BioTech Capital takes punt on meditech firm

Sydney-based pooled development fund BioTech Capital (ASX:BTC) has dipped its toe into the medical device sector with a $2 million investment in Continence Control Systems (CCS).

BioTech Capital’s managing director, Harry Karelis, said that most of the deals that fell across his desk were in medical devices, but that the 23 per cent investment in CCS was its first punt on the sector.

"We’ve been looking for a device deal for some time, but we haven’t found one before that presses all the right buttons," Karelis said. "Australia has a pretty long history in that space, and spawns people who understand the sector."

CCS was formed from a collaboration between the University of Melbourne and Cochlear (ASX:COH) to commercialise a new treatment for severe urinary incontinence. Scientists in the university’s departments of anatomy, zoology and surgery collaborated to developed a replacement sphincter from a ring of the patients own muscle. Medical devices specialist Cochlear provided the implantable stimulation technology which allows the patient to hold or release urine from the bladder when desired.

CCS said the treatment would address the AUD$1 billion-a-year market for the management of severe urinary incontinence. The technology is currently undergoing pre-clinical in larger animals. If successful, CCS will use the funds raised to begin human trials in the middle of next year.

Karelis said the patent for the technology had been allowed in the US -- the final phase before the patent is granted. Patents are also pending in other jurisdictions, including Australia.

CCS has appointed Graham Vale as chairman and Tony Stephens as CEO. Each has more than 20 years' experience in the implantable medical device field. Dr John Parker, the chief technology officer and an executive director of Cochlear, will be a board member.

Karelis said Cochlear was a shareholder, along with the initial angel investors. High net worth investors also contributed $1 million in funds.

As part of the deal, Biotech Capital has the right to appoint up to two directors to the board and to invest a further $2 million into CCS should the pre-clinical studies be successful.

BioTech Capital became a top 10 shareholder in Starpharma two months ago. It also holds investments in Alchemia, Biocomm, Clinical Cell Culture, Proteome Systems, Stem Cell Sciences and Xenome.