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Companies chasing the next big thing

LISTED companies looking for quick growth and international exposure are changing their spots and re-emerging in new industries.

The flavour of the month appears to be biotechnology, with applied technology also attracting the attention of companies merely seeking diversification and value adding.

While many speculative companies have chased fast fortunes, the latest incarnations are not being promoted in the dot.com ilk.

Backed by their shareholders, three WA companies have decided biotech R&D is the next big thing for them.

Led by management with research, pharmaceutical or medical connections, former minerals explorers Exodus Minerals and Britannia Gold (now Solbec Pharmaceuticals) and former produce exporter Sumich Group have chosen new names and ventured into hormone replacement therapy, cancer vaccines, drug implants and orthopaedics.

Solbec Pharmaceuticals chairman Michael Ruane said if his company got it right, it would be a billion dollar concern.

The company has invested in the BEC anti-cancer agent and a joint venture to register and market hormone supplements.

One of the products, a topical testosterone treatment, is expected to be on the Australian market by the end of the year.

The latest of the companies to change its name, the Sumich Group, became pSivida earlier this month. The new company holds a founding 40 per cent interest in a joint venture with UK bio-engineering group pSiMedica, through which it will support applications research for BioSilicon, a patented bio-friendly form of silicon.

Applications under trial include using a porous silicon to implant drugs into humans and animals and to replace bolts, screws and adhesives used in orthopaedics surgery.

pSivida managing director Gavin Rezos described BioSilicon as “exciting biotechnology”, so exciting that when he first saw it he resigned as banking director with HSBC Investment Bank. With friend Tony Grist and researcher and entrepreneur Roger Aston, Mr Rezos looked for a vehicle that could provide funds to UK Defence Evaluation and Research agency scientists, to develop the porous silicon.

That vehicle was presented to them in the form of the suspended Sumich Group.

The company also has an agreement with PowderJect Pharmaceuticals to develop the silicon in conjunction with PowderJect’s needle-free drug delivery systems.

When Exodus Minerals directors realised gold exploration companies in Australia were doing great things but for little investor reward, former scientific researcher and managing director Alistair Cowden started taking notice of popular public interest in health and medical cures.

Dr Cowden assessed the giant leap forward in genetic technology had carried the biotechnology industry in from the fringe. Not only could he envision it as an “industry whose time had come”, but one which showed remarkable similarities to mining exploration.

“Exodus Minerals had built up a pretty good portfolio of exploration projects, but we started to consider other options when, although we hadn’t lost faith, the market clearly had,” he said.

Hence, when two promising projects supported by Dr Aston were in need of funding, and when pSivida realised it had more than it could handle with BioSilicon development and application rights, Mr Rezos found a receptive ear at Exodus.

“We’ve acquired the key ingredients, the right projects and the right people,” Dr Cowden said. “Something may be great science, but of little commercial value. These projects will be in the international marketplace.”

Dr Aston, valued for his biotechnology expertise and proximity to the UK market, was appointed to the board, as was Professor Robyn Ward, oncologist and chief researcher at St Vincent’s Hospital, Sydney.

Professor Ward had identified a tumour suppressor gene, p53, and developed antibodies with the potential to be developed into a vaccine for a range of cancers.

Meanwhile Murdoch University’s Bob Cook was researching a possible viral trigger for multiple sclerosis and was looking to develop a diagnostic test.

Exodus took on both projects, acquiring the rights to commercialise p53 products and an initial 15 per cent stake in MS Biotechnology, the company holding Professor Cook’s research. Now trading as Australian Cancer Technology, the former Exodus plans to divest its mining interests, to clarify and simplify the company’s profile.

“Our mining assets have significant value, but they’re not sufficient on their own,” Dr Cowden said.

As a full-time biotech company, Australian Cancer Technology is expecting to keep shareholders more than happy.

“The MS project is worth an awful lot of money. If a novel virus is determined and diagnostic test developed, it’s worth tens of millions of dollars,” Dr Cowden said.

But he is even more enthusiastic about the shorter term p53 project, describing it as “as good as it gets”. If the project ultimately fails, Australian Cancer Technology believes its stock will nonetheless double in value.

“But if the technology is successful, we will become a very, very big company. These types of rewards are just not available in the Australian mining industry,” Dr Cowden said.

For companies like Australian Cancer Technology, pSivida and Solbec Pharmaceuticals, there is no shortage of biotechnology projects from which to choose.

“Other places and universities are now ringing up and saying, ‘Hello? Have I got a project for you,’” Dr Cowden enthuses.

“But biotechnology is not a cheap industry to be in,” he warns all interested bystanders.

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