Geoff Brooke, Co-founder & Managing Partner at GBS Venture Partners




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Video title: Geoff Brooke, Co-founder & Managing Partner at GBS Venture Partners
Released on: February 28, 2013. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, filmed at AusBio 2012 in Melbourne, Australia, Fintan Walton talks to Geoff Brooke, Co-founder & Managing Partner at GBS Venture Partners
History of changes in biotech sector
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at AusBiotech in Melbourne, in 2012. On this show I have Geoff Brooke, who is the Founder & Managing Director at GBS Venture, welcome.
Geoff Brooke:
Thank you. Nice to be here again after so many years.
Fintan Walton:
Indeed Geoff, I suppose you have a history of seeing how the biotech sector has done here in Australia and how things have changed, so what are the key changes that you've actually personally experienced, lets say in the last five-years, what's different?
Geoff Brooke:
Yes, so the businesses, the industry has come along enormously, it's become way more sophisticated, people appreciate that you can make products out of medical science and that they can reach the clinic, and can actually reach the pharmacy, and can be of use and you can make money out of it. You know when I started in this business 15, 16-years ago in Australia no one believed that and there wasn't much happening and in those days it was all really us sourcing in vitro stage projects at universities, and so you asked me what's happened in the last five-years probably the biggest change that I have seen is that we now not only see start-ups happening in Australia and companies that were perhaps started 10-years ago coming for funding that are still based here, but we also now see particularly US based companies that get to the stage of requiring a first-in-man study having significant trouble negotiating a path through not only the FDA, but the Ethics Committee and various hospitals for all sorts of reasons it's incredibly complicated, and basically the authorities are saying hey you are going to try this on someone else not an US citizen and then come to us with that data and then we might think about letting it tried in the US and so we have quite a large change in the last five-years in that we have US companies coming to Australia with the venture investors whom we've done deals with before is saying, hey Geoff could you go and find a PI for example, that's a world authority on lung-volume reduction in emphysema for example which is exactly what happened with one of our companies called Uptake Medical, and so we went out and found who was the guru, physician, professor in lung-volume reduction in emphysema, got them involved in doing some due diligence for us and then facilitated for them to be the PI. So in numbers of cases, and I am not, it's not just one or two it's probably now may be eight, we've had, we've invested in a US company but all of our money and some others has been spent here in Australia with a value add of clinical development done in an Australian hospital.
Fintan Walton:
So the money goes into the subsidiary?
Geoff Brooke:
The money goes into the US usually Deleware incorporation.
Fintan Walton:
Right, straight out there.
Geoff Brooke:
Usually the US company has an incorporation here and they channel the funds back to Australia that pays for the clinical development here, sometimes they will have operational staff here, sometimes they fly people in and out and they'll use a CRO, in fact they pretty much always would engage a local CRO into the projects. So it's good for Australia because it's high end value added, I mean this is really pretty expensive work this you know it might be $20,000 per patient, and you have the CRO involved, you have the professor, and their staff and the hospital.
Benefits of tax credits in financial hardship
Fintan Walton:
And the recent changes in tax, giving tax credits to people who do research here, has that helped?
Geoff Brooke:
It's been a great help for not only those types of companies but all of our companies in Australia, and I have even heard international pharma companies saying how attractive it is for them now and that they that they've planned to spend money here using that as an incentive to do it, so it's been great and we were sort of in the woods a little bit a few years ago when there was a change of government and that the previous grants, which were also were great, was stopped.
Fintan Walton:
Suddenly stopped.
Geoff Brooke:
And no one knew what they were going to do and some people might be in the midst of a grant application planning their whole budget and they are all developing part up on funding from the government and then you didn't know what was going to happen, so now this seems to work really well. The cash comes in and it seems to work really well and it's real cash. It will be interesting to see what happens though when those companies end up making profit and they've got to remember that they've already had the tax deduction on the R&D, so they can't claim that tax deduction against revenue in the future, but anyway that's a while off for a lot of those.
Investment strategies for local companies
Fintan Walton:
Well that's part of the shift and change, moving the risk, isn't it, really around, so but when it comes to your portfolio you've got, you've had several funds, you've raised several funds, your last fund that you've raised was about four-years ago, is that correct, and you are obviously investing with that fund. You mentioned the types of companies, the US based type of companies who coming over here and setting up some of their clinical trials, what about the local companies, the investments that you are making in those, what is the typical character of those companies right now?
Geoff Brooke:
So it's changed now in that there are older companies that we might have not seen, when they were in vitro stage or in vivo stage, that have, all we have seen and said, hey you go away and do an animal study and come back and show us that it works, for example, and so we not only still see those early stage things where we have to work with universities to do a license and start a company, but we also see later stage companies now that might have human data for example, that we might have passed on before or kept watching, who've come back and shown us that they could do what we asked them to do or what they said they were going to do and that allows us to have somewhat of a later stage and this one, and we've got several examples, I mean Chemgenx is probably a good example, because I tracked what Greg Collier was doing with Chemgenx for a couple of years and in fact before they even had their lead compound and kept encouraging him to find a lead compound to prove his genomics based theory of a mouse model, a rat model actually, basis of diseases, and so he finally did that and he came and said, hey look I found a molecule it's in a related area and work in a mutation, particular mutation leukemia and we invested and now that had human data, so that's a pretty good example of our later stage investment. Peplin was another one, we did Peplin when they had some human data as well and that was a fantastic success for us as well.
Fintan Walton:
Yes, well I suppose in the end, what we are hearing though, is that a lot of the investment is going into the maturer company, or you taking the same level of risk that you took say you know five, ten years ago?
Geoff Brooke:
Well, not across the board, because we do early stage stuff, which obviously has a high risk but you are getting a bigger piece of the company for the dollar that you invest, but we are also doing some of these later stage things, so we are still doing both. I mean we did a thing, Josh Funder who works with me, did a thing called pathway, not that long ago, which was really early stage, in vitro stage, so we still no one could ever say hey GBS doesn't do early stage really, preclinical trial, pre-human study things, because we do, you may not hear about them as much as before, but we do them as well as later stage things and we are really interested in that early stage stuff as well.
Partnering strategies with venture arms of pharma companies
Fintan Walton:
Right, are you working closely with the some of the venture arms of some of the pharmaceutical companies, or have those venture arms really hit the shores of Australia yet? Are they active here in Australia from your perspective?
Geoff Brooke:
Yes they are becoming active, and the answer is yes we have done deals with the venture arms of the pharma companies. So we did a company called Celladon, which is one of the US based companies that came part of the, has come to Australia for part of it's clinical development and we've done that with a venture arm of a pharma company. We've been doing that for a while though, so some of the older companies that we did under that old model at early stage we also partnered with big pharma venture groups, JJDC, we've done heaps of things with them and know them really well and continue to do so.
Fintan Walton:
Sure, yes.
Geoff Brooke:
So for us that hasn't really changed that much. We still get.
Fintan Walton:
Okay, Just that there are more of them now are active?
Geoff Brooke:
There are, there are more. It's sort of bit of a cyclic thing with downturn, I've been through a couple of downturns now and it's funny the new model is getting corporate venture investing, well I've seen that twice before, it comes in and out of favor with the tide of interest in innovative investment funds.
Future prospects of GBS Venture Partners
Fintan Walton:
So taking that historical perceptive and then pushing it into the future, what do you see Geoff and you're obviously still in the game and so what do you see in the next three to five-years?
Geoff Brooke:
Well it would so at the moment venture, interest in venture investing so is not high. All the money in the world is either with the government or with pension funds, the government is really interested in it and they are doing what they can by state and federal to stimulate the venture fund activity, but since 2008 in particular the pension funds, our superannuation funds, have been worried about their liquidity and worried about their asset base of when they are working at the ratios of percentages of what they have in a liquid investments, so that's definitely changed. And until recently I would say there hasn't been much improvement, right at the moment we are seeing glimpses of increased interest, so may be going back 6 or 12 months ago when we called on our current pension funds, superannuation fund investors they would say hey we are worried about liquidity, we are not interested in anything that's not liquid, we love you guys, really pleased of what you've done in the past, but we are not interested in anything in future now, we are now getting the odd ones say will call us and say, hey you know we've now got a new allocation for private equity or even come and tell us what you are doing, where as 6 or 12 months ago that was not the case, so there is a glimpse that they are showing interest again.
Fintan Walton:
And as a result of that hopefully more investment back into biotech?
Geoff Brooke:
Yes, so hopefully others will be able to raise new venture funds to invest in Med tech and biotech and hopefully when we are out to raise our next fund there will be, the tide will have completely turned and there will be avid interest.
Fintan Walton:
Geoff Brooke, many thanks for coming on the show.
Geoff Brooke:
Good, thanks for having me, Nice to see you again.
Fintan Walton:
Pleasure.
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).
Geoff Brooke
Co-founder & Managing Partner
At the time of this PTV interview Geoff Brooke serves as Co-founder & Managing Partner at GBS Venture Partners. Dr Geoff Brooke co-founded GBS in 1996 and has more than 20-years venture capital experience. He was formerly President of Medvest Inc., a US-based early-stage venture capital group he co-founded with Johnson & Johnson. Geoff's experience includes company formation and acquisitions, as well as public listings on both NASDAQ and ASX. He has been a founder, executive and director of private and public companies and has an extensive network of international contacts. Geoff is on the board of GBS portfolio companies CoDa Therapeutics, Sunshine Heart and Uptake Medical. Geoff is licensed in clinical medicine by the Medical Board of Victoria, Australia and his post-graduate studies were in anaesthetics/intensive care. He earned his Bachelor of Medicine/Surgery from the University of Melbourne, Australia and a Masters of Business Administration from IMEDE (now IMD) in Lausanne, Switzerland.
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.
GBS Venture Partners
GBS Venture Partners (GBS) is a leading life science venture capital firm. Founded in 1996, GBSinvests in young businesses developing and commercializing products which, when combined with the right management and finance, will make a significant difference to patients' lives and deliver financial returns for our investors. Our areas of particular interest and expertise include human healthcare, biotechnology product development and life science start-ups. In particular, recent investments have included biological or small moleculetherapeutics, medical devices and diagnostics. GBSinvests in private or public companies whether at start-up or later stages of company development.