BioAngels: Dr John Ballard




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Video title: BioAngels: Dr John Ballard
Released on: December 08, 2010. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, Fintan Walton talks to Dr John Ballard, Chair of BioAngels Inc.
John Ballard 's role and involvement in GroPep and growth factor
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at AusBiotech in Melbourne in October 2010. On this show I have John Ballard , who is Chairman of BioAngels based in Adelaide, in Australia. Welcome to the show.
John Ballard :
Thank you.
Fintan Walton:
John, you are a I could describe you as a veteran of the biotechnology industry here in Australia. You have lot of experience in biotech particularly, because you founded one of the first biotech companies here in Australia, and I'd like you to tell me the story about how you set that company up, and also to find out more about your experience has been now an Angel investor, so lets go back to those early days and how it came about that you set up this company called GroPep?
John Ballard :
Yes thank you, what happened was that myself and a colleague in the university at (indiscernable) had developed, discovered an entirely new growth factor, we licensed it or trying to license it to a major pharmaceutical company or may be major biotechnology company and what we found was that the company wasn't particularly interested in talking to a lot of different people they wanted one entity and that's where the university and CSIRO who I worked for decided to set up GroPep, and I joined it initially part time as CEO and the licensing deal went through.
Fintan Walton:
Now tell us a little bit about the growth factor, because you had ambitions for it, but it went in a particular direction, so the growth factor was?
John Ballard :
Yes the growth factor was des(1-3)IGF-I it's a modified version of Insulin-like growth factor 1. I was particularly interested in a treatment for muscular dystrophy , I had number of colleagues in that area and I realized that if you could improve the growth of wasted muscle cells you might be able to treat the disease. The licensee that we dealt with was more interested in what now we call it catabolic disease, AIDS and other conditions where worsening occurred and again growth factor needs were pretty obvious, if they would work and if they were safe and that was hence of that was the licensed deal now become evident rather quickly that growth factors were worried because they also cause cancer cells to grow and although normal cell are stimulated so are cancer cells and so the whole field of using growth factors as therapeutic treatments looked a bit and became rather wobbling. Now at the same time we've had been working on this growth factor essential my growth factor I in cultured cell that's part of our assay system and we realized that industrial growth of cells by the pharmaceutical industry really required the factors that didn't need this serum and hence that became the main business of the company GroPep.
Fintan Walton:
Right, now obviously that's the classic story in someways, because you set up a biotech company, you trying to partnership with another company, you have your aims and eventually you know you may not achieve those ends but you may adapt to a new future, but importantly you had to go through series of rounds of financing presumably in those early days which may have been much more difficult than it is even today?
John Ballard :
No actually we didn't, because we did what I think is fairly typical of Australian companies we had a side business selling reagents, making and selling reagents that happen to be growth factors and antibodies to those growth factors and the cash flow from that helped the company going, so really right from the outset the company was cash flow neutral and we were putting all of the money into the development program, so the only time we've raised money was when we listed them on the stock exchange.
Fintan Walton:
And when did you do that?
John Ballard :
In 2000.
Fintan Walton:
And how much money did you raised at that time?
John Ballard :
We've raised about 17 million altogether at that time.
Fintan Walton:
And what was the purpose of that raising, where you were trying to apply that?
John Ballard :
Well again really to expand the company in terms of pharmaceutical development the use of these growth factors broadened that we were also looking at them from milk or particularly bovine colostrum, but milk as well and there it seemed to be good opportunities, we set up a number of clinical trials not using the recombinant growth factor but natural growth factor mixtures and so that was what most of the cash raised was used for.
Fintan Walton:
Right, and then that company was eventually sold to Novozymes [PharmaDeals ID = 25034]?
John Ballard :
Yes we sold to Novozymes in 2005 I believe, I left the company in 2002, but it was a successful sale and Novozymesat least for the first couple of two or three-years kept it going very actively.
Fintan Walton:
Right, so your experience was from start-up all the way through to IPO and end up to eventual sale?
John Ballard :
Yes I even add something to the beginning of that invention, so the invention of the IP which enable the start-up.
BioAngels : Purpose,Opportunities and Investment strategy
Fintan Walton:
Which is very, very important of course that reflects your scientific background obviously which was important and so now you've moved and you are Chairman of BioAngels could you tell us a bit about BioAngels what's your purpose is? Who do you work with? What are you looking to invest in?
John Ballard :
Okay, BioAngels is a group of individuals who invest their own money that's the first it's got a fund. There is 20 of us at the moment and what we do is we evaluate as a group or we have an Executive Officer as well opportunities and there are plenty of those around to see those which would need modest amounts of money to take them to an inflection point may be profitability, may be not profitability, but nonetheless a commercial inflection point. So it's not competing with venture capital industry so much it's a little bit earlier we are talking about a quarter of a million to a million racing a quarter from ourselves usually and rest through syndicated investment and that's the space that the VC industry never really liked and today they like up all this.
Fintan Walton:
Right, and so obviously you need, you say there is lot of opportunities out there from your experience at GroPep now in this new environment, which one thing is tough anyway?
John Ballard :
Absolutely.
Fintan Walton:
What is your preferred investment?
John Ballard :
Well I guess that the preferred investment is one that has some down side protection first of all in other words I am learning from my own GroPep experience if you got a cash flow business in parallel with a drug development business and things get pretty tough you don't collapse, you pull your head in a bit and what, so what we see is that as a preferred investment one which has either some sales and that can be very small companies can have sales particularly if they are reagents or they can even be service businesses these types of things, so that's our preferred one side. The second side is because when the VC investment comes in it often it's pretty rough on the early investors we tend to favor company investments which are not likely at least when we invest in them to require venture capital.
Fintan Walton:
So obviously here in Australia there is popularity put companies quickly onto ASX at least in the past, does that still work and does it work for companies that you've invested?
John Ballard :
It hasn't, in recent three or four-years the winner is definitely closed for classic biotech companies, the exception if you can call it that companies which are using money that they raised on a listing or subsequent to a listing to expand activities which are generating revenue or build the pilot plots something like that, so what we do see and from our group as BioAngels what we're interested in is less like the pharmaceutical development company or drug discovery company that those which could be reagent companies, they could be medical device companies and perhaps diagnostics, AgBio and industrial biotech and this is what we see quite a lot of.
Fintan Walton:
Right, now ultimately you want to get your money back?
John Ballard :
Of course, with a bit more place.
Fintan Walton:
So sure, with a little bit more and was sometimes you don't get your money back, but what's important is that you do and with an IPO market closed or more or less slamshut and so the exit has to be a acquisition, has to be a trace out?
John Ballard :
Yes almost certainly, I think the exception would be if a company is nicely and profitable and if the profits are growing with sales then you could list it, but you know that's a big ask for any part of any company in the sector.
Fintan Walton:
Right, and so let's just go back to the types of companies you invest, we were obviously talking about companies that are in the life sciences?
John Ballard :
Yes here, exclusively yes.
Fintan Walton:
So, exclusively you are not into anything peripheral to that at all. In other words you are not into, you are not into services to the farming business, as all food industry and so forth?
John Ballard :
And one of our investments for example is a company which is engineered Clover, so that the seeds of Clover are much easier to harvest, so but it's still it's classic biotechnology and it's market is to expand those cells those seeds and sell them, so you know it's the same really it just AgBio.
John Ballard 's perspective :Prospects of Biotech industry in Australia
Fintan Walton:
So when you look at the I've described you as a veteran of the biotech industry in Australia you have seen the changes that happened over the years, if we just look at the slot where we are at the moment you know particularly over the last few years and is not just a phenomenon here in Australia it's a phenomenon a worldwide you know what do you think you know we are here at AusBiotech how do you feel about your industry, how would you diagnose it and what prospects do you have for the biotech industry particularly here in Australia?
John Ballard :
Well I think it's tough worldwide in terms of raising finance, the pharmaceutical industry that component is seeing it's profitability dropping at generics become much big part of the business that will continue sales to third world companies et cetera, but over all sales will go up. What we, what I think is going to be a real growth area is industrial biotech, biofuels for example one of the companies that I am involved with makes enzymes for oil exploration, I never knew enzymes been used in oil exploration and I am an entomologist by training, so I think we just have to look broader and say well what are the opportunities there will still be good ones in the pharmaceutical side, but along side that there will be many others as well.
Fintan Walton:
So are you saying then that if you are talking about therapeutically based companies it's a much higher risk for any investor to get into these days and the preferred profile of the company is one that has low risk innovative, but lower risk early to market, early cash flow is coming in?
John Ballard :
I think that's right, I think what we are seeing here in Australia is universities and other public sector institutions are setting up their own funds and are supporting in-house they may not be companies at this stage, but invention which become companies and they leave later. So when a cash investor comes in they are more mature in the sense of the product and I think that's the tendency we'll see worldwide, the public sector institutions will take that inventions further.
Expectations on returns from investments
Fintan Walton:
And as you grew to 20 of you hopefully you've got a similar view and what you want to get out of the investments you get, what are your expectations? What sort of level of return and when do you except that return for the types of investments that you do?
John Ballard :
I can answer that in two ways, first of all based on experience not so much for us because we only going for eight years, but The Angel Capital Association in the US is collecting vast amount of data and they are talking about average returns of about three fold in an average of five-years. Now I think many people are into the good news and I don't think as good as that, but on the other hand what we will see is a lot of failures, always out of 10, 5 will fail they will either get either nothing back or in Australia the best you've get is a tax reduction for your losses, but what you are hoping of course is that of the remaining percentage 50% say one or two do very well that requires an exit, an IPO isn't an exit your shares been (indiscernable) for a while, but it's a move to an exit, but a trade sale is the obvious way to go.
Fintan Walton:
John Ballard , thank you very much indeed for coming on the show.
John Ballard :
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).
John Ballard
Chairman
John Ballard was Managing Director and previously CEO of the GroPep Ltd until 2002, positions he held since the inception of the company in 1988 and through its listing on the ASX in 2000. He was one of the founders of BioAngels , of which he is currently Chairman. He is also a Director of BR-Angels Pty Ltd, Applimex Pty Ltd, AdAlta Pty Ltd and Neubody Pty Ltd as well as the not-for-profit companies, Australian Proteome Analysis Facility Ltd, The Australian Association of Angel Investors Ltd and the Australian Institute for Commercialization Ltd. He is a biochemist by training (PhD, BSc), has authored more than 300 research publications and is an inventor of 10 patents. He was elected to the Australian Academy of Technological Sciences and Engineering in 1997.
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 commercialisation.
BioAngels Inc
BioAngels Inc. is a not-for-profit association of business executives and entrepreneurs from a wide range of backgrounds. Established in 2002 by a group of founding members including, Dr John Ballard, Mr Paul Flavel, Mr Ron Langman and Dr Oliver Mayo. In 2010, the group has 20 active members and is looking to expand its membership.