Brandon Capital Partners: Dr David Fisher discusses their role in Medical Research Commercialization Fund




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Video title: Brandon Capital Partners: Dr David Fisher discusses their role in Medical Research Commercialization Fund
Released on: January 04, 2012. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, Fintan Walton talks to Dr David Fisher, Venture Partner of Brandon Capital Partners
Types of funds and investments
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at AusBiotech's convention in Adelaide. On this show I have David Fisher, who is a Venture Partner at Brandon Capital , welcome.
David Fisher:
Thank you.
Fintan Walton:
David, you've been an active investor in biotechnology companies here in Australia for some time.
David Fisher:
Don't ask me how long, it's been longtime.
Fintan Walton:
But long enough to build up an experience of the biotech industry and bit of a biotech sector, first of all just for the audience could you remind them little bit about the types of funds that you manage, and the types of investments you are making?
David Fisher:
Okay, Brandon Capital Partners our current formation really started only five-years ago prior to that I started Brandon Capital Management which is a predecessor but as we have grown and took on more institutional investors we increased our management base and so the current partnership is really 60 now, just approaching a 60. I've been in the biotech space for close to 30-years, but mostly prior to that was in the operational CEO management role and I think importantly all our investment partners, all managers have operational experience as well as investment experience, we think we need to do both sides of the equation to understand the trials and tribulations of companies as well as managing investments, so I guess to some extent that makes us a little bit different, but not unique.
Involvment with Medical Research Commercialization Fund
Fintan Walton:
Yes, one of the funds you do you have got himself involved in is the Medical Research Commercialization Fund, can you tell us a little bit about that?
David Fisher:
The history is quite important here, because I think around the world finding early stage capital for taking things out of the lab too early for most of the venture funds , but still a very promising is a big gap the valley of death all the expressions we hear about. The federal government here about 10-years ago licensed a few managers with a thing called the pre-seed fund which filled that gap, but for some historical reason they precluded the medical research institutes because they are independent and are funded partly by state governments, so the federal governments in its wisdom didn't allow those entities to access those funds. So for our big institutes like the Walter & Eliza Hall Institute or the Garvan in Sydney the big well known institutes and the smaller ones we really had no ready access to high risk early stage capital. So this combined us with what I think many would regard as Australia has got pretty good medical research infrastructure but they are well re-matured in the capital market side of the equation, so few of this still got to get with without all the persons involved, but some investors some super pension funds superannuation funds we call them here who are active in the VC space several we need a good pipeline of products coming through, we've only got investments in these mid to later stage VC funds but where is the next generation of products coming from, so as more as an option play there see if we can fund some of that else of interests we can see better deals coming through had some investments structured put around them they are more investment ready and so forth. So a few key individuals that advised those super funds, those pension funds solve the idea that this in fact they put up a risk capital that might be to their own self interest as well as getting a, it is a venture fund so are looking for returns. So that's fine but to invest early takes lot of management time, it's heavy lifting the typical 2% management fee doesn't come with that, so they said we will pay a bit of it not the 2% but substantially less you go and find the rest. So we spoke to the Victorian and New South Wales state governments and said here is the proposition you've got all these well known medical institutes here have that tipping in some management fee not the risk capital that was spoken for by the superannuation funds but we need some more money to actually proper due diligence and in addition to that we said lets make this a fee for service type concept so every institute that joins that's a collaboration to actually bring the governments as well as shareholders collaboration agreement they actually pay an annual fee there is no guarantee of getting a investment that's a small amount, but it's 35,000 a year for each institute and we started with the ambition of saying we might get 10 or 6 or 10 the big institutes we now have got I think 29 the last count So pretty well 80% of Australia's research, medical research institutes are member of this fund and it's a real seed fund invest for early investments of 200000, 500,000, a million and will can tap it out of 4 million, so the funds started with $30 million of risk capital it's more recently got another 20 million from the federal government is one of these schemes I've planned for this run so it's a $50 million seed fund and next to that we've got our standard venture fund which we call Brandon Biosciences Fund, so we manage a 100 million between the two funds which means got a lot of money in the life sciences, but there is enough horse power there and we are still investing so got capital to invest in this otherwise pretty capital constrained environment.
Investment strategy and measurement of success
Fintan Walton:
Right, so in the end you are giving, you are putting as you said the so called valley of death which is that money can be diverted into specifically early, very early stage researches going on within the institutions already?
David Fisher:
It has to come from our member institutes, so they've got to be a member of the paid up member of the party and it's got to come from them it may be something they collaborate, they may be collaborating with the biotech company, as long as they've got a role and not just a post box role but an active role of a clinical research, preclinical research and we've seen a couple of institutes now collaborate on synergistic R&D to bring it forward as a project, but I think the interesting thing for us is that when we started the thought of having 6 or 10 are now 29 institutes all actively participating not together that works this sounds like a nightmare about to happen and we're all a bit cautious, it has been the most collaborative experience I've ever seen, so every member institute can join every six weeks we have an Investment Review Committee they have one representative so we've got 30 people around the table listening to the pictures, the proposal not the pharma due diligence we did that as a fund manager but the early stage proposal the full investment thesis and that's a very constructive and collaborative exercise. So we've been very pleasantly surprised, because there is a lot of horse power around the tables, people have come out of big pharma, couple of IP lawyers, ex-scientist have become more commercial so it's a pretty broad relative sort of experience so they can bring that to bare enough and so will we've got connections with company X in the US we are happy to give you some introduction or whatever might be, so that part works. The other thing we have done is that each institutes gets a little bit of equity in every deal, so lets say you are the Walter & Eliza Hall Institute you have a proposal clearly that's the IP so the investors and the institute have most of it, but the investors are ready to give up the small portion of their first tranche of investment to spread equally amongst all the member institutes, so some they've got alignment of interest everyone wants to see a winner, because they all will get a little bit of the benefit in such a way we are getting alignment of interest amongst all the players.
Fintan Walton:
Avoiding conflict of interest?
David Fisher:
Who normally would be competing for funding from government or whatever it might be, so we have to build in a few idiosyncrasies if you like but ways to try and get around some of the sort of the traditional views of early stage venture investing and what's in it's for me and things like that and we run internship programs for people from institutes internally sets part of their learning capacity building relation.
Fintan Walton:
Right, so what evidence do you have now that this is actually working, obviously there is money there?
David Fisher:
There is money there it seems to have five now and these are early stage investments there is no exits clearly, we have one medical device company that's got TGA and CE market approval start selling next year, I am representing that on Wednesday but it's a very interesting little device company, we've got others that are in fairly advanced discussions with big pharma no deals on the table, so the jury is out clearly we have to make it work, but work means it has to work for the investors that can be through direct returns as well as pipeline filling for the sector, it has to work for the institutes in commercialization benefits, but also learning about commercialization so even if they don't get investment if we can help try in some of their staff by internship programs being exposed to due diligence and for them to operate search and all things are going to that they are now going to benefit that they would have had an eye, so there is a number of sort of stakeholders we have to think about in terms of getting everyone as a winner out of this and yes its interesting model.
David's perspective: Investment scenario in biotechnology sector in Australia
Fintan Walton:
Yes, so just then just briefly then on the general state of investment in biotechnology here in Australia. David, from your perspective how would you describe it?
David Fisher:
I wouldn't like to be raising capital now, I think all the large pension superannuation funds are really are out of the game for the time being, I think everyone has been burnt for all the reasons we know about around the world, there are a number of investor VC funds still with money who are cautious like around the world were keeping sufficient capital more than they would otherwise for follow-on funding, but we are making some new investments. Australia has got a rather as some of your viewers may know the ASX here, the securities exchange here has really been a defector of venture capital provider for early stage of companies in the mining sector as in life sciences and without that critical our securities capital markets here we would not be at the place we are now, so that's been a very important agent companies list too early that's the problem, but you can get access to capital later while some have blown it others have wouldn't survive and wouldn't be here today without it, so there are some good examples of companies need to raise 30, 50 million which is difficult in our venture environment they can do that in the public markets. So that's been a side view to some extent as well as the federal government providing some support to the venture industry.
Fintan Walton:
Yes, and then obviously tax credits as well, so just then what would you change in Australia or have you got it right?
David Fisher:
Look I think somewhat or rather, I think the jury is out the extent I think the next two-years are critical when that's just out and it's unique to Australia, but we have many companies that are in there Phase II clinical testing or devices that are in getting close to FDA submission well going to Europe which many are first because of the FDA and so forth, and I think the there is a chance now with a bit of luck and the tale win that have few more success stories will start to change the sentiment and people will see there are there is money to be made, we've had a couple of pretty successful M&A transactions, we've got companies like Mesoblast which now has a market capital over I think 2.5, 2.6 billion for stem cell business. So there is a few, there is a few flowers coming out of the spring it's early days, but I think we had a pretty good rain in Australia in the last two months, so I think we may start to see a greening of the sector, but it's we have to show you can make money as well as do good and produce better products and services for the mankind and like stuff.
Fintan Walton:
David, thank you very much indeed for coming on the show.
David Fisher:
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).
David Fisher
Venture Partner
At the time of recording this PTV interview David Fisher serves as Venture Partner of Brandon Capital Partners. David is a Venture Partner with Brandon Capital Partners having helped found the business in 2007. David had previously established, Brandon Capital Management, the investment manager for three life sciences Pooled Development Funds in 1999. Before this, David was foundation CEO of Peptech Limited. During this period, Peptech Limited went from a start-up to having R&D operations in Australia, the UK, the US and manufacturing operations in Denmark. Prior to Peptech David spent ten years with Pharmacia AB (now part of Pfizer Inc), including five years at their head office in Sweden. David is a director of Signostics Ltd, Global Kinetics Corporation Pty Ltd, Nanosonics Ltd and Aeris Environmental Ltd. He is a past president of the Australian Biotechnology Association and past chairman of the CSIRO's Division of Animal Production Industry Advisory Committee. He has a first class Honours degree in Rural Science, a PhD in Chemical Engineering from the University of Sydney and a Masters degree in Applied Finance and Investments from the Financial Services Institute of Australasia (Finsia). David is a Fellow of Finsia and a member of AusBiotech.
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.
Brandon Capital Partners
Brandon Capital Partners (BCP) makes seed and venture capital investments into emerging businesses in the high-growth life science industry. In addition to capital, the company enables entrepreneurs to access the resources needed to build successful businesses. We approach each investment as a collaborative alliance. Brandon Capital Partners is passionate about turning good science into improved medical outcomes for everyone. BCP's team has a record of accomplishment of successful life science investment as well as a history of working in research, operations and business development in the life sciences industry. Brandon Capital Partners was established in 2007, building on the success of its predecessor, Brandon Capital Management, established in 1999.