Queensland Life Sciences Industry Report 2012 (PDF, 3.5MB)

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Queensland Life Sciences Industry Report 2012 54 organisations (Queensland 301; New Zealand 276 (defined as Bioscience) 82 . Queensland reported a similar average market cap ($60.2 million) as New Zealand ($68.8 million), both of which were lower than the average market cap of the nonmajor Australian firms. Canada and Australia share a high standard of living, health and education, spend similar amounts on health R&D as a percentage of GDP 83 and, in recent years, both have sought to develop their bioscience capability. 84 There is, however, a considerable difference in population between the two nations (Canada: 34,869,747 85 and Australia: 22,682,566 86 ). A comparison of the Canadian and Australian listed Life Science sectors reveals that the average size of publicly listed Life Sciences companies in Canada was lower than listed Australian Life Sciences companies (Table 48). This most likely reflects a higher maturity in the Canadian sector and greater access to capital and customers in the US market. TABLE 48: International comparison of average listed market capitalisation (AU$m) 87 Region Date Total Market Cap Queensland Jun 2011 New Zealand (ex major; FPH) Australia (ex majors; RMD, COH, CSL) Oct 2010 Jun 2011 Average Market Cap $482 $60.2 $619 $68.8 $9,074 $91.7 Australia Jun 2011 $35,003 $343.0 Canada - Life Sciences* Dec 2011 $21,400 $180.0 Canada - Biotechnology 2010 $5,176 $82.1 * Please note the TSX/TSXV listed Life Sciences sector includes healthcare facilities and health services, which are both sub-sectors not included in the definition of Life Sciences for the QLS survey and report. 82 NZBio 2010 Bioscience Industry Report. http://www.nzbio.org.nz/portals/3/files/Final%202010%20Bioscience%20Industry%20Report.pdf 83 OECD Science and Technology Scorecard 2011, Health R&D in government budget appropriations or outlays for R&D, 2010. Canada (2008) 0.1% GDP; Australia (2010) 0.09% GDP. 84 Bruce Rasmussen, (2005) ‘Developing the Biomedical Industries in Canada and Australia: An Innovation Systems Approach’, (Working Paper No. 24), Victoria: Victorian University of Technology. 85 Statistics Canada, www.statcan.gc.ca/ig-gi/pop-ca-eng.htm; accessed 1 July 2012 86 ABS Population Clock, www.abs.gov.au; accessed 1 July 2012 87 PwC BioForum Publication Edition 36, Quarter 4 FY11, August 2011; Canadian TSX/TSXV listed Life Sciences sector data December 2011 accessed at http://www.tmx.com/en/pdf/LifeSciences_Sector_Profile.pdf; NZBio 2010 Bioscience Industry Report; Ernst & Young, Beyond Borders 2011.
By David Blake, Editor of BioShares INDUSTRY COMMENTARY THE LISTED LIFE SCIENCES SECTOR IN AUSTRALIA — NOT ONE SIZE FITS ALL A neat one size fits all description of the state of Australia’s listed life sciences sector has become an impossibility since the GFC in 2008 began a process of constant damage to some companies but left others merely bruised and even some others unscathed. A high Australian dollar has not helped sales focused life science firms and healthcare system budgets and some export markets have weakened company earnings of late. What is known is that the number of listed life science companies has declined from a peak of 134 in 2008 to 100 in 2012, with a contraction more likely to continue for as long as global economic conditions remain poor. The hundred or so life science companies listed on the ASX are a diverse group of companies in terms of market value, scale of operations, scope of business and market focus. There are 29 companies capitalised at less than $10 million, 49 are capitalised at less than $20 million and 18 capitalised at less than $100 million. There are five companies capitalised at greater than $1 billion. The activities of ASX listed life science firms range from medical device manufacture and sales, vaccines and immune therapy product manufacture, cell therapy and wound healing development, assessment and diagnostic technologies including molecular, bio-sensor and algorithmic approaches, biological storage technologies, sleep apnoea management products and many more. Roughly 7-8% of ASX-listed life science companies are foreign firms lacking direct links to Australia. Biotech identity is a tricky classification issue given that quite a number of listed companies are US entities, which own operating subsidiaries in Australia. Investment in biotech stocks has been a stock picking activity for quite some time, a strategy which is a function of the time it takes for medical technology businesses to arrive at valuation inflection points, leaving many companies without vital news flow to attract investor interest. The Bioshares Index for example was down 23.5% between June 2012 and June 2011. However, 22 stocks posted share price gains of greater than 20% for the same period. That’s not such bad going in dismal times. Ongoing key issues for investors in life science stocks include execution risk, otherwise known as financing risk, reflecting a company’s capacity to support the business objectives it has set itself. Investment flows have been biased towards later stage companies in the past few years, with companies such as Mesoblast, Alchemia, QRxPharma, Starpharma, Prima Biomed and Phosphagenics raising sizable tranches of capital to support pivotal clinical studies. New listings (the IPO market) have all but dried up with only one, Osprey Medical completed in 2012, following three in 2011, and two in 2010. One risk that has recently been elevated in importance is regulatory risk. Several submissions to drug regulators from Australian firms, e.g. Pharmaxis, Mayne Pharma and QRxPharma, have been knocked back at the first round leaving both investors and the companies concerned in a state of shock. These first-cycle requests for more data can be expected to have a negative impact on investment in the sector The highlight for Australian life science investors in the last two years was the payment of a $100 million dividend by Acrux in April 2011, following the receipt of license-based payments from Eli Lilly for the testosterone drug Axiron. Rather than retaining the cash for another stage of business development, by paying shareholders a dividend, the board of Acrux elected to send a clear signal that investment decisions are ultimately the prerogative of shareholders. 55
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Queensland Life Sciences Industry Report 2012 (PDF, 3.5MB)

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