A small group of Perth investors who continue to support the unfashionable biotechnology sector are hoping that patience will prove to be a virtue, just like for the mining investors who stuck to their guns during the tech boom and are now reaping the rew
A small group of Perth investors who continue to support the unfashionable biotechnology sector are hoping that patience will prove to be a virtue, just like for the mining investors who stuck to their guns during the tech boom and are now reaping the rewards.
Local investors who remain focused on the tech sector include Australian Securities Exchange-listed BioTech Capital Ltd, venture capital manager Stoneridge Ventures and superannuation fund Westscheme.
BioTech Capital has a $36 million investment portfolio focused on 10 companies, including Perth firms Phylogica Ltd, Sensear Ltd and Neurodiscovery Ltd.
It is also sitting on $9 million of cash, which indicates the challenge it faces negotiating attractive investment opportunities.
Manager Harry Karelis said the biggest challenge was finding an exit strategy, which usually means either a trade sale or a sharemarket float.
“Biotech is not for the faint hearted,” he said. “The market is only interested in later stage companies that are in clinical trials or generating revenue.”
One of its investee companies, Continence Control Systems International Pty Ltd, has addressed this issue by merging with a second private company in the continence management sector, Colocare Holdings Pty Ltd.
Mr Karelis said the combination of CCS and Colocare should make it more appealing when it floats on the stockmarket next year.
“They were both single product companies and that was an issue for investors,” he said.
BioTech Capital’s new investments this year include $2 million in hearing device developer Sensear and $1.5 million in ASX-listed drug developer Neurodiscovery, and is planning to make a third investment shortly.
Westscheme, which has a $2.8 billion investment portfolio, has been an active investor in private equity and venture capital for many years. It has agreed, in tandem with Brisbane-based investment company Uniseed, to invest $1.75 million in CCS ahead of its ASX listing.
Westscheme has also teamed up with Stoneridge Ventures to invest in a number of early stage technology companies that have emerged from university research programs.
It recently agreed to invest $500,000 in Nedlands company OrthoCell Pty Ltd, as part of a $1 million capital raising.
Westscheme also invested $300,000 in WA drug development company Glycan Biosciences Pty Ltd.
OrthoCell is developing technologies for tendon treatment, after licencing the intellectual property from the University of WA.
It recently completed a $1.2 million “clean room” facility at Murdoch University, which will be used for its own research and development, and will also be available to other companies.
Another major development for OrthoCell was recruiting Swedish orthopaedics professor Lars Lidgren, who is considered a world leader in the field, to join the company as a director.
Another local company that has attracted support from Stoneridge is Spirogene Pty Ltd, a spin-out from Murdoch University that is developing a vaccine for diseases in chickens. Stoneridge has committed to invest $500,000 in Spirogene.
Westscheme has invested substantial funds on the east coast, where it has found more opportunities than in WA.
“It’s amazing how innovative Australian research is,” chief executive Howard Rosario said.
In June, it committed to invest $15.6 million in the Melbourne-based Medical Research Commercialisation Fund, and has agreed to invest up to $15 million in Uniseed, which is backed by the universities of Queensland, Melbourne and NSW.