Paul Cheever Consulting: Funding and Investment Consultancy




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Video title: Paul Cheever Consulting: Funding and Investment Consultancy
Released on: December 02, 2009. © PharmaVentures Ltd
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  • Summary
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In this episode of PharmaTelevision News Review, Dr Fintan Walton talks to Paul Cheever, Cheever Consulting, Co-Founder.

Filmed at AusBiotech 2009, they discuss:

• Medical Research Commercialisation Fund
• Pre-seed funding for tech transfer
• How the funding works
Medical Research Commercialisation Fund
Fintan Walton:
Hello and welcome to PharmaTelevision news review here in Melbourne, Australia. On this show I have Paul Cheever, who can be described as an architect of a number of investment schemes through the universities including UniQuest and then Medical Research Commercialization Fund which is just recently started. Welcome to the show.
Paul Cheever:
Thanks Fintan Walton.
Fintan Walton:
Paul Cheever, as I said you are a been described as an veteran investor in the Bio-Tech scene but one of the things that you"ve done here in Australia is to build up a architected put together a number of schemes that enables technology to come out of the university the one that"s been recently announced is the Medical Research Commercialization Fund, but you"ve done other types of schemes, so what's behind the fundamentals of these particular schemes?
Paul Cheever:
Sure, sure. Let me just start by a little bit of micro interest simply that, I am not a veteran investor in biotech, I am a portfolio manager so I am more of an investment consultant that, that"s has, but a better decade ago we were advising our institutional investors on investing at venture capital we began to make allocations as one does conventionally to venture funds and as we researched the industry and as we worked to those venture funds and particularly participated in the (indiscernable) Government Pre seed Program here we began to understand some of the weaknesses in what we might call the whole commercialization venture chain. And the weakness was largely around the fact that tech transfer offices at universities and medical research institutes were being given policy incentive to try and get better and do more but were largely inexperienced, so that how they motivated and being better funded but they were largely inexperienced and so commercialization from the lab bench after getting ready for venture investment was a pre ready path. We thought that we could do " we would do benefit our venture portfolio if we can improve that, so we talked about providing institutional or long-term institutional committed capital directly to collaborations involving the universities, groups of universities and institutes, so that they have a systematic process for accessing pre seed funds, we created a new set of pre seed funds on a collaborative basis working with them, one of the differences in this model versus a typical venture fund is it these funds actually aren"t owned by the managers, the investment managers have brought into manage them they are actually owned by the sponsors being institutional investors and the universities and the real institutes. And the process actually works very well because at least a huge amount of scale for the research organization in terms of their commercialization resources.
Fintan Walton:
And the key question is does it actually work?
Paul Cheever:
It does, yeah. Yes, it does and mind you we"ve run a few lessons along the way. we learnt this is a pretty expensive process and so that the last in collaboration has been in medical research and more recently the trends has been collaboration, we are very fortunate to have some government assistance in particularly from, from Victoria and in the MRCF case [ph] it's actually from Victoria, New South Whales, Queensland and Western Australia procuring sales man [ph] from three governments involved, New Zealand and two state governments here. And, and it's just been the help offset some of the management cost not, not investment funding, the institutions provide the investment capital, but it enables to actually run to scale, run the operation scale without having a huge cost[ph] from the institutional investment preview a huge cost of generating the asset.
Pre-seed funding for tech transfer
Fintan Walton:
So lets just look at the MRCF one in particular, I understand that the institutions can actually join " they actually join the scheme in a fact by an annual paying and annual fee?
Paul Cheever:
Right.
Fintan Walton:
And so those institutions are now represented within the MRCF?
Paul Cheever:
Right.
Fintan Walton:
So how does that work from there?
Paul Cheever:
Okay. So when a medical research institute joins the MRCF what they get access to is they get the right to put a nominee on the investment committee, and that gives an access to the rest of the investment committee of those people and a connection if you like but it also from their own experience point of view it means they are now instead of seeing their one or two transactions a year they are seeing 15 to 20 transactions a year. So a huge amount of experience, huge amount of connectivity in terms of " okay, here is a new assay somebody else is developing and who is, who we are talking to in the pharma or biotech or the MedTech sectors "
Fintan Walton:
So it's a greater, greater exchange of information?
Paul Cheever:
Greater exchange of information.
Fintan Walton:
And also getting a better idea of how things can collaborate?
Paul Cheever:
That"s right.
Fintan Walton:
How individuals collaborate?
Paul Cheever:
And so what happens around that table as well is that somebody will talk about that they"ve identified a new receptor and somebody else will talk about we"ve got a library it might be useful for high throughputs screening to see if we can get something to hit that receptor. So a lot of inner activity that way, plus they also by joining the scheme they actually get access to the investment so -- the investment managers so we retain a professional typical venture investment team on this case Brandon capital for the MRCF that, that provides access through the full time investment management personal.
How the funding works
Fintan Walton:
So in the end does the investment go into new companies or does it go into an existing organizations, does it promote the licensing of technology into companies that are already part of the portfolio, how does that all work from that perspective?
Paul Cheever:
The standard path is the, is a typical spinout path, typically either university or research will bring something to the investment committee, if the investment committee determines it's investable what we do of call institutional capital, but a spin out company is formed and that"s the company that"s funded and proceeds into commercialize that technology, but one of the variations we did do is in these as we said okay well we can do some projects financing and we can also do just simply improve the technology to increase this licensing value. so we don"t have to develop companies per say.
Fintan Walton:
Yeah.
Paul Cheever:
We are looking for opportunities to go up the value curve through some investment activity to simply take it to a license state and through to the spin out company and then either whatever path is appropriate for.
Fintan Walton:
because the danger of course is that you can have just too many companies, in the end you need to consolidate, have good companies taking good technologies through?
Paul Cheever:
Yeah. We would, we would hope that in the scheme of things that the companies we starting this year in four-years times have more of their own momentum, and actually quite frankly hopefully will be in the hands of venture capitals or pharma collaborations or something else, so they they"ll actually might still be drawing on so heavily on the pre seed resource if you like on the initial investment resource.
Fintan Walton:
Paul Cheeverthank you very much indeed for coming on the show. Thank you.
Paul Cheever:
Pleasure Fintan Walton. Thanks.
Paul Cheever
Consulting Co Founder
Paul Cheever has worked in the finance and investment industries for over 33 years. During the 1970s, he was involved with many of the innovative developments in Australia 's financial markets, including the development of the bill market, new underwriting techniques for semi-government authorities, the introduction of promissory notes and currency swaps and the transition to de-regulated markets for government securities. During the 1980's he held senior finance roles with two top twenty Australian listed companies. For the past 14 years Paul has had a high profile in the superannuation and investment industry, first as a Director of IPAC Securities Limited, then as Director of Consulting and Managing Director of Frank Russell Australia and followed by the establishment in 1996 of his own business, PlanPerform, a business planning and project management company. From 2000 he joined Access Economics in order to return to the investment advisory business, specializing in portfolio strategy, private equity and hedge funds. Paul was the first Chair of AIMA's Regulatory Committee and was until December 2004 Chair of ASFA's Best Practice Committee. Paul holds a Bachelor of Science degree from Washington & Lee University, a Master of Business Administration from the University of Michigan and is an Associate of the Securities Institute of Australia.
MRCF
The Medical Research Commercialisation Fund (MRCF) was established in 2007 as an innovative investment collaboration. The MRCF invests in early stage development and commercialisation opportunities emanating from Australian medical research institutes and allied research hospitals. The MRCF was founded through collaboration between Australia"s leading medical research institutes and Statewide and Westscheme Superannuation funds, with support from the State Governments of Victoria, New South Wales and Western Australia. The MRCF is an evergreen fund that is managed by Brandon Capital Partners, an experienced life science fund manager.