Aust biotech set to repeat '04 performance: PwC

A report on ASX-listed life sciences companies has predicted that the Australian industry is on track to at least equal the amount raised in initial public offerings in fiscal year 2004, with a bountiful first quarter of fiscal 2005 -- in which seven Australian companies raised AUD$93.5 million -- already under its belt.

The quarterly PricewaterhouseCoopers Bioforum report, released today, also revealed that the Australian industry had punched well above its weight when compared to US capital raisings, which amounted to $350 million in the first quarter of fiscal 2005, ended September 30.

"Statistically we work on the Australian market being about 4 per cent of the US market," said PwC partner Andrew Sneddon. "If you look at capital raisings in the US, the Australian market is doing pretty well, relatively."

But offshore raisings in the most recent quarter were significantly below the previous quarter, when 20 companies raised almost AUD$1.6 billion.

And investors in the newly listed Australian companies will not be cheering yet. "While the IPO numbers look positive, almost all companies underperformed post-listing and the sector continues to be volatile," said report author and PwC director Karen Dado. That said, Dado is confident that the industry held its own in a tough market.

Longer term investors will have less to complain about, with the PwC Life Sciences Index -- a composite of 96 ASX-listed life sciences companies -- recording a 7.9 per cent increase over the quarter, surpassing its 5.6 per cent gain in the last quarter of 2004.

This increase was due in part to the 26 per cent gain clocked by industry heavyweight CSL, and also to optimistic shareholders who boosted Peptech 15 per cent in anticipation of the successful outcome of its patent dispute with Johnson & Johnson subsidiary Centocor.

"In the next 5 to 10 years you'll see some really good stocks come through that push the whole index," said Sneddon. "There are a few later-stage companies that have listed in the last year -- it's changing the profile [of the sector] a little bit. But there are still too many small companies."

A striking 100 per cent of the 15 Australian clinical trial results reported during the quarter were positive. "Four of the top 10 performers had positive trial results this quarter," said the report -- Select Vaccines, Pharmaxis, Imugene and VRI Biomedical. In comparison, a third of US clinical trials -- seven of 21 results reported in the last quarter -- were unfavourable.

Companies also raised a total of $96 million through secondary financing, on par with a year ago.