Allied Healthcare Group Australia: Julian Chick, developing, investing and delivering leading edge medical technologies




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Video title: Allied Healthcare Group Australia: Julian Chick, developing, investing and delivering leading edge medical technologies
Released on: November 21, 2012. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, filmed at BioPartnering Future Europe in Brussels, Fintan Walton talks to Julian Chick, COO of Allied Healthcare Group Australia
Allied Healthcare Group in revenue generation
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at BioPartnering Future Europe. On this show I have Julian Chick, who is Chief Operating Officer at a company called Allied Healthcare Group, welcome.
Julian Chick:
Thank you Fintan, it's lovely to be here.
Fintan Walton:
Good. It's good to see you Julian, because you are a guy who has been in the biotech, healthcare area in Australia for many years, and now you've joined this company called Allied Healthcare Group. Allied Healthcare Group is a fascinating company for a number of reasons, it's as I understand it's a revenue generating business, it's floated on the ASX, how would you describe the Allied Healthcare Group?
Julian Chick:
It is an interesting animal and it's a company that's really trying to build around its revenue and it's abilities into generating revenue to build an integrated healthcare company. So we don't have that pitch that some companies have in the biotech space where, where a pure oncology player as an example, or a pure infectious diseases play, we leverage off our sales and marketing group and we take up, we are very interested in technologies we think have a future and where the futures of going in that science area. So the other two parts of our business are in regenerative medicine and DNA vaccines, so we are in vaccines and we think they are two areas that are certainly growing and very strong as far as the broader healthcare community goes.
Products in market and its revenue sharing
Fintan Walton:
Okay, so just let's look at the revenue sharing bit or the revenue generating bit which is you know you've got sales and marketing, what are the sales and marketing guys selling?
Julian Chick:
So the product, that business itself was established in 2003 and it is selling for third parties, infusion and cardiac orientated products primarily, so we do have a franchise in ECG machines as an example at the big end but we look at infusion pumps, particularly portable pumps, so this move away from sort of putting the patients in hospital beds for prolonged periods of time to more portable delivery devices, infusion devices, whether it would be an antibacterial for a cystic fibrosis kid, or a chemotherapy for an elderly patient, I think that, I think we accept from a healthcare cost perspective, that you know it's extremely expensive to put somebody in a hospital for a long period of time and particularly for the elderly it's certainly disorientating, so we have this a range of pumps, in fact we are one of the biggest infusion arrangers in Australia and New Zealand, the business itself is actually based only in Australia and New Zealand but we are looking for that to grow into new territories in a couple of ways, and so that's what it cornerstones. We have about six different alliance, partnerships and we have exclusivity for the region but we are not selling small margin type products, we bring in products that we think have a unique aspect to them, and we look and we go through the whole regulatory process of getting them integrated in the hospital and getting a reimbursement. So for an example we work with an US company that has an electronic portable pump which is heavily used by the US military as an example and we bring that into Australia and then we bring on the follow-on products in the region, the new generation of their products. And on the flip side of that we also have things like a mechanical pump, and the reason I've raised cystic fibrosis previously that mechanical pump is an amazing product, it looks so innocuous in the sense and simple, but we get a lot of support from that because parents, it's about this long and parents could actually strap it to the arm of kids and so they can put them in the bath, they can let them run around as opposed to, if you know that five to ten years ago where you infuse a antibacterial into a cystic fibrosis child they'd be hospital bound or bed bound for a period of time, so that's the cornerstone of the business and it's generating about US $7 million for us at the moment. We had a slow year last year as far as growth but we are certainly looking to that growth to pick up and previously had been at fifteen plus percent.
Business strategies in sales and marketing
Fintan Walton:
Okay, so the business model you've got, you are basically marketing other companies products in Australia and New Zealand, and then you've got these other two parts, the regenerative medicine and the DNA vaccines, so they are presumably they are elements of that of taking those particular products through clinical development, is that correct?
Julian Chick:
Yes.
Fintan Walton:
So there is an element of risk associated with those particular programs?
Julian Chick:
Absolutely, but I think that, if you know when you if you want to look at as a transition period you've got a cornerstone of sales and marketing and that teaches you some things as well and I think that probably lacks in a number of small companies. It lacks, teaches you about distribution, supply chain, getting in into hospital, just getting it approved doesn't necessarily mean it's going to be solved or picked up by hospitals. So our next sort of wave we believe is our in-house technology around the regenerative tissue medicine area, and then as you say we've got the blue sky, and the reason why we have gone into that blue sky is because we think that the pedigree behind the science particularly with Ian, Professor Ian Frazer and his history around Gardasil and cervarixHPVvaccines encouraged us to sort of pursue that as well as a sort of another opportunity.
In-house technologies and their development
Fintan Walton:
Sure. So you got the DNA vaccine as you say with Professor Frazer and then you've got your regenerative medicines, so just on the regenerative medicines side, what are, what's in development?
Julian Chick:
So our lead program is a product called CardioCel, it's a patch, it's a tissue patch and it's used, it's first indication will be for the use in congenital heart disease repair but in pediatrics, so for the children, and that is the nature of the patch is that it is a piece of tissue that's bovine originated, but we have a special treatment process for that, and the surgeons will use that to either reconstruct or repair congenital heart defects in some way. The product itself beyond that, the technology, the actual technology itself is actually the treatment process as opposed to the tissue, so that lends itself to a whole range of tissue orientated products in that sort of xenograft market, so there are you know adult heart valve repair, there is vascular repair, valvular repair and then it moves into things like hernia, pelvic floor, orthopedics even to the extent of things like dura maters of spinal cord repair post in some circumstances. So we are, in a way we are agnostic as to the tissue, our first protocol however with the CardioCel product that's currently in and CE mark application has been launched, the TGI in Australia application has been launched, and we are looking to file our 510(k) later this year, early next year. And so that would be the first product that we will look at, and the reason why we have gone after that, for a number of reasons is that's where sort of the bulk of our research has been, but it also gives us an easy for no better term or a very specialized foray into that tissue market. So from a global perspective we think we've got the capacity to launch that product ourselves because the number of pediatric cardiothoracic surgeons, you know there is not one on every corner, and so we see that as being a real genuine opportunity for us to establish sale, a European sales force of three to ten people that can really get the bulk of that sales of that product.
Fintan Walton:
Okay, and then the DNA vaccines business, that must be a little bit earlier stage is it?
Julian Chick:
It is, so the lead program for there is for Herpes Simplex 2, genital herpes, that's going into Phase I late this year, early next year. It's a program that originated out of professor Ian Frazer's lab, and so those that know Ian his work in the past he worked on HPV, we actually have a HPVtherapeutic side, so what we are really, that program we are looking to take that forward and getting some validation in a clinic and keeping with our practice of focusing on building a revenue out of the business, you know we don't necessarily see ourselves taking that all the way through to market, we think that there is ability to generate revenues through the sort of traditional model whereby you get some proof of concept in a Phase I, for a vaccine for example, and then you can look at sort of partnering in some formal fashion.
Fintan Walton:
Right, upfront payments, milestone payments and eventually a royalty stream hopefully?
Julian Chick:
Yes.
History of Allied Healthcare Group and it's investors and shareholders
Fintan Walton:
Okay, so the other thing Julian it's, you know the company as I said is listed on the ASX, it's always fascinating how Australian's get companies funded, could you just tell us a little bit of the history because I think that sort of helps the audience understand how in Australia things can be slightly different?
Julian Chick:
Yes certainly.
Fintan Walton:
So could you describe the origins of the various parts of the company that came together, obviously the science, obviously the original Allied Healthcare Group element to it, but how was that created to get into listed on the ASX?
Julian Chick:
Yes, so yes Australia has a unique path to market who have publicly listed companies typically so and we are a good example.
Fintan Walton:
It is a good example, you are good example, yes.
Julian Chick:
So the company itself originated out of a mining company, Australia is obviously very strong in that space, and we for no better term were incubated within a company called Fortescue Metals. So when Fortescue Metals was originally established, the company that the framework that it was it had a number of different components to it, and one of them was a company called Allied Medical, and Allied Medical was a sales and distribution business, so over the period of when that Allied Medical was established in 2003 we have built that up by bringing in additional products and we've been very careful not to sort of try and bring in anything and everything, particularly low margin products, and so that's come over time and that's taught us a lot of lessons. So along that way as that business was growing the Fortescue Metals the parent company as it were, the one we were spun out of, actually had a great success in that, you know we've started off as a public company at twenty million and then grew to a peak of around fifteen billion.
Fintan Walton:
Really?
Julian Chick:
And so, some people would tell you that of thousand dollars invested in that company sort of in the early days became $50000, so we all like to see that in biotech as well. So and along that way we've had a, larger shareholders, a gentleman by the name of Andrew Forrest, and he does have some philanthropic aspects to his in the nature of the individual, and along the way the company met with Ian Frazer and was very impressed by what Ian was doing in the vaccines space, and so we took that strategic position to invest in that company, into Ian's franchise, or R&D I should say, and so that got us into there. The regenerative business came about by a merger with a company, public listed company, that had originally gone public on the back of some other technology, that technology itself was actually derived out of Fremantle Hospital, a group of cardiologist looking to address some of the issues that were being faced in the regenerative of the tissue market thing. So the businesses sort of picked up technology along the way and they've looked at a large number of opportunities particularly to list and to bring in, and so it has to have a kind of a, I guess we are trying to look at unique aspects, we don't want to look at Me too's and all that sort of, there is some element of uniqueness to the business that, you know that's a big quirky. So if you look at us from a distance, you know so what are these guys doing, they are sales and marketing over here and they've got regenerative here and vaccines over there, but it's more about, I hate the word opportunistic, because we are not trying to be opportunistic, although everybody here is, but in a way we've looked at strategic opportunities where we think that we can do some work, add some value and then at some point convert that into a revenue stream.
Fintan Walton:
Right.
Julian Chick:
So it's a balance of a risk versus the revenue in a sense.
Growth of Allied Medical
Fintan Walton:
The company you were first into which was already listed on the ASX, was that a company that was struggling for a period, or was that you know was it going to be delisted, and or threatened to be delisted and now you came in and you are able to give a new life?
Julian Chick:
Yes absolutely and that's exactly what happened. I mean that company it's market cap had slipped to a couple of million dollars, I think they were at that point where they needed a little bit extra work needing the program to be thought through to go forward and then go into that regulatory process and so there are a number of these companies particularly in Australia, because companies have a tendency compared to say the US to go public.
Fintan Walton:
Quite early?
Julian Chick:
Quite early, having taken a company in a previous life early that was even pre-preclinical, I can sort of sympathize with that. So yes they have that issue, so you know that company probably shouldn't have been public in a wider world perspective until you know they probably got their first approval, and that's you see that with other medical devices, they don't actually start to look at becoming approved, public until they've at least got their CE mark.
Fintan Walton:
Right, and in the end Allied Healthcare Group is a more appropriate company for the ASX, because it generates revenue?
Julian Chick:
Absolutely and I think that's the basis for it, and I think that we as a company we see ourselves, albeit that our market cap is small now, we want to build on that revenue and then hitting certain milestones, getting our first product to market in the regen business, getting some validation of the technology in the HSV area, or other platform around DNA vaccines, we think are value creation points for our shareholders and pushing that out to build that business.
Fintan Walton:
Okay. Julian Chick, thank you very much indeed for coming on the show.
Julian Chick:
Thank you Fintan, lovely speak to you.
Fintan Walton
Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
Julian Chick
Chief Operating Officer
At the time of this PTV news interview Julian Chick serves as Chief Operating Officer of Allied Healthcare Group, Australia. Dr Julian Chick is an experienced corporate executive with over 12 years experience in senior management roles including Chief Operating Office, Chief Executive Officer, Head of Business Development across the biotechnology and healthcare industries. Dr Chickhas extensive experience running early and late stage Research & Development projects across a range of pp therapeutic areas as well as medical devices. In the past six years Dr Chickhas raised over $180 million for R&D projects. Prior to the executive roles Julianhad five years' experience as an investment adviser and financial consultant with Prudential-Bache Securities, BNP Paribas and Salomon Smith Barney. He was also the principal analyst with Foursight Associates reviewing healthcare and biotechnology investment opportunities for private equity investors and venture capitalists. Julianhas a PhD in Muscle Physiology and is currently the COO at Allied Healthcare Group.
PharmaVentures
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialization.
Allied Healthcare Group
Allied Healthcare Group Limited (ASX: AHZ) is an Australian diversified healthcare company focused on investing in and developing next generation technologies with world class partners, acquiring strategic assets to grow its product and service offerings and expanding revenues from its existing profitable medical Sales and Marketing division. The Company has assets from research & development, clinical development of new technology as well as sales and marketing of third party medical devices. Allied Healthcare Group is in the process of commercializing its innovative tissue engineering technology for regenerative medicine. Allied also has major interest in developing the next generation of vaccines with a Brisbane-based research group led by Professor Ian Frazer. The vaccine programs target disease with significant global potential like herpes and Human Papilloma Virus.