Biotech IPO breaks the drought

Select Vaccines, the first biotech floating an IPO in 2003, has shown the way for investors with a 150 per cent oversubscription from the money market.

"We had overwhelming interest, and could have easily found two and a half times the $AUD2 million we were looking for," asserted Martin Soust, managing director of new listing Select Vaccines.

Soust said the new biotech, which will focus on the commercialisation of virally-related diagnosis, vaccination and therapy for infectious diseases, is a joint venture with the Melbourne-based Burnet Institute, formerly the Macfarlane Burnet Institute for Medical Research and Public Health.

The first commercial deal will be for point of care rapid diagnostic kits for hepatitis A and E, with a subsidiary company, Picoral, working with the Burnet Institute on antivirals against RNA viruses.

RNA (picornaviruses) are responsible for diseases including sinusitis, bronchitis, conjunctivitis, polio, encephalitis, rhinitis and viral meningitis, with an estimated 50 per cent infection rate worldwide -- a major market, as Soust indicated.

"It looks as though the (investment) dip is finishing, and I think as well that investors are now seeing the value in (biotech) companies. The market is becoming more sophisticated about biotech generally; people are watching success stories and having their interest piqued.

"I think things might be changing in the biotech scene," he said.

Soust noted that one reason his company had performed well at IPO stage was that it had a "near to market" product with its Hepatitis A/E rapid diagnostic test.

"We are already talking to a large Singapore-based diagnostic company about a deal to use the technology," he said. "They are looking at our product and we have a list of other major companies too. It is likely we will be looking at an up-front payment plus ongoing royalty stream deal," he added.

Whilst remaining coy about exact figures, Soust commented that an upfront of $1 million plus ongoing royalties of 5 per cent was not uncommon. He said that it was most likely that a global deal would be struck, but a country or regional structure would be equally acceptable.

"I am confident you will see us with a licence deal with a major diagnostic company within 12 months," he said. "If we do get a good deal, the Burnet may offer us more opportunities, which would mean that more offering would not be out of the question in the future. We are very happy with the outcome," he said.