Victorian feature: Smaller players face big issues

While Victorian companies who have been around the block a few times reckon the latest batch of biotech newcomers have got it relatively easy, the feeling out there is quite different.

Take Bovagen Biologicals, for example, a fledgling company whose managing director is still working a full-time job to help fund his new venture.

Rick Clements believes the time is right to pursue his idea of manufacturing safe Australian bovine biological products for a global market scarred by mad cow disease.

Clements registered the company 12 months ago and is currently having a manufacturing facility built in Keilor East, with sample product runs set to commence soon.

But Clements, who works full time as operation manager at Alpharma Animal Health, believes progress could have been swifter if more backing were available for companies such as his.

Admittedly, the entrepreneur has chosen against seeking venture capital funding.

"I didn't want to go to venture capital groups simply because my advice is that they really want their pound of flesh and you are beholden to your investor, to a degree," he said.

"I wanted to run the business at my own pace and as I saw fit."

So far he has built his company with his own money, which will be supplemented by a recent federal BIF grant worth almost $230,000.

He said it would be helpful if the state government provided similar financial support for young companies.

"The state government is prepared to help companies like myself with networking opportunities, but I think it would be nice if it was able to provide some money for start-up biotech companies," Clements said.

"It would be nice if money were to be made available ... because it could influence whether or not a company will get off the ground and that is ultimately an investment in the state."

Pargenex Pharmaceuticals, recently awarded a $250,000 BIF grant, is an 18 month-old company that has found the start-up phase more than a little challenging. Chief scientist of the University of Melbourne spinout Dr Thomas Cocks said juggling money issues with potential conflict of interest in the university environment had been particularly difficult.

"It's difficult for me in that I am not a businessman, I'm a scientist," he said.

"I'm trying really hard to get this thing going," he said, adding that apathy is endemic at the university and sometimes he feels like they consider biotechnology spin offs to be a bit of a joke.

Cocks lamented the lack of support for intellectual property at the university and the low level of funding from governments for grass roots research.

However, Cocks said he loved Melbourne research and the State government's commitment to make Victoria a major biotech hub within five years.

Similarly, Deakin University spin-off Chirogen struck difficulties in trying to secure seed capital.

Faculty of science and technology innovation coordinator Mark Littlejohn said that despite some promising chemicals research, the "micro company" had trouble convincing people to invest.

"It is a well-known fact that there is a large gap between funding for very early stage and investment-ready where you have something to show," Littlejohn said.

"Investors are not entering that space enough."

Eventually the company secured $1.7 million over two years from Deakin, the University of Melbourne's commercial arm Uniseed and private investor Yagen Pty Ltd.

Chirogen was formed in August 2000 through the transfer of IP from Melbourne and Deakin universities to the inventors.

But Littlejohn believes it was a process that could have been made easier with a more uniform IP policy across universities.

He said Deakin was starting down the Melbourne Uni path of giving inventors majority share of IP, but it remained very much case-by-case, which often made it unattractive to potential investors.

Chirogen attracted a round one BIF grant, but hasn't applied for an STI grant because it is using the universities' infrastructure.

Littlejohn's own position at Deakin is a three-year role, funded through the Victorian government's Technology Commercialisation Program, to seek collaborative opportunities, commercialise IP and educate science students to be aware of commercial potential.

But the role is set to expire in June and, with no word yet as to whether it will be renewed, Littlejohn said forward planning was difficult.

Over at La Trobe University, biotechnology is a growing concern with a new 5000 sqm facility within its R&D Park expected to house a significant number of biotechs.

Walter and Eliza Hall already has space within the Technology Enterprise Centre (TEC), which has helped give life to 35 businesses in total so far.

TEC manager Ed Hilliard said the intention of the incubator was to provide start-ups with the technological environment to help them avoid failure.

Hilliard said the businesses received legal and financial advice and introductions to venture capital groups to help them through their first two to three years.