fighting flu and more article

This is my typo of the article printed on The Herald Sun on Saturday 13 June after page 79 – Business Daily section (no page number). Fighting flu and more. While it is at the forefront of the fight against H1N1, Biota is yet to find a cure for the share market ills that plague its stock. CEO Peter Cook spoke to Olga Galacho.

Never has Melbourne played such a pivotal role in a worldwide health scare as it has this year on three fronts, thanks to the swine flu.

On Thursday, the World Health Organisation elevated the H1N1 virus pandemic alert to the most serious level on its six-point scale after the large spike in Victorian influenza cases was reported.

Simultaneously, the Parkville laboratories of plasma company CSL are losing no time in developing a vaccine for the virus.

Yesterday, Swiss company Novartis said it had completed a batch of vaccine compound for pre-clinical trials but CSL is still tipped to be the first drug maker in the world to get approved H1N1 flu jabs on the market.

And third, GlaxoSmithKline has its Boronia factory on 24-hour shifts during the week and 12-hour shifts over the weekend pumping out Biota’s licensed flu drug, Relenza.

As health authorities around the world snap up on the five million courses a month of
Relenza that GSKI is producing, Biota will earn handsome royalties from its licensed partner.
That is the sort of “news” that caused Biota shares to double in price last month before profit-takers moved in, much to chief executive Peter Cook’s continuing disgust with market manipulators.

If the Notting Hill-based Biota were to have a Hollywood parallel, it would be wedding chapel addict Elizabeth Taylor.

Few stocks have been as wildly loved and as wildly unloved as the Melbourne biotech.
And, Dr Cook adds, as wildly misunderstood.

“There is a small minority of day traders who just love the sensationalism that follows influenza outbreaks and use it to their gain and the detriment of long-term Biota shareholders.” Dr Cook said.

“Our share price bounces around on flu scares.

“It stupidly doubles, gets pushed beyond Biota’s intrinsic value and then those that buy at the top get their fingers burnt when it comes crashing down soon after.

“My shareholders get distressed about this volatility – that’s what upsets me.”
Of the company’s 13,000 shareholders, just two institutionals Hunter Hall and Alleron – own 18 percent of the stock. The rest is spread among mum and dad investors.

Dr Cook would like to see more institutions on the registry to help stabilise the price.

But while the stock remains volatile, the institutions stay away because it is difficult for them to explain the price falls to investor clients focused on quarterly reports.

The price uncertainty leads to a view in the market that the company lacks gravitas, a perception that health sector analysts dismiss as unfounded.

Almost unique among chief executives, Dr Cook is well-known for talking down any speculation that could push the share price up unreasonably.

He also has a stronger desire than most for his shareholders to understand the thinking behind the board’s decisions.

He is still miffed that some critics have not been able to come to grips with Biota abandoning its litigation against GlaxoSmithKline last year.

It is nearly 12 months since the company settled its long-running dispute over GSK’s efforts at marketing Relenza.

Biota had accused GSK of not using “best endeavours” to promote Relenza, thereby allowing Roche’s rival flu treatment, Tamiflu, to corner the market.

The company alleged it was forced to forfeit $700 million in royalties because of GSK’s strategy.

After vigorously defending its case across four years, GSK settled with Biota for $20 million, but not before the smaller company had spent $40 million in legal costs.

“Were the shareholders upset? Yes they were – and people are entitled to their opinion.” Dr Cook said.

“But those that are still upset need to do a reality check.

“We didn’t have an infinite amount of money to stay in court – the board recognised that, because of GSK’s size, they could wear us down.

“Pursuing justice was proving too expensive, and if people didn’t recognise that then they must have been infatuated with the answers they got exploring outside of reality.”

Weeks before the settlement, GSK appointed a new chief executive, Andrew Witty, who set up a marketing unit to promote anti-flu therapies including Relenza.

“Our relationship has returned to a more normal basis now that GSK has made a commercial commitment to the influenza sector,” Dr Cook said.

That commitment is translating into growing sales as governments move towards flu medicine stockpiles that strike a better balance between Tamiflu and Relenza.

Part of the reason for the shift is a growing resistance that some flu strains have developed to Tamiflu but not to Relenza.

“Before the middle of last year, Relenza made up just 13 per cent of global stockpiles,” Dr Cook said.

“Today, some countries like Australia and the UK now have Relenza in excess of 30 per cent of their stockpiles and in Japan it outsold Tamiflu in the first three months of this year.”
But in his typically cautious style, Dr Cook dismisses the notion that Relenza will completely replace Tamiflu in the short term, especially as both medicines have been effective against swine flu so far.

In the meantime, Biota is continuing the development of other therapies for influenza, as well as respiratory diseases caused by the syncytial virus and human rhinovirus, and a drug for Hepatitis C.

With exception of the rhinovirus therapy, all the others are already licensed to large pharmaceutical companies which are paying Biota to do the research.
It is an enviable position for a drug developer to be in and helps the balance sheet stay in the black.

Together with further Relenza royalties – Biota collected $32 million worth in its last quarter – the company is sitting pretty, according to analysts.

Perhaps not as pretty as a Hollywood starlet, but certainly with as much red carpet appeal.