Cash flow a hurdle for biotech

Alison Birrane begins a four-week series on WA’s technology leaders by looking at the State’s growing medical technology and biotechnology sector, which features some world-class performers.

WITH many of the Bali bomb victims evacuated to Perth for medical treatment, international media focus was placed firmly on Western Australian medical expertise.

And what the world saw was some of the State’s world-class medical innovation, particularly the treatment of burns victims with the groundbreaking spray-on skin technology developed by Perth-based Clinical Cell Culture.

However, C3 isn’t the only Western Australian company making significant headway in the medical and biotechnology fields.

There is a raft of WA-based companies gaining attention in the medical and biotech fraternities, and the investment community is now starting to take notice.

C3 is the company jointly established in 1999 by Dr Fiona Wood, the director of Royal Perth Hospital’s burns unit, with C3 CEO Marie Stoner to commercialise the skin culture technologies developed by research group, the McComb Foundation.

While C3 is perhaps one of the higher profile WA medical or biotech companies, it shares research and development ranks with the likes of Chemeq Limited, VRI Biomedical Limited, Imugene Limited, pSivida Limited, CustomVis, Australia Cancer Technology, Solbec Pharmaceuticals Limited, Xcell Diagnostics Limited, MedicVision, OzGene and Eastland Medical Systems Limited.  Another emerging WA company recently gaining press attention is EQiTX.

The focus of the medical and biotechnology field in Perth is diverse – from spray-on skin to laser eye technology, skin cancer technology, pharmaceuticals, medical equipment and telemedicine.

Burdett Buckeridge and Young analyst Graeme Wald said there was an above-average chance of the products of certain WA biotech companies reaching the market, such as those of pSivida, VRI Biomedical and Australian Cancer Technologies.

Mr Wald said all three of these companies had excellent, and proven, technology.

Others in the stockbroking industry support this view, saying that if share prices among biotech companies were higher, there might be more market interest.

Stockbrokers contacted by WA Business News say that it was only a matter of time and cash flow before some of the biotech stocks started to perform.

Mr Wald said the development of biotech companies such as VRI Biomedical, pSivida and Australian Cancer technologies was hampered by cash flow.

“I expect excellent interest in the sector once the money that has been put into it starts to pay off,” he said.

Paterson Ord Minnett analyst Kim Christie said the sector was “moving along” at the moment, however it tended to be announcement driven, which made it a difficult sector to follow.

“Share prices are volatile and tend to move up and down fairly quickly,” Ms Christie said.

“There has been a couple of eastern States companies that have put out good announcements, which is driving the sector overall.”

However, Euroz analyst Steve Suleski said WA didn’t have a particular investment sector that followed the biotech stock, as the stockbroking focus was more on mining and resources.

“Victoria and Queensland have bigger biotech stockbroking interest,” he said.