Biosignal lists on ASX at premium

Biosignal (ASX:BOS) listed today on the Australian Stock Exchange, with shares leaping to AUD$0.38, a premium of almost 100 per cent on its $0.20 issue price.

As the first Australian biotechnology float this April, and the first NSW biotechnology listing of the year, Sydney-based Biosignal will become the 127th health or biotechnology company listed on the Australian Stock Exchange.

“We are very pleased with Biosignal’s debut which has run smoothly and outperformed expectations,” said MD Michael Oredsson.

Biosignal chose a backdoor listing, using as its vehicle Perth-based CTI Communications. Last week, it raised $4 million in an oversubscribed share issue, bringing its total cash to approximately $5.5 million.

Biosignal has 10 scientists working on developing biomaterials using molecules called furanones which prevent bacterial from signalling to each other in order to create pathogenic colonies known as biofilms.

“When bacteria are in the planktonic state [rather than in colonies] they aren’t particularly harmful -- and aren’t able to produce toxins,” Ordesson explained. “The technology specifically inhibits the colonisation of bacteria -- rather than destroying bacteria using biocides -- and thus both resistance and non-targeted effects can be minimised.”

The first product off the rank for Biosignal is likely to be a contact lens to which furanones are covalently bound, preventing eyes from becoming sore and red due to bacterial toxins. According to Oredsson, the company is also developing an anti-fouling paint for use in aquaculture, and is working with an undisclosed commercial partner to this end.

Cleaning products, oral anti-bacterials, medical devices such as catheters, and industrial products such as membranes and filters for air-conditioners are also being considered. Oredsson said Biosignal was working with a range of international multinationals and was deriving income from these collaborations.

Biosignal’s technology is certainly home-grown. The molecules it uses are synthetic versions of furanones which are produced by the seaweed Delisea pulchra, a native of Sydney’s Botany Bay.

“Peter Steinberg, one of our two research directors, is a marine ecologist. Essentially he spent half of his life underwater and happened to find seaweed in Botany Bay which synthesised its own furanones to defend itself against invasion by algae, barnacles and mussels,” Oredsson said.

“He showed the structure to our other research director Staffan Kjelleberg, a more traditional microbiologist who was interested in bacteria. [Kjelleberg] realised the structure was extremely similar to the signalling molecules that bacteria use -- the AHL system -- and understood that Delisea seaweed was most likely interrupting signals that bacteria transmitted.”

Powering ahead

Meanwhile, six new listings on the Australian Stock Exchange in the March quarter have taken the worth of listed Australian biotechnology and healthcare companies to a combined $24 billion, specialist biotechnology investment report Bioshares has reported.

"Six new listings occurred in the March quarter, following nine in 2003. In the March quarter 2000 there were 55 companies in the entire healthcare and biotech sectors, valued at $14 billion," said Bioshares' co-editor David Blake.

"Australia clearly has a very successful biotech and healthcare investment environment where the capital needs of Australia's innovative drug developers and medical technologists are being met by an increasingly better educated class of investors. The Australian equities market's long history in appraising higher risk investments, for example, in the mining industry, has been a key factor behind the successful growth of the listed biotech and healthcare sector. Since the global biotech IPO window opened in August 2003, Australian investors have supported 15 biotech and healthcare IPOs or backdoor listings compared to one in the UK.

"No market is perfect but it is obvious that Australia's financing infrastructure, including the ASX, is doing something right. It’s a happy problem that we think the ASX will soon have to divide up the biotech and healthcare sector into more sub-categories.

"The benefit an expanded biotech and healthcare sector for investors is risk reduction. Investors have a vastly improved ability to build increasingly better balanced portfolios. Investors can achieve huge diversification in biotech and healthcare stocks, including balancing income producing stocks generated from domestic or export earnings against numerous higher risk growth plays in many different areas of healthcare need.

"Although the March quarter saw the announcement of the yet-to-be approved sale of Axon Instruments (ASX:AXN) to [US company] Molecular Devices for US$140 million, which would result in its removal from sector, its remains a positive event for the sector.”