Biotech veteran calls for tax breaks

Long time biotechnology investor Leon Serry has called on the federal government to implement a 100 per cent tax deduction as an incentive for significant institutional investment into Australian companies running Phase III clinical trials.

Speaking at a BioMelbourne breakfast briefing on the similarities between the mining and the biotechnology industries, Circadian Technologies MD Serry said the difficulty faced by companies in raising the $100 million or more required for Phase III clinical trials meant that many licensed their technology to large foreign-owned pharmaceutical companies in return for royalties.

He noted similar strategies had been used to get the mining industry off the ground in the 1970s, and said that industry was again lobbying for a return of the 100 per cent tax deduction.

In a paper submitted to the federal government, Serry has proposed that Phase II trials of TGA or FDA approvable products excluding vitamins and nutraceuticals should receive a 50 per cent deduction, and Phase III trials a 100 per cent deduction, with safeguards in place to ensure that only Australian discoveries are eligible.

He said that risk was reduced at late stage trials -- Phase III trials have a success rate of about 65 per cent.

"It's silly to lose it at this stage," he said. "Government assistance, in the form of [R&D Start] and [Biotechnology Innovation Fund] grants, is wasted if a company has to go offshore to complete development."

In return, he said, the universities and research institutions responsible for the discovery would be better able to share in the successes, through royalties, funding of R&D and education and equity.

Serry said state governments were interested in the idea, and the Australian Sock Exchange was also keen on it. Next week, he is scheduled to meet with the federal treasurer, Peter Costello, to discuss the proposal

Serry and the BioMelbourne Network's business patron Leon Davis, chairman of Westpac bank, said that there were many parallels between the mining and biotechnology industries, including long lead times to marketable products and the capital-intensive nature of the ventures. And both industries had potentially enormous returns, with substantial cash flow and profits once established.

But Serry said foreign interests primarily controlled Australia's mining industry these days. "We want to build the [biotechnology] industry here, not be taken over, picked off by overseas interests like the mining industry is," he said.