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

By Anne-Marie Birkill, Partner at
OneVentures Innovation Fund
INDUSTRY COMMENTARY
VC INVESTMENT IN THE LIFE SCIENCES SECTOR
IN AUSTRALIA — PLEASE, SIR, I WANT SOME MORE
Many commentators have noted that post-GFC the availability of VC funding for the Life
Sciences sector in Australia has diminished considerably, which is a shame, given the
Australian Governments large investment in life sciences R&D, the quality of the people
backed by this investment, the standard of the facilities available in which to perform that
R&D and the potential of many of the outcomes of this investment and effort. In the two
years since OneVentures launched in early 2010, we have seen more than 100 life sciences
sector investment opportunities (roughly 15% of total deal flow) and invested in just two of
these (out of a total of six investments to date, so 33% of investments by number) despite
seeing a number of other companies in which we would have liked to invest. As one of
a handful of investors placing capital in the life sciences sector, we simply don’t have
sufficient funds under management (FUM) to be able to service the quality deal flow
we see.
What we are seeing is effectively a “broken pipeline” – we push loads of funding into the
early stages of developing our life sciences opportunity via the ARC and NHMRC, then for
the lucky few commercialisation grants and angel funding develop those opportunities
a little further, then there is a great gaping hole through which only the best of the best
(or the luckiest or the most tenacious) pass — with only a handful of life sciences deals
receiving venture capital every year. Like water escaping a leaking pipe it is just such an
awful waste. We need a concerted effort to increase the total FUM otherwise we risk not
only continuing this wastage, but disrupting the very fabric of our life sciences industry.
On the bright side, we are seeing some potential superstars emerging. Recently,
OneVentures led a $15M syndicated investment in Vaxxas Pty Ltd, a company developing a
new medical device for vaccine delivery using a game-changing micro needle technology
(NanopatchTM) developed at The University of Queensland. The NanopatchTM, which
is pain-free, more effective and may reduce the requirement to refrigerate vaccines
is targeting a multi-billion market and is already receiving strong interest from big
pharmaceutical companies for use with their vaccines. Alongside other VCs OneVentures
has also invested in Hatchtech Pty Ltd (Melbourne), the developer of a proprietary next
generation head lice treatment, DeOvo, which has successfully completed a Phase IIb
clinical trial and is poised to enter Phase III. Subject to regulatory approval, market launch
is anticipated in late 2014. DeOvo is a head lice product that kills both lice and eggs
treating all life cycle stages of the organism in a single application.
These examples are indicative of the very high quality and of the commercial potential
of R&D coming out of our research institutions. More VC funding, managed by fund
managers with the expertise and experience to efficiently take them out of the laboratory
and toward commercial success, is essential if we are to seed the next crop of Peplins,
Acruxs and Cochlears. Like Oliver Twist the sector may survive but can’t thrive on
thin gruel.
69