AusBiotech: Anna Lavelle explains how investors can leverage their investment dollar by bringing clinical trials to Australia




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Video title: AusBiotech: Anna Lavelle explains how investors can leverage their investment dollar by bringing clinical trials to Australia
Released on: November 23, 2011. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, Fintan Walton talks to Anna Lavelle, CEO of AusBiotech.
AusBiotech's view: Growth of Biotechnology industry in Australia over the past year
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at AusBiotech's convention in Adelaide. On this show I have Anna Lavelle, who is CEO of AusBiotech, welcome.
Anna Lavelle:
Hi Fintan, great to see you again always enjoy talking to you.
Fintan Walton:
Good, well thank you very much indeed Anna, because we want to talk about last year we had an interview and that year is passed and so what's happened here in Australia from AusBiotech's point of view?
Anna Lavelle:
It's been pretty action packed in fact I would suggest the best you've had in Australia for biotechnology, if you look at the mergers and acquisition activities, you look at the biotech grant $231 million from the NIH, you look at the licensing deals that across have got and also the fact that they've paid back a dividend 60 cents per share to their investors which is great $100 million dividend so that's terrific for a company with 24 people and you look at the amount of money that's being raised also with capital raising things are looking really optimistic very, very healthy here in Australia, now to be fair of course that's for the listed companies and still the private companies are finding it difficult to raise capital, but the companies that have been in existence for 6 to 10-years are doing very, very well.
Fintan Walton:
So is the maturing in the industry going on?
Anna Lavelle:
Absolutely that maturing is happening and despite the GFC the share if you look at the share prices for biotech companies in Australia the listed's since 2009 we have been consistently above the ASX 300, so if an investor have had a biotech profile they would have done better than with some of the other industries in this country that's very unusual I think.
New government tax credit system
Fintan Walton:
Right, indeed. Now Anna one of the things that happened this year, I mean I know you've been personally involved in a campaign with the government.
Anna Lavelle:
Yes.
Fintan Walton:
And that campaign is to do a tax credits and I believe you've moved the mountain and got these guys to approve these ideas?
Anna Lavelle:
Well was a bit David and Goliath I have to admit because there were powerful forces that didn't agree with us and some other industries such as the mining industry, banking industry and so on were unhappy of changing the system from the concession system to a credit system it really didn't wasn't attractive for them, for us it's highly attractive the small innovative companies particularly biotech or science based technologies we are in a sweet spot of this particular reform and it means that companies with less than $20 million turnover will get 45 cents pack for every dollar they spend on approved R&D, and for biotech companies there is no challenge that is what they do their reason for living is research and development. So this could be extremely important for that the smaller end of town which as I said before are struggling to get capital in and that means that they will be able to invest much more in their trials, in their pre-clinical work.
Process of approved R&D work
Fintan Walton:
Right and one of the key things key words that you've used there is approved R&D so how does that actual work, how does that process actual work, how can a biotech company be sure it's going to get it's 45 cents?
Anna Lavelle:
Okay, well there is two things first of all there is a definition which you can follow through and that talks about using scientific method and it has the word experiment in it which really did spook some other industries that sort well we don't do experiments, I don't see it that way what I see is that all the government is saying it has to legitimately use scientific principal so you have to have a hypothesis you have to test that hypothesis, you have to get new knowledge and you have to be able to repeat it and demonstrate that it is a fact and most industries if they doing bonafide R&D ought to be able to do there. So that's one thing, the other thing is that if you are wanting to do some offshore work for example you can get pre-approval from innovation Australia which is a committee associated with the government and they will just tell you yes if you do what you said you are going to do we will honor this and you will get the out of the tax offset all the cash payment back.
Effects of new tax credit system on Biotech industry
Fintan Walton:
Right, and so what effect, okay that's the biotech's gonna work, what effect do you predict it will have on biotech here in Australia?
Anna Lavelle:
Well I am trying to encourage all companies now to seek advice immediately a professional advice, because the clock is already ticking it's from 1 July this year so we're already half way through the taxable year so if they need to make any adjustments they need to properly understand that it's a brand new system, they throw away their knowledge of last year in the old system and they may need to tweak their business model to maximize their claim, if people do that I would expect a large upswing in the amount of money that comes into the sector and I would predict would be in the order of $300 million or more depending on how aggressive people are at working out how to maximize optimize their claim. So my fear is that we will have some companies for example getting to the end of the calendar year the fin year and saying my turnover is $20.1 million which takes away the cash and means that they just getting an offset on new tax which is less attractive for small innovative companies, so making sure that they don't make silly mistakes like that is what's going to be really important for the CFO's and the CEO's in the next few months.
Fintan Walton:
Right, and in terms of attracting capital into these private companies where you said that's been the difficulty do you predict that this will make the difference?
Anna Lavelle:
It will help, I think I could tell you recently we were in New York at an investment summer as you know AusBiotech runs investment summits in Australia, in San Francisco, in New York and we did one in Amsterdam this year too in October, so in New York and I mentioned this was going to come into the house the parliament in a couple of months and that I predicted that it would get support which it did and the investors were very excited because they could see that they could leverage their investment dollar if they brought their clinical trials to Australia as opposed to some other location, so it is going to be attractive for international investors as well as for domestic investors. The other thing which I can tell you I negotiated was a quarterly payment from the 1st of January 2014 which means that if you are a small company you will get a cheque every quarter rather than having to wait for the end of the year which is great for cash flow and also allows you more certainty that means a new locker to reinvest in your work, so I see that as a terrific improvement to the system as well. So I am looking forward to it, now I've been appointed to a seven person committee associated with the Federal Governor with the Minister Kim Carr to over sight the implementation of this tax incentive system for the next three-years, so it's a terrific opportunity for the biotechnology industry to have it's voice at the highest level and able to pick-up any unintended consequences or things that are not quite as we expected and seeing if we can massage the implementation to really have the policy impact that the government is looking for and that is moving some money from the big end of town to the small end of town.
Challenges ahead
Fintan Walton:
Sure, now congratulations on what you've done there obviously there is another year to go and then so forth you must have other challenges in front of you so what's in your in tray at the moment in terms of actions that you would like to take?
Anna Lavelle:
Well as you know Fintan there is never a dull moment in this industry and there is always another mountain to climb, so the one that I am working on at the moment or paying a lot of attention to is getting up another VC fund and as you know in Australia we have the IIF fund, my concern is in the past that the amount of money that the government has put up has been around $20 million of money which is then dollar matched by the private sector and really a $40 million fund is not it doesn't have enough muscle to really improve the lives of a number of companies, so I would like to see a much larger fund eventuate over the next 12 months or so and I am optimistic that we may be able to, we might see something, see some movement on that area in the next month or two.
AusBiotech convention at Adelaide
Fintan Walton:
Sure, so in terms of we are here at this at the convention here in Adelaide which is a lovely town as everybody knows, tell us how is this convention going for you?
Anna Lavelle:
It's going well, Adelaide is a smaller town than say Melbourne or Sydney and the City of Churches they call it, so we had a great, great night last night as you know at the Adelaide Oval the Don Bradman memorial oval almost iconic Australian oval which was fantastic but the thing that really has intrigued me is that we have a large number of internationals at this conference and also we have the Australian investment summer on Wednesday and nearly 50% of the investors attending there are internationals and from 11 countries, a lot of them are from the US, but also from a number of Asian countries, UK and Europe, so it's a very nice spread and I am very happy to see that. So we are looking to bolster our engagement with the investors over time we've been doing that now for few years and that would be our trajectory going forward.
Fintan Walton:
Anna Lavelle, thank you very much indeed for coming on the show.
Anna Lavelle:
Thank you Fintan.
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).
Anna Lavelle
CEO
At the time of recording this PTV interview Anna Lavelle serves as Chief Executive Officer of AusBiotech. Dr Anna Lavelle was appointed inaugural Chief Executive Officer and Executive Director of AusBiotech Ltd in June 2005. AusBiotech is the peak industry body for biotechnology with over 3,000 members. AusBiotech is part of the Pharmaceutical Industry Council and Chairs the Asia/Pacific biotechnology network. Dr Lavelle also Chairs or is a member of, various Federal and State government committees associated with biotechnology. Previously Dr Lavelle was a Senior Executive with the Australian Red Cross Blood Service (ARCBS), commencing in 1998 as Director responsible for Strategic Planning and Business Development. Prior to joining ARCBS, Dr Lavelle held positions of Chief Executive Officer of a public health organization, Industry Lobbyist for a member organization and commenced employment as an academic at Monash University, Melbourne. Dr Lavelle holds a Doctor of Philosophy in Genetics from the University of Melbourne and is a graduate of the Australian Institute of Company Directors.
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.
AusBiotech
AusBiotech is Australia's biotechnology industry organization, which represents over 3,000 members, covering the human health, agricultural, medical device, bioinformatics, environmental and industrial sectors in biotechnology. AusBiotech is dedicated to the development, growth and prosperity of the Australian biotechnology industry, by providing initiatives to drive sustainability and growth, outreach and access to markets, and representation and support for members nationally and around the world. AusBiotech has representation in each Australian state providing a national network to support members and promote the commercialization of Australian bioscience in the national and international marketplaces. The structure is a not-for-profit limited guarantee company managed by a Board elected by members in line with its constitution. AusBiotech membership base includes biotechnology companies, ranging from start-ups to mature multinationals, research institutes and universities, specialist service professionals, corporate, institutional, individual and student members from Australia and overseas. In assessing the current needs and issues faced by Australia's core biotechnology companies, AusBiotech's Strategic Business Plan addresses the requirements to build a favorable environment to enable companies to grow, help them globalize and position Australia as a significant biotechnology industry for increasing international investment and interest.