States of the nation

State government policy has been vital in helping to shape the Australian biotechnology industry. Here, Cristy Burne takes us for a tour of Western Australia, the state that later this year will host the national biotech conference.

Western Australia's biotechnology industry is entering a make-or-break phase in its development. Equipped with world-class research facilities, a strong culture of innovation, and a wealth of biological and intellectual resources, it still lags behind states like Victoria and Queensland in terms of its biotech policy.

But as a late starter, Perth's biotech industry already has a market capitalisation of more than AUD$1 billion, with WA's agricultural and mining economy providing strong opportunities for the State to establish itself as a leader in agricultural and environmental biotechnology.

Perth may be the most remote city in the world, but it's the Australian state closest to other up-and-coming biohubs, such as India, South Africa, and much of South-East Asia, and its time zone aligns well with growing markets such as those in Singapore and Japan. With Asia predicted to have 45 per cent of world GDP by 2020, this edge will become increasingly valuable.

WA's distance from Europe and the US, meanwhile, means biotech executives really rack up the frequent flier points. But Stephen Carter, the CEO of WA company Solbec Pharmaceuticals, says the isolation can work as an advantage.

"It opens up innovation and entrepreneurial spirit in the people who work here," says Carter. "You can't just go down the road to buy that technology, or buy that knowledge. You have to sit down and develop it yourself. You also become very frugal in the way you operate. You manage to get a lot more done for the same price."

Dr Calvin London, managing director of Stirling Products, agrees. "You have to be more entrepreneurial in going out and attacking people, but WA biotech is starting to realise that this [proactivity] has to be part of any business plan you create."

Dr Frank Koentgen, CEO and co-founder of WA company Ozgene, says location is a minor consideration when operating a global business. "If you export, you always export, no matter where you are. If you are in Boston, you export to Europe, you export to Australia, you export to Japan. You'll always be isolated from everybody else. If you're doing a really good job, it doesn't matter where you are."

A critical mass

Although WA is producing top technology and eager entrepreneurial minds, many say government support is inadequate, and that this limits the options available to young companies.

"If Technology Park wants to be what it says it is, it should provide incubator space," says Koentgen. "We had to build our own lab space, and that energy could have gone into establishing the company. WA needs to wake up and say, 'Let's take a couple of million bucks and provide some [laboratory] space'."

Carter agrees. The WA government is starting to come around to supporting its local biotech industry, he says, but compared with the efforts of other states, "it's no wonder we're seeing an exodus of WA companies to the East Coast."

But the 'brain drain' has started to drain back, with many WA entrepreneurs returning to Perth after years abroad with giant pharmaceutical companies. They're bringing with them the academic experience and business acumen to create a critical mass of biotech talent.

"We've developed a pool of people at a senior level who can take some of the projects coming out of the universities and the public domain, and do something with them," says Carter.

"We're really doing it almost in spite of the government," says Dr Stewart Washer, CEO of WA company Phylogica. "But the people in the frontline of State government are actually very good, and medical biotech is actually doing very well."

Sticking to strengths

Institutes like the Telethon Institute for Child Health Research have already put WA on the map for work in areas such as immunology and cancer research, and this kind of research is attracting constant international attention. But how do you turn bench science and clinical success into commercial success?

Harry Karelis, managing director of investment fund Biotech Capital, says that for WA to reach its full potential, it must stick to its strengths. "In WA now there's a big push to set up a mega research facility, with funding of close to $200 million a year, making it one of the top agbiotech research institutes in the world. That's an example of how WA can become a world player in a niche area."

Karelis says that while WA might never be the R&D capital of Australia, it could become the funding capital. "The entrepreneurial spirit here is alive and well. There's lots and lots of money in the system, and people in Perth are comfortable with high-risk investment opportunities. Half of the money for biotech refinancing has come from places like Perth.

"People need to be realistic that while Australia might be a top-five player, we're a long way behind Canada and the US, and we need to concentrate on what we're good at, and concentrate the money that is available into areas where we really have a chance."

For WA, those areas have been agricultural, chemical, and environmental biotechnology. WA occupies 33 per cent of Australia's land area, encompassing a huge range of climatic regions, and hosting some of the world's most biodiverse areas. This provides WA researchers with access to a unique and diverse library of biological resources.

These tools are being used to devise innovative solutions to environmental problems such as salinity and the greenhouse effect, which have the potential to cripple WA's agricultural economy. Such solutions can be applied globally, giving WA's biotech industry the chance to make a significant global contribution.

WA's mining industry could also save millions of dollars a year thanks to innovative research into ore processing, bioleaching and mineral testing coming from places like the AJ Parker Cooperative Research Centre for Hydrometallurgy, and these technologies can also be transferred overseas.

A 2001 moratorium on commercial production of GM food crops by the WA government has been seen as a setback for both agriculture and agbiotech. In 2004, 8.25 million farmers across 17 countries planted 81 million hectares of GM crops. WA risks being left behind.

"Some of the environmental stuff is very young, but it's going to become very prominent in the future," says Dr David Cox, co-chair of the WA branch of industry peak body AusBiotech. "We just don't have the resources to keep going the way we're going. A lot of people think [the moratorium] shouldn't be there, our present minister for agriculture thinks it should be there. It's an area that government does need to keep an eye on, because we don't want to be lagging behind the rest of the world."

Beginning a transition

Many WA players see that things are now on the move. The state government has come to the party with support for AusBiotech's annual conference, to be held in November this year in Perth, and will be in Philadelphia for BIO 2005 to introduce nine WA companies to an anticipated 20,000 delegates.

Calvin London says WA is ready to begin transition. "We're at a stage where we need to stand up and say 'we do have some good stuff here, and we want to develop it, and to be considered as one of the forefront places in Australian biotech'," he says.

Cox agrees. "We have a government who is very supportive of biotechnology and are trying to support it as much as they can. We have a fabulous set of institutes and universities, we have a great business community, and a history of being quite progressive in terms of adopting new things. We've got great intellectual capital and personnel, and we're graduating a lot of people with a lot of skills.

"Biotechnology is part of the green revolution and the knowledge economy. It's here to stay, and just offers so much. It's a watch-this-space market."

The agbiotech evolution

Western Australia is poised to become a world-class producer of GM technology. It combines a natural emphasis on agricultural research with the infrastructure of institutions such as the State Agriculture Biotechnology Centre, the Department of Agriculture, and CSIRO's division of Land and Water.

But a statewide moratorium has designated WA a GM-free area, banning the commercial production of GM food crops.

Dr Ian Edwards, Chair of AusBiotech's agbiotech advisory group, says the moratorium is not only robbing growers of choice, but also hijacking WA's economy. "It's discouraging investment in agricultural biotechnology within the state, and it's discouraging students who would like to look for a career in biotechnology," he argues. "We should drop the moratorium forthwith in all states, and instead carefully consider each GM product on a case-by-case basis."

One WA case that has received the nod from the Office of the Gene Technology Regulator is an application to field-trial GM salt-tolerant wheat, produced by WA wheat-breeding company Grain Biotech Australia, a company established by Edwards himself.

"For the minister to turn down a salinity tolerance trial would be like shooting Bambi," he says. "It would incur anger among farmers with saline land, and might not be a smart battle to try and fight."

Laboratory results show the new GM wheat can grow at salt concentrations equivalent to 30 per cent seawater. Comparable success in the field would be great news for farmers of the six million wheat belt hectares currently at risk from salinity, and could make a substantial dent in WA's estimated salinity damage bill of $55 million over the next 30 years.

As well as salinity tolerance, WA researchers are studying pest and disease resistance, molecular breeding techniques, and other crop and soil improvements. There is also a strong animal biotech focus, with work done on animal health, disease control, vaccine development, and breeding techniques.

This agricultural lean offers tremendous support to WA's economy, which receives an injection of more than AUD$4.5 billion in exports produced from more than 7 million hectares of cropping land.

Although GM cotton occupied 80 per cent of the cotton-growing area in Australia in 2004, the nation's 0.2 million hectares of GM crops appears rather dismal next to the US's 47.6 million hectares, Argentina's 16.2 million hectares, Canada's 5.4 million hectares, Brazil's 5 million hectares, and China's 3.7 million hectares.

"The world is moving at warp speed while in Australian we fiddle," says Edwards. "Over 75 per cent of Canadian canola growers pay technology licensing fees, either to Bayer or Monsanto. They do it because it's still putting dollars in their pocket. Farmers make economic decisions. Our politicians will be far more sensitive to grower demands than to the demands of those in industry."

Edwards says Australian growers are becoming more informed, and more interested. "Invariably the reaction is 'when we listen to you this sounds reasonable; why haven't we heard this anywhere else?'

"Technology adoption has never come through opinion polls and popular demand. It has come from making technology available to the innovative few, and it's picked up when others start looking over the fence."

Who's who in WA at BIO

BioPharmica

www.biopharmica.com.au

David Breeze, managing director

BioPharmica is involved in the commercialisation of biomedical research, with a portfolio including HLS5, a tumour suppressor gene identified by the Western Australian Institute for Medical Research, and infectious disease diagnostic products. The company listed on the Australian Stock Exchange in August 2004.

CollTech Australia

www.colltech.com.au

Leearne Hinch, chief business officer

CollTech extracts and purifies high-grade collagen from sheep. As opposed to collagen produced from cows or pigs, sheep collagen is not subject to religious embargo and is free from the stigma of TSE. CollTech is based at Collie, close to sheepskin suppliers and international shipping ports. It listed on the ASX in February 2004.

Epichem

www.epichem.com.au

Wayne Best, managing director

Epichem provides contract drug discovery and synthesis services, including chemical isolation, purification and identification, and recently signed a five-year contract with a major US-based pharmaceutical company. Epichem is based out of Perth's Murdoch University, and shares a second Melbourne laboratory with sister company Mimotopes.

GeneStream

www.genestream.com.au

Dr John Daly, managing director

GeneStream's RapidReporter system reduces the time lag when using a reporter gene to measure drug effects, increasing the accuracy of screening processes. GeneStream is also developing a GM MetaboMouse, which has more human-like drug metabolism and enables human drug responses to be more accurate predicted.

Ozgene

www.ozgene.com

Eddie Noonan, business development manager

Ozgene tailors GM mice and rats for clients from all over the globe, exporting 80 per cent of its services and recently winning a US$8.5m contract for the supply of GM mice to the National Institute of Allergy and Infectious Diseases (NIAID), and the National Institutes of Health (NIH).

Phylogica

www.phylogica.com

Rolee Kumar, operations manager

Phylogica uses a library of protein sub-domains, or Phylomers, to screen for molecules with activity against target disease proteins. Phylogica is the result of close collaboration with the Telethon Institute for Child Health Research in Perth. It listed on the ASX in March 2005.

Resonance Health

www.resonancehealth.com

Glenn Smith, director of sales and marketing

Resonance Health provides non-invasive diagnostic services. Its leading product, FerriScan, is an MRI technique that can reliably diagnose liver iron loading within 48 hours, and without risk to the patient. Resonance Health has been listed on the ASX since 1987.

Solbec Pharmaceuticals

www.solbec.com.au

Stephen Carter, CEO

Solbec is a Perth-based drug development company currently focused on treatment of melanoma and malignant mesothelioma. Its anti-tumour agent Coramsine, now in Phase I trials in Perth, has been shown to cause rapid tumour regression without toxic effect. Solbec listed on the ASX in January 2004.

Stirling Products

www.stirlingproducts.net

Dr Calvin London, managing director

Stirling Products focuses on animal health, and owns exclusive rights to ST810, one of only three known non-steroidal, non-antibiotic growth-promoters. Animals given ST810 have increased muscle mass and reduced fat. ST810 also has potential application in human obesity. Stirling listed on the ASX in February 2004.

Cristy Burne is a Perth-based writer.