Biotech IPOs continue to test market

While many companies are preparing to shut down for the festive season, parts of the Australian biotech sector show no signs of getting into holiday mode.

Five companies signalled plans to list on the ASX in December, raising more than $30 million before the year's end. First cab off the rank was Medical Therapies (ASX:MTY), which listed on Friday.

Medical Therapies' IPO closed oversubscribed, raising more then $3 million. The company listed at $0.205, just above its issue price of $0.20. "We are pretty positive -- the shares closed at 19 cents which was good. It really was a momentous day for the company," said Medical Therapies CEO Llewellyn Casbolt.

New Zealand company Brainz is planning to list tomorrow [Wednesday], following a successful IPO which was oversubscribed raising $13 million.

Portland Orthopaedics has closed its IPO fully subscribed, raising $4 million, and will list on 21 December. PacMab, Labtec Systems and Vet Biotechnology have all extended their offers, but still plan to list before the end of the year.

"There is nothing magic about Christmas," said EG Capital executive director Alison Coutts. "I'd say this was the time that they came to. I think they would have liked to have gone [to market] before Christmas. But if it is do it at Christmas or not at all then do it at Christmas.

"All of [the companies set to list] are relativity small, and were unlikely to get institutional interest. Brainz has the best opportunity because it has the same heritage as Neuren, which is so highly thought of."

PacMab's offer has been extended from December 8 to December 16. The Sydney-based company specialises in the development and commercialisation of monoclonal antibody treatments and is planning to raise $5 million to commercialise its treatment for a fatal blood cancer and other blood disorders.

"Some people seem to be harder to find and there is money outstanding," said PacMab CEO Alan Liddle, explaining why the offer was extended. "I don't think the listing date is the issue, what we need is the required funds to have the job done -- everyone likes to get these things finished and closed off, the sooner the better.

"I think what we have is extraordinary -- we are very focused, with a fantastic drug. The conditions in the market are difficult to raise money. If it continues to be so difficult we are prepared to change our strategy. We are happy to wait until next year and raise money when it is support. So much money is being soaked up by attractive non-risk companies at the moment for a mix of investments," said Liddle.

Vet Biotechnology is raising AUD$3.25 million to fund development of a vaccine against 'rattles' disease in racehorses by a backdoor listing on the ASX through Plantcorp. The company has extended its offer, which was due to close on November 21, to December 20, which could see a listing on 27 December.

"It has been a six-month process and we'd be happy if a listing occurred during the Christmas period -- if it needs to go out to January that is where it will end up," said Vet Biotechnology managing director Hugo Le Messurier. "There was a delay with a meeting of Plantcorp shareholders and where a number of resolutions related to the merger which needed to be approved, with these complete the offer was extended. Even though we had a small delay our goal is for Plantcorp to compete the capital raising and ASX listing as soon as possible. I am happy with the way the process has moved forward."

Labtech Systems' offer has been extended from December 5 till December 22. The company is planning to raise $4.5 million.

Deloitte report

According to the Deloitte IPO December 2005 report, Australian IPO activity over all sectors has continued at the same level as last year, but $87 million less has been raised. In 2004 there were 11 biotech IPOs which raised a total of $158 million, while this year there were 10 IPOs raising $71 million.

The Deloitte report also indicated it was a rough year for biotechs with the average share price movement dropping from a high 33 per cent in 2004 down to -5 per cent 2005.