Australasian Biotechnology (backfiles) AusBiotech ISSN: 1036-7128 Vol. 10, Num. 6, 2000, pp. 20-21

 Australasian Biotechnology, Vol. 10 No. 6, 2000, pp. 20-21

BIO-FINANACE

DELOITTE’S BIOTECHNOLOGY INDEX REVAILS BIOTECH STRENGTH

Code Number: au00065

Commercial interest in Australia’s growing biotechnology sector has rebounded after the plunge in the sector’s stockmarket fortunes six months ago, according to the latest Deloitte Biotech Index.

The 4th Deloitte Biotech Index reveals that 14 new biotechnology-related companies have listed, or are about to list, on the Australian Stock Exchange (ASX) since July 2000, bringing to 47 the number of companies tracked by the Deloitte Biotech Index.

The Index shows that as at 29 September 2000, market capitalisation of the Index’s 47 ASX-listed stocks had reached $11.89 billion, a 32.5% increase on the 16 June 2000 capitalisation figure of $8.97 billion.

Deloitte Life Sciences Partner, Glen Sanford, said the Index shows that Australian biotechnology stocks have not been significantly affected by the recent ‘Tech Wreck’ fallout.

“Despite the upheaval of stocks witnessed in the 3rd Deloitte Biotech Index released in July, existing biotechnology stocks have steadied and new entrants have flocked to the market to capitalise on investor interest,” Mr Sanford said.

“Biotechnology stocks have continued to attract investors, often at the expense of other technology stocks.”

Mr Sanford said the Deloitte Biotech Index continued to outperform the ASX All Ordinaries Index with CSL again powering much of the growth of the sector.

“The Deloitte Biotech Index shows a 7.8% improvement in the three months to 29 September, although if CSL is excluded, the Index fell 1.5%,” he said.

“The rise of 7.8% is in line with the rise in the Nasdaq Biotech Index of 8.1% and the rise in the ASX Healthcare and Biotechnology Index of 6.9%.

“The close correlation between the rise of the Deloitte Biotech Index and the ASX Healthcare and Biotechnology Index reflects the dominance of CSL on both indices, being 44% of the Deloitte Biotech Index and 33% of the ASX Healthcare and Biotechnology Index.”

“While the Deloitte Biotech Index has dipped slightly since 29 September, falling 3.1% in the period to 20 October, the Index still showed a healthy rise of 4.5% for the period 30 June to 20 October.”

David Black, Life Sciences Client Director for Deloitte Touche Tohmatsu, said it was significant that a large number of recent and upcoming listings had share options attached.

“In the recent listings of floats which have come to market over the past three months we have noticed an increasing number of companies are offering share options to potential investors.

“The increase in the availability of options enables investors to benefit from any future upside in biotechnology shares without spending large amounts today.

“The popularity of options clearly indicates investors expect biotechnology share prices to rise.”

The rush to the market will continue over the coming months with the following companies thought to be considering listing sometime in the future:

Sage Global Fund Limited is a Pooled Development Fund which intends to invest in small to medium-sized enterprises in the area of leading-edge, economically proven, environmentally friendly and socially responsible biotechnology. The company is seeking to raise $10 million via the issue of 20 million shares at 50 cents, however the directors reserve the right to accept over-subscriptions for a further 20 million shares. For every two shares issued, one option to subscribe for one share for 50cents will be granted. The offer is not underwritten.

Proteome Systems Limited (PSL) was founded in 1999 as a technology spin off from Macquarie University. PSL is a world leader in the area of proteomics.

PSL are currently working with Dow AgroSciences on the impact of proteomics on agricultural biotechnology and in addition have a strategic alliance with Shimadzu Corporation to build instruments to make possible high throughput screening of proteins.

Because of the huge amounts of money required to compete in this field it is likely that PSL will list sometime in the near future, probably on the Nasdaq rather than the ASX due to the fact the US market is more mature and that it is easier to raise large amounts in the US. Proteome Systems Ltd has recently been awarded a $3.3 million Commonwealth Government grant under its R&D START Program, to support a $12 million initiative by the company to develop instruments for proteomics research. On 26 September 2000 Proteome announced it had completed a private capital raising of AUD$16.3 million, giving the company a valuation of AUD$166 million. This capital raising included the Queensland Investment Corporation and BioTech Capital Limited, as well as venture capital funds and high-net-worth individuals.

Syngene Limited is still thought to be considering listing later this year.

Syngene is owned 42.38% by Circadian and 20% by Kerry Packer. Syngene Limited holds an exclusive worldwide licence from the Howard Florey Institute in relation to certain patented synthetic genetic molecules and their application as gene diagnostics or as antisense pharmaceuticals. Syngene is also concentrating on new uses for ephedrine.

Vapotronics Inc was founded in Australia and now headquartered in California. The company is developing and commercialising its patented range of very small and intelligent digital inhalers which are based on using Thermal Ink Jet printer technology to create aerosols for inhalation. The inhalers are designed to deliver a wide range of drugs such as insulin, hormones, vaccines and pain-management drugs thereby eliminating the pain and inconvenience of injections. Vapotronics Inc are currently seeking to raise $10,000,000 at $1 per share.

Human Therapeutics Limited are reported to be looking to list overseas during 2001.

The Sci.com Group of companies is actively involved in the investment and commercialisation of new and unique Australian technologies including:

• Medical and surgical instruments: a range of high precision optical instruments for use in surgery.
• Medical and scientific imaging: commercialisation of quantitative phase-imaging techniques with a broad range of applications including microscopy and x-ray imaging in conjunction with renowned physicist Professor Keith Nugent.
• Biotechnology: a new saliva-based test for chronic heart failure in conjunction with eminent cardiologist Associate Professor Henry Krum.

The Group plans to launch products in each of these divisions over the next 12 to 24 months and is currently considering its listing strategy.

A2 Corporation of New Zealand has an interest in the A2 protein in milk that may slow the onset of diabetes and artery diseases. A2 is currently traded on the New Zealand Stock Exchange unlisted securities market. The company has a market capitalisation of approximately NZD$50m.

Blis Technology is a company set up to commercialise the discovery by scientists from the University of Otago of a naturally occurring protein (Salivaricin B) which may prevent or control streptococcal throat infections. The company is currently traded on the New Zealand Stock Exchange unlisted securities market.

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