Australasian Biotechnology (backfiles) AusBiotech ISSN: 1036-7128 Vol. 10, Num. 3, 2000, pp. 14-17

Australasian Biotechnology, Vol. 10 No. 3, 2000, pp. 14-17

BIOTECH BUSINESS

Code Number: au00030

• NEW BIOTECH IPO TO
• AXON INSTRUMENTS SIGNS AGREEMENT WITH ASTRAZENECA
• MRIF PROPOSAL FALLS THROUGH

NEW BIOTECH IPO TO

Biopharmaceutical company, Pi2 Limited, has released a prospectus for an initial public offering to raise $7-million to commercialise Australian research in a new biopharmaceutical.

The company is an spin-off from the Human Therapeutics Pty Ltd (HTPL) group which includes Biotech Australia Pty Limited.

The HTPL group was purchased from Hoechst Australia Limited in December 1999, by Human Therapeutics Limited, a consortium of investors and management and staff.

The HTPL group initiated the wound-healing project and has invested approximately $30 million over the last 10 years, taking it to its current mid-Phase II trials stage. It is entitled to licence fees from Pi2 as development milestones are reached.

According to Dr David Harrison, managing director of Human Therapeutics and acting managing director of Pi2, the biopharmaceutical for wound healing was the first of its kind to be discovered, developed and manufactured in Australia.

Pi2 raised $8.85 million from Australian institutions in March 2000 and through the prospectus offer is seeking $7 million from an issue of shares at 50 cents each.

If the current offer is fully subscribed, Pi2 will have a market capitalisation of $56 million at the offer price.

The money raised will be used to fund the acquisition of rights and know-how to Biotech Australia’s lead compound, PAI-2, for wound-care and dermatological uses, and to provide working capital for the business.

Pi2’s name is derived from a plasminogen activator inhibitor, PAI-2, which is a natural molecule found in the skin and which was described and patented by the Australian National University, in collaboration with the Human Therapeutics group.

PAI-2 represents a novel approach to the treatment of chronic skin diseases such as chronic venous leg ulcers (CVLU) and psoriasis. In CVLU, it is applied topically as a gel and is aimed at slowing degradation processes in the skin and allowing natural healing to take place.

Human Therapeutics group, which includes Biotech Australia and employs 55 people, including 10 PhDs, is based at Roseville NSW, where facilities include research laboratories and pharmaceutical manufacturing operations.

Directors of Pi2 are Mr John Ries (chairman), Dr David Harrison, Mr Chris Bregenhoj, Mr Michael Egan and Professor John Shine.

Sponsoring broker to the issue is Lodge and Partners and the offer is expected to remain open until 14 July with ASX listing around 27 July 2000.

Dr David Harrison can be contacted on (02) 9928 8800

Silicon Valley-based Axon Instruments Inc, developer of instrumentation and software in the fields of cellular neuroscience and DNA microarray scanning technology has announced an alliance with one of the world’s top five pharmaceutical companies, AstraZeneca.

The agreement between the two companies is to develop an automated electrophysiology system for improved drug development. AstraZeneca will supply a prototype instrument and key technology to Axon Instruments, which will develop it into a production-quality drug screening system for non-exclusive use by AstraZeneca and for sale by Axon to other pharmaceutical companies.

“This revolutionary system, which will be up and running by the middle of next year, is aimed directly at the drug discovery and development process,” said Axon CEO Dr Alan Finkel. “One-quarter to one-third of drugs act on ion channels and related proteins. Ion channels allow ions - such as calcium, sodium and potassium - to flow into cells, and consequently many drugs can be screened by testing their effects on ion channel activity. Our system aims to automatically measure the tiny currents passed by ion channels, allowing better research in appropriate drugs.”

“Ion channels are important therapeutic drug targets, but traditional tests are indirect and suffer from many shortcomings,” said Dr Andy Blatz, Axon’s Director of Cell Based Screening Technology. “Out of one million drugs undergoing preliminary testing, ten thousand might get through, but there are inaccuracies involved such as false positives and, even worse, false negatives, which can lead to a potential blockbuster drug being ignored. Existing ion channel drug discovery systems can miss significant drug activity because they use indirect methods, such as fluorescence, to study ion channel targets.”

After three years of planning by County Investment Management to establish a proposed Medical Research Investment Fund (MRIF), the idea has been found to be impracticable and will not proceed as originally planned.

The MRIF, which was to provide investment funding matching the research grants awarded by the National Health and Medical Research Council (NHMRC), was publicly launched in October 1998 after an 18 month period of joint planning by the NHMRC and County, a wholly-owned subsidiary of the National Australia Bank.

The aim was to raise up to $100 million per annum from superannuation firms which would be invested on a matching basis with with research funding by the NHMRC. Adjustments to the initial idea were announced in June last year, when it was proposed that the MRIF would negotiate with institutions rather than individuals, based on framework agreements that would be developed for each type of research institution.

In a statement last month explaining the decision not to proceed with the Fund, County’s Head of Corporate Affairs, Paul Murphy, said that the groundwork in developing suitable business models for large-scale investment in medical research had uncovered complexities arising from “the myriad structural and governance arrangements currently in place among the various research institutions, and the absence of a common framework for the management and development of intellectual property assets generated by the research process.”

“While considerable progress has been made towards identifying these issues and developing principles for how they might be addressed, it is simply not feasible for County to continue to treat them solely on a case-by-case basis with individual institutions.”

Speaking with R&D Review, Mr Murphy said that County had written to the Federal Department of Health urging them to take on as a matter of public policy the need for a commonly accepted accreditation mechanism for management of intellectual property (IP) that would make early stage investment in research feasible.

Mr Murphy suggested that such a mechanism might involve a credit rating system for research institutions which took into account their IP management procedures such as maintenance of laboratory record books, and procedures for identification and protection of commercialisable IP.

Other suggestions were that the Government should issue guidelines on IP management for publicly funded research, a bureaucracy could be established to oversee IP management, and possibly grants should have some IP ‘strings’.

He said that while some institutions, such as the Walter and Eliza Hall Institute, had already adopted a more business-like approach to their intellectual property, these were generally the ones that were capable of financing commercialisation out of their own budgets and were less likely to require the sort of investment the MRIF would have managed.

However, many other institutions needed to change their thinking.

“They need to move away from the idea that commercialisation is a vulgar thing that upsets their public interest pursuits, and understand that if something of commercial value emerges, it is part of responsible management of taxpayers funds that it is captured and exploited”, he said.

In relation to universities, Mr Murphy said that because research funds were allocated on a project basis, there was little discretionary money available for IP management. He said that both Federal and State governments should consider spending public money on IP infrastructure rather than on ever-increasing science without the appropriate IP protection infrastructure and procedures to support it.

The statement said that County would welcome proposals for specific partnerships with individual institutions that met the necessary IP management and related investment requirements. County is currently drawing up a check-list of minimum requirements for research to make it an ‘investable asset’. - Australian R&D Review.

Copyright 2000 - Australasian Biotechnology