Intersuisse Bioscience Managers: Investments and Australian Biotech




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Video title: Intersuisse Bioscience Managers: Investments and Australian Biotech
Released on: December 18, 2009. © PharmaVentures Ltd
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  • Summary
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  • Participants
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In this episode of PharmaTelevision News Review, Fintan Walton talks with Matt McNamara, Chief Investment Officer at Intersuisse Bioscience Managers.

Filmed at AusBiotech 2009, they discuss:

• the companies Intersuisse invests in
• private v. public companies and Australia v. New Zealand from an investment point of view
• the importance of funds
• how Australian biotech is likely to perform in 2010
The companies Intersuisse Bioscience Managers invests in and Private v. public companies.
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here in Melbourne, Australia. On this show, I have Matt McNamara, who is the Chief Investment Officer at Intersuisse Bioscience Managers, welcome.
Matt McNamara:
Yeah.
Fintan Walton:
Matt , you are an investor in the biotech scene; you've got a fund that you've raised relatively recently.
Matt McNamara:
Correct.
Fintan Walton:
What is your fund investing in?
Matt McNamara:
Okay, we it's a life sciences fund where basically human health, drugs, devices may be diagnostics the business models got to stand up. It was designed to be a $100 million fund that we've in this current capital raising you know period we've managed to raise just over 50 so we have over 50 under management, we are still open to investors. We've been going for about 16 months now and we started on the 1st of July which the 1st of July 2008 which is a pretty hot date in most people's minds that was the start of the big, big dipper.
Fintan Walton:
Yeah.
Matt McNamara:
And, but we have our investing in public and private companies.
Fintan Walton:
Yeah.
Matt McNamara:
Australian companies and potentially New Zealand and we are looking at what we call "in or near clinic", so in Australian (indiscernable) that would be mid stage.
Fintan Walton:
Right.
Matt McNamara:
So there are the 6 or 12 months away from clinic or in clinic. When we started back in 1st of July we saw what was happening in the world it was collapsing, we became a little bit more conservative and we actually saw the process of some quality Australian stocks just plummeting.
Fintan Walton:
Sure.
Matt McNamara:
And we realized there is nothing wrong with the technology, you know so we started investing in Aussie listed companies that were well into the clinic. And we've managed to take our dollar units [ph] to a dollar 60 so our investors are ecstatic.
Fintan Walton:
Right. So down trends are good for investors?
Matt McNamara:
Yeah, for every loser there is a winner.
Fintan Walton:
Right.
Matt McNamara:
And there was a massive over hang in some of these stocks and we were the lucky recipient in them and, and so you know as the recovery has happened we've been a beneficiary.
Fintan Walton:
Right. I presume that the fund initially was out there to as you said to go for private invest in private companies as well as public companies.
Matt McNamara:
Surely.
Fintan Walton:
And you're looking for a $50 million fund you would probably be investing in pretty early stage technologies typically.
Matt McNamara:
Well.
Fintan Walton:
But you would have changed I presume because of the advantage you would have in a potential rising market?
Matt McNamara:
We are sticking to our "in or near clinic".
Fintan Walton:
Okay.
Matt McNamara:
So we haven't changed that. We haven't looked at as many private companies as we thought we would because the opportunity for public companies was too enormous.
Fintan Walton:
Sure.
Matt McNamara:
And also as you will appreciate as the world was imploding private companies are not under the spot light and so they refuse to accept that their valuation was less, so we've, you know they've not been able to raise capital over the last year and so they're ready to further invest us now at the right price.
Fintan Walton:
Right. Now obviously it's very important that biotech funds do well and getting one dollar [ph] 60 back of every dollar you've invested can be good news, will that mean that some of that money will now make its way back again into further investments or what's going to happen to that those particular course?
Matt McNamara:
Well as we return, as we return money to our investors, we'd like to say we'd like them to think and they are real line inspect to us, you know you have proven your business model works, there is nothing stopping us from setting up a 100, $200 million fund doing the exact same thing, but just bigger licks[ph], because you know our licks have been relatively small, our typical investment is 3 to 5 million.
Fintan Walton:
Right.
Matt McNamara:
Yeah.
Investment philosophy of Intersuisse Bioscience Managers.
Fintan Walton:
So, clearly the other thing that's happening in the industry here in Australia is that as well as having publically listed companies, all of these companies are actually maturing they are getting, they are getting products into Phase III clinical trials and so forth, so does offer another potential not just only to do stock gains on the stock market but also some of these companies are becoming acquisition targets, so is that changing the way that you are looking at how you are investing in companies as well?
Matt McNamara:
Our investment philosophy is actually quite simple. I've told you what stage of companies we like to invest in. And we look at a company and say if we put our money in and offer our global because we have a global team, if we offer our global assistance in taking that company from the stage we get in to having a data [ph] pack that is attractive to an acquirer then we should be able to make multiples on our investment. So our targets are always companies that we think could or should be take out the targets in three to five-years. Of our nine investments to-date Arana has already been [PharmaDeals ID = 32606] acquired, Peplin is voting next week the shareholders will probably accept that, HeartWare was tried to be [PharmaDeals ID = 32439] acquired by Thoratec and so while there was some disappointment that the FTC rejected on anti-competitive grounds, the FTC's statement on why they founded anti-competitive was actually a major fill up for the company, so they might raise $66 million the next week, and the HeartWare is going along very nicely. I think you're eluding to you know Australia has matured a lot in the last 10-years and the companies used to try and get to Phase II and hope they could you know sell if off to big pharma, now you've got companies particularly in orphan drug areas where and you know Pharmaxis is clearly the, using our portfolio, so I am talking about book [ph] here, but has clearly leading the way of saying well there is a very finite universe of cystic fibrosis clinics, maybe we can have a 50% sales force globally and do it ourselves.
Fintan Walton:
Right.
Matt McNamara:
Now if it was an anti-hypertensive or an oncology product, no.
Fintan Walton:
Right.
Matt McNamara:
You need to partner.
Australia v. New Zealand from an investment point of view.
Fintan Walton:
Okay. So you said that you invest in Australian companies, you also invest in New Zealand companies, what do you see the difference between Australia and New Zealand from an investment point of view, is there a difference?
Matt McNamara:
Look there is, no there is not a real difference except that they tend to be more ag-focused over there in food and agriculture. So we are more into human health, so we've had a little dabble in Neuren Pharmaceuticals, but their phaseIII Glypromate failed and so we've (indiscernable).
The importance of funds.
Fintan Walton:
How important are the funds that are like the MRCF fund that is going into earlier stage investments coming out of universities, how important is that development for an organization like yours?
Matt McNamara:
It's critical. It's critical for the Australian industry, they were pre seed funds there is now the MRCF and there are some earlier stage funds. We are not led to be critical of the government around here in otherwise we are gonna head lopped off, but with the commercial ready been scraped there are lot of early stage companies that are struggling to find that pre clinical funding, Series A type funding, because commercial ready was a good way of leveraging an early stage fund.
Fintan Walton:
Sure.
Matt McNamara:
The brand grouped at MRCF the other guys involved with the pre seed funds, they are all very clever investors and they actually provide a lot of value to the companies and mentoring them, the management and the structuring the boards and all the rest of it. And to be honest they are like, they are producing ideal flow as they invest their 1 to $3 million at that early stage these companies then need to get their Series B, Series C and we would like to think that they've done a lot of the heavy lifting for us in taking a lot of the risk out and so we will be investing in that stage.
How Australian biotech is likely to perform in 2010.
Fintan Walton:
Right. We are in the end of 2009 coming towards the end of 2009 you've said you know you've mentioned how the stock market has gone in a positive direction towards as we progress through the year, you talked about how, you know the industry anyway biotech industry had has such a tough year for 2009, so looking at where the stocks are going and they can't just always keep going up looking at how MRCF and other types of funds are emerging, how do you see 2010 for Australian biotech?
Matt McNamara:
Well it's already polarized, companies that have been head capital adequacy been able to raise cash mature in there, in this structure their board, their offering their development time line have all gone having still a success, those that haven't got all those attributes are still struggling. And I think will still struggle to raise capital. And so you know, well was the investment market has improved people are now looking at real estate, resources, infrastructure and yes they are looking at biotech at the moment, but you know " I mean it's good, it is good for the industry with Peplin you know it being [PharmaDeals ID = 33817] acquired, but as the stocks appreciate then the attractiveness from overseas companies obviously (indiscernable).
Fintan Walton:
Right. So in the end you have some reservations about 2010, am I correct about that?
Matt McNamara:
On a bit of a bear in the market that's you know it was a spectacular fall it's been a quite a spectacular recovery.
Fintan Walton:
Right.
Matt McNamara:
It doesn't makes sense. I expect there to be a few hiccups for couple of years.
Fintan Walton:
But there will be some companies that will continue to grow and become strong?
Matt McNamara:
Yeah, yeah. I mean we look at Acrux, apology speaking our book again, but you know Acrux there was nothing wrong with Acrux Technology, it's fabulous technology and their stock price fell through the floor because someone was off loading during the GFC they are now at a more reasonable price and that will stay there if not continuing, because they're about to get their product in market and they're about to get a significant product in market.
Fintan Walton:
Matt McNamara, thank you very much indeed for coming on the show.
Matt McNamara:
You're welcome. Thanks Fintan Walton.
Matt McNamara
Chief Investment Officer
Matt McNamara is responsible for deal flow management and evaluation, leading all investment recommendations and due diligence. He has over 20 years experience in the Life Sciences sector. After initially being a Molecular Biology Research Assistant, Matt McNamara spent 11 years in Sales & Marketing, and General Management with Merck & Co and Johnson and Johnson Medical Pty Ltd respectively. He has served as SVP Business Development for a University of Sydney spin out, eBioinformatics Inc and was CEO of a Life Sciences Venture Capital fund, SciCapital Pty. Ltd.
Intersuisse Bioscience Managers
Intersuisse Bioscience Managers (IB Managers), the Australian operation of International Bioscience Managers Limited (UK), was established in 2003, bringing together in Australia the essential elements of an international advisory and funds management group ("Bioscience Managers") Bioscience Managers is unique in Australia bringing an international perspective together with the track record, networks and expertise required to convert that perspective into informed investment decisions and value enhancing opportunities. Intersuisse Bioscience Managers offers a multi-disciplined team and related activities in the northern hemisphere. The IB Australian Bioscience Fund I, is a private equity style Life Science fund that will raise up to $100 million, based in Victoria and draw on the global resources of the Bioscience Managers network. Bioscience Managers is currently assisting a number of Australian life science companies identify and implement commercialization strategies. It has established working practices that have created an active deal log and benchmarks to assist Australian companies achieve international best practice.