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Australasian Biotechnology (backfiles)
ISSN: 1036-7128
Vol. 10, Num. 2, 2000, pp. 15-20
Untitled Document

Australasian Biotechnology, Vol. 10 No. 2, 2000, pp. 15-20


Code Number: au00018


CSL Limited has obtained the exclusive worldwide marketing rights for the next ten years for novel recombinant growth factors developed and produced by GroPep Pty Ltd.

CSL and GroPep will also jointly develop other recombinant growth factors used in cell-culture media required to manufacture biotechnology-derived pharmaceuticals.

Paul Bordonaro, President of CSL’s Biosciences Group, said there were significant synergies between GroPep and CSL which would be used to develop a strong global position as a supplier of specialised cell-culture media to the biotechnology industry. He said the CSL Bioscience Group, which develops, manufactures and markets cell-culture reagents used in the manufacture of human vaccines, biopharmaceuticals and gene therapy products, would be developed through the supply of specialised cell-culture products.

GroPep manufactures an expanding range of patented recombinant growth factors for industrial cell-culture applications and has recently constructed a facility for their preparation.

In another development, CSL has made a bid of around $160 million for the vaccine business of Medeva, part of the British Celltech Group. The sale is expected to be completed within the next few months.


Anadis Limited has announced the completion of a successful Phase II study of Travelan, the company’s lead product. The double-blind placebo controlled study was undertaken at the Medical Academy, University of Warsaw, in February, following regulatory delays in scheduling a US-based clinical trial. The results showed that Travelan afforded a high degree of clinical protection against a highly infectious dose and virulent strain of E.coli, a major cause of travellers’ diarrhoea. Of the 15 volunteers subjected to enterotoxigenic E. coli strain who received Travelan, only one showed symptoms of infection compared with 11 out of 15 who were administered a placebo.

Discussions are now under way with the University of Maryland regarding a phase II/III trial of a multivalent product. In the meantime, the company intends to “fast-track” a laboratory tested “over-the-counter” product to be available for regulatory approval before the end of the calendar year.

Anadis has appointed Barry Strong, formerly company secretary and legal counsel to the National Mutual Group, as company secretary, replacing Dr Ted Stelmasiak, who resigned as secretary, but continues as a director of the company.

Manufacturing Facility Relocates to Victoria

Virax is adding value through innovation.

The vaccine to be used in Virax’s HIV/AIDS treatment trial was manufactured during 1999 at Virax’s GMP pilot manufacturing plant in John Curtain School of Medical Research at ANU in Canberra. The GMP manufacturing facility has been relocated to Institute of Drug Technology (IDT) located in Boronia, Victoria.

The manufacture of the VIR201 for use in clinical trials requires a special controlled-manufacturing process. Therefore, a pilot GMP facility, owned by Virax, was built at ANU. The facility will now be relocated to IDT, where Virax has leased land, and has built a building in which the GMP facility will be housed. IDT has the necessary expertise to maintain such a facility at the standard necessary to ensure international standards compliance with GMP specifications. Virax has contracted with Agricultural Victoria Services (AVS) for the specialist services of their virologists and contracts with ANU provide for technology transfer to the new facility.

Dr David Beames, Virax’s CEO, said “We are pleased that our pilot manufacturing facility is now closer to our corporate headquarters in Victoria. Our innovative, specialised facility will comply with international GMP specifications and will have the capacity for contract pilot manufacturing of vaccines in addition to Virax’s VIR201.

Virax’s alliances with IDT, AVS and CSIRO help to advance Victoria and Australia’s capacity to commercially develop the output from our world-renowned research.”

IDT is a manufacturer of active pharmaceutical ingredients for the international pharmaceutical industry. IDT also provides project management services for clinical trials and regulatory submissions. The marriage of these services and the AVS in developing this GMP capability is very important.

As previously announced, the links with Dr David Boyle from CSIRO’s Animal Health Laboratories is also essential in this GMP capability. Dr Boyle is one of a few scientists with world-ranking expertise in the making of the virus constructs which are the starting point for vaccine manufacture.


Australian biotechnology group Genesis Biomedical Ltd has announced two joint venture initiatives and licensing deals with international firms in the treatment of spinal disorders.

The deals are with DBC International Ltd of Finland (Documentation Based Care) and Singapore-based Back To Health Pte Ltd (BTH).

Last year, Genesis took a strategic position in Bodyworks Inc, giving it access to Bodywork’s Omni Life Science division, the USA developer and manufacturer of orthopaedic braces.

The deals with DBC International and BTH are subject to the completion of documentation. Once they are concluded, a new company, Back To Health Australasia Ltd (BTHA), will acquire the Australian and New Zealand master licence for the DBC International Active Spine Care technology. Genesis will take a 75% stake in BTHA and DBC International (Asia Pacific) Pte Ltd will acquire the other 25% interest as well as the master licence for the DBCI Active Spine Care technology for the whole of Asia-Pacific excluding Japan. Genesis will acquire 15% of BTH.

DBC International has developed an active spine-care technology system that is proving to be highly effective in the management and treatment of back and neck pain. The technology is made up of assessment systems, a range of proprietary exercise equipment and condition-specific treatment and rehabilitation programs.

The DBC International technology is being used in 70 licensed clinics across 15 countries.

Genesis Chairman, Dr Saliba Sassine, said the goal of the BTHA joint venture was to establish 20 clinics in Australia and New Zealand by 30 June 2002. DBC Asia-Pacific aims to establish about the same number of clinics throughout Asia in that time. Three clinics already operate in Singapore and a fourth is under construction. A clinic is to be established in Kuala Lumpur shortly.

Dr Sassine said the first BTHA-operated clinic would be set up in Perth by June, with other clinics to be established in Melbourne, Sydney, Brisbane and Auckland later this year.

The Perth clinic will utilise the Genesis smart card-controlled bioelectrical treatments for musculoskeletal injuries and disorders. Once successfully integrated, Genesis plans to licence its technology to the other BTHA clinics.The two technologies are complementary, with the Finnish-developed Active Spine Care program for back and neck problems, while the Genesis bioelectrical technology has applications in the treatment of musculoskeletal disorders such as osteoarthritis, tendonitis, muscle strains and stress fractures.

Dr Sassine also announced that Genesis would soon open an office in Singapore as it continued to look for opportunities and strategic relationships with industry and the medical community.


Gradipore has signed a collaborative research agreement with international biopharmaceutical supplier, Baxter AG, covering the potential application of the Gradiflow technology to remove certain viruses from blood products. Baxter AG is the Austrian subsidiary of Baxter International Inc whose medical products and services include blood therapies, medication delivery and renal therapy technologies.

The research agreement involves the evaluation of the patented Gradiflow technology for the removal of so-called “non-envelope” viruses.

Current methods of viral inactivation are typically designed to attack the lipid coating of a virus, exposing and deactivating it. Non-envelope viruses do not possess this lipid coating and are largely unaffected by these current methods.

The specific terms of the research agreement are confidential although Gradipore retains exclusive ownership of its patented Gradiflow technology.

Gradipore Executive Chairman, John Manusu, stated that Gradipore’s Gradiflow technology had been shown to remove both envelope and non-envelope viruses.

“Unlike traditional methods of viral inactivation, our work suggests that the Gradiflow technology actually removes known viruses rather than simply rendering them inactive,” he said.

Gradipore recently announced that it has developed a process to purify blood proteins and remove viral contamination simultaneously, based on its Gradiflow technology.

The ability to purify blood products and remove viruses simultaneously presents an opportunity for Gradipore to enter the blood fractionation market.

Current best practice involves the pooling of donor plasma, then treating this with a solvent/detergent. This process is effective for inactivating enveloped viruses, such as HIV and Hepatitis B & C as the solvent removes the a lipid coating on the virus, allowing the detergent to act directly on viral nuclei to deactivate them. However, non-enveloped viruses, such as Hepatitis A and Parvo B19, cannot be effectively dealt with using S/D.

The current way of dealing with non- enveloped viruses is by heat-treating or pasteurising the plasma products. Although the pasteurisation process destroys the viruses, it also reduces the quality of the plasma product itself.

Mr Manusu said the inability to deal effectively with non-enveloped viruses coupled with concerns over the potential for some of the life-threatening enveloped viruses to mutate into non-enveloped viruses, was increasing pressure on blood fractionators to find a better way.

Gradiflow is now pressing ahead with developing the virus removal technology in-house and without external funding so as to retain full rights to the intellectual property.

It is currently working to prove the technology by removing viruses from known spiked samples and will aim to meet the specific goals of each customer by incorporating the Gradiflow technology into customers’ existing production processes.

Mr Manusu said that Gradipore expected to receive an upfront payment, milestone payments during the implementation phase, and a royalty stream on the end product sales.


Pharmaceutical and healthcare company, Vita Life Sciences has relisted on the Australian Stock Exchange, having raised $8 million to enable the company to expand its existing activities including assisting in funding an FDA application and to retire borrowings.

Earlier this year, Vita Life purchased Vita Health, a Singapore-based pharmaceutical products producer, and the nuclear medicine group, Tetley Medical.

These acquisitions have formed Vita Life’s two key operational business units - Vita Health and Vita Medical. Vita Health is principally engaged in the development, manufacture (outsourced to contract manufacturers), packaging and supply of pharmaceuticals, complementary and alternative medicines, dietary supplements and health foods under the brand name ‘Vita Health’. It also distributes Sunkist products in four countries in Asia under license from Sunkist Growers Inc, a US-based multinational.

Vita Medical’s main product, Technegas, has a market share of 82% and 30% respectively in its key markets of Australia/New Zealand and Europe, and is currently awaiting FDA approval for distribution in the US.

Technegas delivers an ultra-fine radio-pharmaceutical which has the potential to be applied to a range of isotopes that could deliver diagnostic and therapeutic products.

Applications presently in the development stage include PVDS - delivery of Technegas for patients with breathing difficulties; ThromboTrace - diagnosis of Deep Vein Thrombosis; and drug delivery systems in the areas of irritable bowel disease, asthma and liver diagnostics.


Aventis Pharma, a company formed last year through the merger of Hoechst Marion Roussel and Rhone-Poulenc Rorer, has signed a five-year, $15 million contract with ExGenix to supply test samples of native plant stock for screening for antibacterial properties.

ExGenix was created in January this year from former subsidiary of Amrad Ltd, Amrad Discovery Technologies.


Chiron Technologies, a company formed in the mid 1980s as a spin-off from the Commonwealth Serum Laboratories, and then acquired by Californian biotechnology company, Chiron Corporation in 1991, has been sold to international biotechnology company, MitoKor, and renamed Mimotopes Pty Ltd. Mimotopes, based in Melbourne, is focused on combinatorial chemistry techniques for drug discovery and manufacture of custom peptides, peptidomimetics and small-molecule libraries.

The plan is that Mimotopes will combine its advanced technology in combinatorial chemistry, solid-phase synthesis and novel polymer systems with MitoKor’s platform in mitochondrial biology to form a fully integrated drug discovery company. As part of the arrangement, Chiron will collaborate with Mimotopes by funding specific drug discovery projects over the next three years.

Mimotopes will continue to sell its peptide products, proprietary kits and reagents to pharmaceutical and biotechnology researchers through its direct sales force and worldwide network of distributors. Mimotopes will also continue to collaborate with major pharmaceutical and agrochemical companies in technology development and drug discovery programs. The combined entity will employ over 100 people and will have annual revenues exceeding $10 million.


Optiscan Imaging Limited has begun trials at Melbourne’s Alfred Hospital of its miniaturised microscope technology in the diagnosis, differentiation and monitoring of psoriasis and other inflammatory skin lesions. The microscope is already in trials for cancer detection at the University of Pittsburgh.

Managing Director of Optiscan, Peter Delaney, said that, in the past, inaccurate diagnosis of psoriasis and difficulty in identifying disease progression had limited the successful management of the disease.

Optiscan’s platform technology magnifies skin cells 2000 times without the need for biopsies. Digital images appear in real time on a computer screen, offering immediate diagnosis with cellular precision.

Optiscan’s hand-held probe, soon to be released for use by dermatologists, will enable biopsy-free detection and monitoring of skin cancer and burn depth analysis. A flexible endoscopic version is also being developed for applications in detection of colon cancer and other gastrointestinal disorders.

  • Established in 1998.
  • Private company, owned by the CSIRO, Child Health Research Institute, Dairy Research and Development Corporation and University of Adelaide.
  • Involved in the biotechnology industry, specifically aimed at the discovery of new growth factors, understanding how they work, their manufacture, and investigating their application for cell culture and for a range of pharmaceutical applications.
  • Products under production are presently used in the manufacturing processes of protein-based pharmaceuticals as well as in evaluating clinical opportunities.
  • Currently owns 12 patent families relating to recombinant and native growth factors, compositions, production technology and uses.
  • Current workforce of 50, expected to increase to 80 within three years.

Major products

  • Growth factors and related reagents for research purposes - sold to research laboratories around the world.
  • Recombinant growth factors for commercial cell culture. These products are particularly important in the manufacturing processes of new protein drugs by major pharmaceutical companies.
  • Drugs under development for wound repair and gut disease, diabetic neuropathy, tendon injuries and osteoporosis.
  • Collaboration and alliances with major biotechnolgy and pharmaceutical companies including CSL, Mayo Clinic, Nestlé and the International Diabetes Institute.

Biotech Company Predicts Rapid Growth

World-wide sales growth of between 25% and 30% a year for a protein used in the production of new generation pharmaceuticals has been predicted by South Australian-based biotechnology company GroPep Pty Ltd.

GroPep says sales of its patented cell growth factor, LR-3, are presently valued at around $4 million a year.

However, the opening of new facilities would enable production to triple in the next three years and triple again by 2006.

Speaking at the opening today of new headquarters, research and production facilities at Dalgleish Street, Thebarton, GroPep’s Managing Director, Dr John Ballard, said that LR-3 was in strong demand by pharmaceutical companies around the world engaged in the research and development of protein pharmaceuticals.

“Protein drugs now represent about half of all the new medical drugs that come onto the market,” he said. “LR-3 is important for the growth of most cells which are used to produce the new pharmaceuticals. Many companies presently use insulin to achieve a similar result, but more effective cell growth is achieved with only one thousandth the amount of LR-3.”

Dr Ballard said GroPep had world-wide patent protection on LR-3 for another 12 years. At the same time, the company was close to developing further growth factors.

He said that GroPep’s new facilities would enable the company to meet world demand from Adelaide.

GroPep’s new $7 million, 3000 square metre complex includes two clean-room production suites and seven laboratories. It is seeking Certification of Manufacturing to Good Manufacturing Practice standard, allowing the production of proteins as potential treatments for human diseases.

Novogen Anti-Cancer Drug Enters Phase 1 Trials

Australian pharmaceutical company, Novogen Limited, recently announced that its anti-cancer drug, NV-06, has been approved for human clinical trialing and will enter a Phase 1 trial immediately.

The initial trial is to be conducted at a major public hospital in Sydney, Australia, which has granted ethical approval for the trial to proceed. The trial will provide preliminary pharmacokinetic and tolerability data on the intravenous form of the drug to enable subsequent cancer treatment trials to be performed.

NV-06 is a synthetic version of a naturally-occurring human phenolic hormone discovered by Novogen scientists that has demonstrated significant anti-cancer activity in the laboratory against a wide range of human cancer cells including breast, prostate, large bowel, and leukaemia cancers.

The company is developing the compound for the treatment of prostate cancer, the most common cause of cancer-related deaths in men.

Professor Alan Husband, Research Director at Novogen, said the approval for clinical trialing marked a significant milestone in the company’s drug development program.

“Typically only about 1 in 1,000 new drug compounds that enter pre-clinical testing ever make it to Phase 1 clinical trials because of unacceptable toxicity, difficulties in synthesis or lack of efficacy in laboratory models of disease,” Professor Husband said. “NV-06 has passed all these tests.

“NV-06 is now at the stage where industry standards predict a one-in-five chance of successfully reaching new drug registration stage,” Professor Husband said.

Results of the trial would form part of a submission to the United States Food and Drug Administration (FDA), for approval for human clinical trials to be conducted in cancer patients in the USA.

Professor Husband said the success of NV-06 in treating human prostate tumours in animals and its acceptance for human testing confirmed the original vision of Novogen’s founder, Dr Graham Kelly.

“Dr Kelly formed the view that phenolic hormones produced in the human body from plant derived isoflavones are not only essential to maintenance of human health but have a profound effect on regulating cellular growth and differentiation,” Professor Husband said.

“Their selective effect on cancer cells is manifested via a variety of pathways including induction of cell differentiation, inhibition of cell proliferation, and induction of programmed death among cancer cells.

“The observation of a lower incidence of prostate cancer in populations where legumes form an important part of the diet was the original trigger for the concept that legumes contain substances which have important health benefits.

“Our subsequent discovery of the phenolic compounds which the human body manufactures from the isoflavones found in legumes provided the key to a whole range of new pharmaceutical opportunities.”

Novogen had completed a pilot production facility for the manufacture of NV-06 to approved pharmaceutical standards and would continue to manufacture the drug throughout the clinical development program.

Novogen’s Managing Director, Christopher Naughton, said the market for a prostate cancer treatment was considerable with more than 300,000 new cases of prostate cancer diagnosed each year in the US alone.

“There are currently no other therapeutic treatments available for prostate cancer,” Mr Naughton said.

“Current treatments rely on drugs which simply block the action of male hormones, on radical surgical interventions or on radiotherapy.

“If successful in the ensuing clinical trials, we would expect NV-06 to take a significant share of the available market.”

The Australian Government’s R&D Start program had provided funding of up to $2.79M to assist in the development of NV-06.

Progen Industries RAISES NEW FUNDS

Progen Industries Limited announced recently that it is raising approximately A$11 million through the sale of ordinary shares to institutional investors. The proceeds from the Australian placement will be used to further the development of the biotechnology company’s anti-cancer drug PI-88, an angiogenesis (blood vessel growth) and metastasis (cancer spread) inhibitor, and continued expansion of Progen’s product research pipeline. Warburg Dillon Read, the international investment banking division of Swiss Banking Group - UBS AG, is underwriting the capital raising.

Lewis Lee, Progen’s Managing Director, commented about the placement: “We have several potential disease applications that emanate from our research, and we want to accelerate their development towards clinical trials, The current Phase 1b trial of PI-88 in cancer is progressing as scheduled. This is encouraging and we are now planning the following Phase II trial in cancer.”

In the placement, Progen will issue 2.8 million shares at A$4 per share, which represents less than 15% of Progen’s issued capital.

Progen Industries is a world leader in the design and development of unique small-molecule carbohydrate pharmaceuticals to treat a variety of disease conditions including cancer, cardiovascular disease and inflammation. The company’s unique drug development approach utilises drug screening and genomic methods to identify carbohydrates that are found naturally in the body as both targets and agents for disease therapies. Progen’s carbohydrate drug discovery program has resulted in two lead compounds in three years, including PI-88, a heparanase inhibitor that is both an anti-angiogenic and anti-metastatic agent, and PI-99, an anti-thrombotic.

Progen’s objective is to develop and commercialise novel therapeutic technologies by leveraging its expertise in research and pharmaceutical manufacturing process development. Through alliances with Australian academic and research institutions, the company will conduct human clinical trials prior to selective out-licensing. Progen has an exclusive licensing agreement with Professor Chris Parish at the Australian National University’s John Curtin School of Medical Research. Professor Parish and his team have been developing carbohydrate technology for more than ten years. Carbohydrate technology provides an extensive drug development platform from which many drug candidates can then be derived for potential application for the treatment of a number of serious diseases.

The company’s market capitalisation on February 24, 2000 was $A86 million.

New Zealand Investment

Leading institutional investor AXA Funds Management has invested $3.5 million in New Zealand biotechnology company, Genesis Research and Development Corporation Limited, acquiring a parcel of 614,035 shares at $5.70.

Dr James Watson, Founder and CEO of Genesis, says the transaction is evidence of the growing interest from institutional investors in discovery-based biotechnology organizations with the ability to deliver a range of products with exciting commercial potential.

“We’re very pleased to be an investor in Genesis, which we believe has an excellent long-term growth outlook in a sector which offers many diversified opportunities,” says Andrew Bascand, New Zealand Equity Manager for AXA Funds Management. “We believe the near-term horizon for Genesis is excellent and we look forward to participating in the company’s growth as it moves into the next phase of its development.”

Dr Watson says the investment represents a major step forward for the company and is a clear vote of confidence in the strength of its research and development program and the value inherent in its pipeline of products. “We are delighted to have AXA on board. As we move forward we plan to secure greater value from our scientific program to consolidate and build on the growing interest from the investment community.”

Genesis acquires a stake in global forestry

New Zealand biotech company, Genesis Research and Development Corporation, announced on February 18 that it has become a 5% equity partner in ArborGen, a world-leading forestry biotechnology joint venture.

The other equity partners in ArborGen are International Paper (USA), Westvaco Corporation (USA), and Fletcher Challenge Forests Limited. ArborGen will produce and market elite tree seedlings to improve forestry health and productivity for the global forestry market.

Genesis will provide input to ArborGen through ongoing genomics research and development capabilities and through the intellectual property of the forestry genomics data base it has developed in association with Fletcher Challenge Forests. Genesis will receive payment for its intellectual property through ongoing royalties from the sale of seedlings incorporating any current or new Genesis technology, and payment for ongoing scientific services. Initial operations on ArborGen’s science platform have already commenced.

“This is a major achievement for New Zealand science. It demonstrates how science can deliver value to primary industries where New Zealand has inherent advantages,” says Dr James Watson, Founder and Chief Executive of Genesis. “It illustrates how new genomic-based companies like Genesis are creating value not only for their shareholders, but also for the industries that adopt this new technology.”

“Our understanding of genomics and Fletcher Challenge Forests’ forestry expertise will make a significant contribution to forest health and productivity world-wide. This wider alliance extends our credentials as a genomic discovery company skilled in turning intellectual property into economic value.”

Genesis and Fletcher Challenge Forests have been active partners since 1995.

During this time, Genesis used its biotechnology expertise to identify and understand many key biological functions of commercial forestry trees.

Genesis’ research has resulted in one of the largest inventories of forestry genomic knowledge in the world.

DEMICAP Filters Offer Disposable Protection

A new range of disposable capsule filters has been announced by Domnick Hunter for small-to-medium-scale filtration tasks in production, research, development and laboratory filtration applications.

The DEMICAP filters - available in a wide variety of microfibre and membrane filter media - offer a robust disposable filter capsule for microbial and particulate control in liquids and gases including air.

Domnick Hunter Business Development Director, John Davis, says the DEMICAP range is available in micron ratings from 5 micron depth media for prefiltration duties, down to sub-micron level so 0.1 micron microbially retentive membranes for sterilisation.

Available in two sizes with three different inlet/outlet connections (tri-clamp, threaded or hosebarb) the filters have integral sanitary vent and drain valves which provide security with ease of operation. Their design ensures minimum fluid hold-up and minimum loss of product after filtration, says Mr Davis.

Further information: John Davis, Business Development Director, Tel: (03) 9762 9922; Fax: (03) 9762 9911; Email:;


Colonial First State Investments has launched a specialist investment fund in the biotechnology and health-care fields.

The fund is seeking to raise “tens of millions” for investment in these sectors with about 20% earmarked for Australian companies. The fund will invest mainly in listed companies although it would be able also to direct funds into companies which are about to list.

Colonial First State Investments said that the biotechnology fund was modelled on a technology investment fund it established last November and which has raised more than $100 million from investors.

Investment will be handled by the London office with Joe Anderson being the senior portfolio manager. Australian investments will be looked after by Rob Adams in the Sydney office.

For more information contact Colonial First State Investments on 13 13 36.


Biotechnology investment fund, Starpharma, will seek to raise up to $20 million through a listing on the ASX.

The proposed share price for the IPO would value the company, established in 1996, at more than $80 million.

The float will be underwritten by UBS Warburg, but the timing has not been finalised.

Starpharma is a Pooled Development Fund and its major product is a vaginal microbiocide topical application to prevent sexually transmitted diseases.

The Melbourne-based company, headed by CEO Dr John Raff, has invested around $5 million in three companies. For more information tel (03) 9662 7124.


CSL is seeking to acquire the Medeva vaccine business operated by the UK biotechnology Celltech Group.

Media reports indicate that CSL is willing to pay up to $160 million for the UK business unit as part of a drive to broaden its vaccine operations.

Medeva makes the flu treatment, Fluvirin, and Hepagene for the prevention of hepatitis B. Medeva was acquired by Celltech last year.


Ken Roberts, a director of the Australian Genome Research Facility, has been appointed as the new Chairman of life sciences investor, Start-up Australia.

Start-up Australia has invested early stage funding into a number of biotech companies including Technico, Alchemia, FuCell and Thrombogenix.

Mr Roberts is a director of CSL and and the University of Queensland’s Centre for Drug Design and Development. Start-up Australia can be contacted on (02) 9235 1140


Peptech has failed in its bid to secure control of Biotech International, receiving only 25% of acceptances from Biotech International’s shareholders. Biotech Australia’s Board had initially recommended the offer which is aimed at creating a far larger biotechnology company.

Peptech has declared its offer unconditional, and has indicated it will continue its efforts to secure a higher percentage of Biotech’s shares.

Biotech said that its unaudited profits for the first nine months to 31 March was $2.24 million before tax.


By David Black and Glen Sanford, Deloitte Touche Tohmatsu


The last four weeks have seen volatility in both local and international stock markets leading many commentators to speculate that the end has come for tech stocks. But what does this mean for biotechnology in Australia?

Biotech companies in Australia tend to be small and engaged in research, much of which may not lead to any tangible new products in the short term. Often they do not have much cash flow, which is why they have to be valued on the basis of what they could become in the future, if their research pays off. Because of their greater uncertainty, in the recent nervous market, they have been written down more than the larger, well-established firms.

The Deloitte Biotech Index

As almost everyone involved in the sector is aware, the problem of raising finance is one of the biggest hurdles to the development and commercialisation of products. Recent months have seen a spate of companies listing or announcing their intention to list, but how have these companies fared over the past three weeks?

Whilst new listings have fallen back from their 31 March levels, most are still significantly above the prices at which they listed.

There is no doubt that the uncertainties in the market have made investors much more wary of investing in the high technology sectors (including computers, Internet and biotech). It is likely that this increased concern amongst investors will reduce the premiums which companies are able to enjoy upon floating and thus reduce the amount which can be raised from an initial public offer or a placement of stock. It is therefore more vital than ever that companies develop structured business plans and select the method of raising finance most appropriate to their circumstances. Only by doing this will existing companies maximise the value of their business when they eventually list on the ASX.

Three upcoming biotech listings are:

  • GroPep, a private Adelaide-based company develops and manufactures a range of insulin-like growth factors and related analogues with unique biological properties. GroPep anticipates listing in May or June. The listing is being handled by J B Were.
  • Epitan has the rights to a drug compound which is claimed to prevent skin cancer and at the same time allow for natural tanning of the skin. Epitan carried out a mezzanine offer in January which raised $7.2m. The prospectus for Epitan is expected to be available in late April from Lodge & Partners stockbrokers.
  • Pi2 Limited is a spin-off company from Human Therapeutics Pty Ltd, formerly owned by Hoechst AG.

Pi2 Limited is handling the product PAI2, a treatment for skin conditions currently in phase 2 clinical trials.

The mezzanine offer for Pi2 will consist of 25 million x $0.40 shares. The initial public offer is scheduled for late May and will consist of 20 million x $0.50 shares. The Pi2 offers are being handled by Lodge & Partners stockbrokers.

It is impossible to predict what will happen to the sharemarket over the coming days, weeks, months or years.

Evidence from the Deloitte Biotech Index suggests that Australian biotech stocks have performed in two groups during the recent turmoil: the more mature companies (Cochlear, CSL, Resmed and Biota) have come through relatively unscathed, whereas other companies have seen prices fall by an average of over 30%.

It must be noted however that for all the hype surrounding the recent stock market events, Australian biotech shares, as measured by the Deloitte Biotech Index, are still up 3% in the first four months of 2000.

Copyright 2000 - Australasian Biotechnology

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