both scientific and managerial), strong technology, secured intellectual property, a clear market and cash.
Michael Vitale, made the point that if the industry is going to get serious it needs to reconsider convening conferences where these issues are discussed over and over while waiting for the industry to take off. Sooner, rather than later, the talk has to move from 'should do' to 'have done'. Vitale says that if this doesn't happen, the industry stakeholders (government, investors, scientists) will be demanding the industry answer the question: 'where's the beef?
New issues
Three themes cut across a number of presentations:
- many spoke about the need for experienced managerial staff including board members and CEOs. The riddle is how Australians are going to get experience if companies are only looking for experienced players.
The riddle was answered inadvertently by a number of speakers: mentoring.
Laurence Bremner said he had great mentors along the way and that his mentors were people with this passion and that it was passion that made the difference. 'If you don't have passion for what you are doing, the person who does will beat you.' Gary Redlich, former Peplin Biotech CEO and Michael Vitale also mentioned mentoring and its importance. It seems that in order to give the Australian biotechnology community the depth of experience it needs, those who have been there before need to share their experiences by performing a true day to day mentoring role.
- the Australian biotechnology community can't rely on mergers and acquisitions for growth or consolidation. Michael Vitale says there have been less than 10 true M&A deals in Australia's biotech history. 'It hasn't happened and it won't be happening,' Vitale says and put forward a number of suggestions for this:
- ego and control – the idea of losing control of a technology can be unpalatable;
- CEO objectives – there are few Australian biotechnology CEO's with a significant shareholding interest in the company. Most are remunerated with salary. CEO objectives are not aligned with those of the shareholders;
- synergies – there are few naturally synergistic biotechnology companies in Australia; and
- cost – most companies would prefer to spend money on R&D rather than M&A.
- the opportunities for biotechnology companies around the world are opening up since big pharma product pipelines are drying up. Gary Redlich says over 30 big pharma patents are due to expire in the next couple of years meaning a loss of $50 billion in revenue. Redlich says this gives biotechnology companies an excellent opportunity to capture big pharma's interest for new products and push for multifaceted and creative partnering deals.
Program
ClubBio2003 offered a good mix of speakers and sessions. Some gave controversial points of view:
- Gary Pace suggested that in addition to having a presence in the US, Australian biotechnology companies need to gear the entire venture structure, valuations, tax and infrastructure to exiting in the US. Pace says, 'Americans don't come to Australia unless they are coming for a holiday...The game plan is to aim for a US exit.'
- David Blake, Co-editor of BioShares, says that Australian biotechnology companies needed to grow up and be aware of all of the risks including:
- the 'K-Risk' (named after Dennis Kozlowski, CEO and Chair of Tyco International) by keeping a close eye on those in control; and
- the 'D-Risk' – that of delusional behaviour, especially when it comes to valuations.
Also particularly interesting was the final plenary session that covered:
- human health in which Michael Good, Director of QIMR gave a refreshing presentation on the future of healthcare in the next 20 years;
- Gerard Davis' (Genetic Solutions) fascinating presentation about the current use of biotechnology tools in industry (from the collection of animal samples by Jackaroos '4 days from a fridge' to analysis in the lab) to determine and ultimately increase marble score and tenderness in meat; and
- Australian Centre for Plant Functional Genomics' Peter Langridge speaking on GM developments in wheat and other grains.
Wrap
ClubBio always pulls a good crowd including The Hon. Paul Lucas, Minister for Innovation and Information Economy who spoke at the conference dinner.
ClubBio 2002 was organised by the Queensland chapter of Ausbiotech Ltd. The word is that since Brisbane is hosting the AusBiotech National Conference (7 – 10 November 2004), a more focussed ClubBioDiscovery will be held in North Queensland in 2004. ClubBio will rev up again in 2005.