Downvalued Proteome Systems "cops it sweet"

North Ryde proteomics technology and research company Proteome Systems will list on the ASX later this year at a valuation of only AUD$160 million, after sceptical fund managers baulked at a share price proposal that would have valued it at AUD$300 million.

Proteome’s founder and CEO, Keith Williams, says he is “copping it sweet”, and acknowledged that the company’s delay in listing had been a factor in its down-valuing in a “brutal” market.

Williams said Proteome Systems had considered, and rejected, the idea of listing overseas.

“We’re paying a pretty high price for our belief that it will be a pretty good market in the long term,” Williams said. “I still believe that, in terms or positioning ourselves in Asia, it’s the right decision.

“We want to live in Australia, not America, and we’ve built ourselves a top-tier, ASX-listed board – it’s a super board, it’s worth a squillion to us, and we don’t want to lose it.”

Williams had been hoping for a valuation around $300 million, which would have made it the Australian biotechnology industry’s biggest IPO.

Proteome had hoped to raise $45 million from the launch, but the final figure could be $10 million short of this target – although Williams says Proteome is still considering the terms of the IPO.

Paterson Securities, appointed only in May as lead manager and underwriter for the IPO after Proteome parted company with UBS Warburg, is expected to accept reduced offer that would raise only $35 million if fully subscribed.

That would value the equity of existing shareholders at $125 million, only half the anticipated valuation of $250 million. The company’s biggest shareholders are Queensland Investment Corporation and listed investment company Biotech Capital (ASX:BTC).

When Proteome announced the switch to Paterson Securities in May, Williams said it remained on good terms with UBS Warburg, but had gone with Patersons because of its record of managing IPOs in the difficult biotech investment market.

The switch involved a further delay during which the market became even tougher, according to Williams.

“In athletic terms, we’ve been sent to run around the block another time before we get started, and that’s a pity,” he said.

Wiliams was upbeat about the company’s prospects. Negotiations for the first Australian sale of its fully integrated proteomics technology package to a major research institution met a last minute hitch.

Williams says Proteome Systems’s technology is beginning to attract real interest within Australia – the company is talking with research agencies in Melbourne, Canberra, Sydney and Brisbane.

After sellng a system to Malaysia earlier this year, it is negotiating on another, and there is strong interest in South Korea.

Asked if, and where, the reduced funds from the IPO would affect the company’s operations, Williams said, “We’re reviewing that at the moment, but we’ll be less aggressive on both sides of the business [technology manufacture and sales, and proteomics research].

“It will affect the speed of our rollout in Europe and our discovery programs as well, so we’re aiming to become more creative about partnering arrangements.”

Williams said the down-valuation could have been worse – in the US, the latest biotech company to list on the NASDAQ had been forced to halve its target figure, then halve it again.”