South Australian feature: The engine driver

Dr Jurgen Michaelis is the man in the hot seat at Bio Innovation SA, the State government's engine of choice for accelerating growth of a commercial bioscience sector.

The choice of Michaelis as its CEO underscores the pragmatic and commercial orientation of the publicly-funded agency.

A German-born biochemist, Michaelis' credentials include nearly a decade in the commercial cockpits of biotechs in Australia and Europe.

Armed with a PhD, Michaelis moved to Australia to work as a researcher, including a stint at Peptech, and took a marketing diploma from Macquarie University. He joined the Cooperative Research Centre for Vaccine Technology as its commercial manager, then was appointed the first CEO of its spin-off company Vaccine Solutions.

Shortly afterwards, a Copenhagen-based vaccine biotech, Bavarian Nordic, headhunted him to return to Europe as its vice-president in charge of commercial and business development. He spent a chunk of the 1990s participating in Bavarian Nordic's growth, including a capital raising of $US100 million in the US and Europe and a stock exchange listing.

Working in the biotech clusters which blossomed in Europe in the mid-1990's opened his eyes to their commercial and social impact, Michaelis says.

In the Munich biocluster, for example, "within about five years there were 80 to 100 biotech companies and 3000 jobs had been created."

Adelaide can't be compared to Munich "but that doesn't mean the same thing couldn't happen here at a later stage."

One of the reasons he jumped at the chance to return to Australia when the top Bio Innovation SA post came up was because "I felt I could make a real difference here," he says.

His brief is to orchestrate the right commercial, financial, policy and scientific environment for kick-starting the State's bioscience industry.

More succinctly, Michaelis is spearheading a drive to create 50 significant bioscience companies and at least 2000 sectoral jobs by 2010.

To make it happen, Bio Innovation SA has an initial four-year war chest of $16.5 million. The largest component is a $4 million pre-seed fund of which $800,000 has been distributed so far. Capped at $125,000 per company, the largesse has been shared by seven companies to date.

On top of that, Bio Innovation SA has helped orchestrate at least one private placement.

South Australia currently lies in the rainshadow of larger Australian biotech peaks such as Victoria and NSW.

But its bioscience roots go back 20 years, which makes it "one of the most under-rated areas of the world," says Michaelis.

Its first biotech hubs began coalescing in the 1980s when small companies began spinning out of university research.

Those initiatives have grown into listed companies such as human and veterinary therapeutic products developer BresaGen, started in 1982, and growth factor company GroPep(1988).

They have since had their ranks augmented by genomics specialist Bionomics, which listed in 1999, biotech products manufacturer form GeneWorks, clinical research and drug testing company CMAX, diagnostics producer Medvet Sciences, (SARDI), and antivenin specialist Protherics Australasia. Based in Adelaide is Australia's largest oral and injectable pharmaceuticals manufacturer, FH Faulding & Co. Hamilton Pharmaceuticals and US contract research organisation Quintiles also have facilities in SA.

Of those companies, almost half a dozen are sited in the Thebarton bioscience precinct - the first of its type in Australia - located next to Adelaide University.

South Australia's strength in plant sciences is focused in another precinct which includes resources in that discipline from The Australian Wine Institute, SARDI, CSIRO and Adelaide University. The precinct has 1500 scientists and students working with agricultural and plant sciences.

The pace at which new companies are being created has picked up in the year that Michaelis has been Bio Innovation SA's chief executive.

Where SA last June had 15 companies whose activities centred on biotech, it now has 21 and Bio Innovation SA is currently working on plans for three new start-ups.

Besides its own grant scheme, Bio Innovation's services extend to helping biotech applicants apply for federal government grants.

With its aid, SA companies have won $1.56 million in Biotechnology Innovation grants and are running at a 50 per cent success rate with eight BIF grants from about 15 applications.

The current BIF round includes three South Australian companies.

To pin down some precise statistics on the bioscience sector, Bio Innovation SA is now engaged in an industry-wide survey whose results will be available in about two months.

All in all, it now has 80 companies in its databases although it is not yet able to supply a precise breakdown between core companies and those peripherally connected with the industry.

In keeping with its commercial orientation, Bio Innovation SA's 10-person team has been largely drafted from the private sector rather than government or academia. Besides Michaelis, it includes investment relations manager Andrew Tucker, who was recruited from Sydney's stockbroking community, and biotechnology business director Neil Finlayson.

Hurdles Michaelis concedes South Australia will have to break down a number of barriers if it wants to realise its life science industry goals.

The first is intellectual property (IP) policies in the public sector. A surprising amount of commercially-exploitable research is locked in the labs of public hospitals and other publicly-funded institutions, Michaelis says.

Until now, State government processes for dealing with the IP associated with that research have been cumbersome and slow.

They aren't flexible enough to allow rapid commercialisation and the pace of decisions need to be sped up to comply with the market time frame, says Michaelis.

Those policies are now being overhauled so decisions can be made in weeks rather than months, he says.

Another hurdle is one that confronts most Australian public and private bioscience enterprises: finding people with both bioscience expertise and a background of running real world businesses.

A third major barrier is about funding and the need to increase the flow of funds available to bioscience initiatives.

To try and breach it, Bio Innovation SA is exploring ways of setting up a $50-100 million venture capital fund in South Australia. Several models are under consideration, including setting up a private fund alongside a government fund or joining forces with an existing fund in the area.