Phylogica spins out to market

The first spin-off from the Telethon Child Health Institute is heading to the Australian Stock Exchange seeking to raise $5 million from the issue of 25 million 20-cent shares.

Phylogica produces drug lead candidates and aims to enter into partnerships with larger pharmaceutical companies or biotechnology players to earn its revenue.

It lodged its prospectus with the Australian Securities and Investments Commission on February 24.

Phylogica’s technology is the brainchild of WA Business News 40under40 winner Paul Watt, inventor of the Funhaler, a device designed to make taking preventative asthma medication ‘fun’ for children.

Dr Watt, who is also an executive director of Phylogica and the company’s chief scientific officer, said its technology revolved around a library of phylomers it had generated.

Those phylomers, he said, were the keys that undid the biological locks that could lead to new drugs to treat various conditions.

“Our business model is to have other companies come to us with the biological locks they want opened,” Dr Watt said.

In its prospectus Phylogica has highlighted asthma, diabetes and stroke as the areas it wants to concentrate on.

For example, the prospectus says the company has identified several candidates that could lead to a house mite allergen vaccine.

Phylogica’s board is headed by non-executive chairman Aki von Roy, who was president of Bristol-Myers Squibb, Europe, which had sales of $US2.2 billion and more than 7,500 employees.

Also on the board are Dr Stewart Washer (CEO and executive director), Harry Karelis (non-executive director), Bruce McHarrie (non-executive director, and Dr Saliba Sassine.

Mr Karelis has also played a major role in the development of Phylogica. His BioTech fund put $2 million into the company.

He, along with Phylogica’s lead manager Azure Capital, is credited with changing the company’s business model.

Dr Watt said Phylogica had been prepared to licence its phylomer library to other companies initially.

“Now what we’re not doing is giving away our golden goose,” he said.

Another approach Phylogica will be taking is to partner earlier with drug manufacturers.

While Dr Watt admitted such an approach reduced the return the company could expect, he said the pay-off came in lower risk.

The company would be seeking to enter into a number of partnerships, which would expand its revenue earning opportunities.

“Our model now is to extend our technology into all sorts of areas,” Dr Watt said.

If the company’s float goes ahead, the two largest shareholders will be the Telethon Institute for Child Health Research and Mr Karelis’ BioTech.

Dr Watt said with Phylogica being the first spin-off from the Telethon Insitute, the pressure was on to make sure everything went right.

“We’ve spent more than half a million dollars on the patent portfolio alone,” he said.

That patent portfolio relates to eight patent families.