interesting article , ignore the market cap figure, there are...

interesting article , ignore the market cap figure, there are 18.3m shares on issue, giving it a market cap of around 55-60m depending on the price. figure stated of 210m is incorrect i believe.





Biotech down under

Brian Leedman, VP investor relations at Australian biotech company Psivida, tells "Globes" what the Australian and Israeli industries have in common.

Gali Weinreb 23 Jul 08 18:52

As Israelis, we often think of ourselves as a highly significant player in the high-tech industry and, to a certain extent, also the biotech industry. It seems to us that everyone has heard of us and sees us as the East side of Silicon Valley. So it is a somewhat eye-opening experience to discover that several other countries also feel the same way, and we weren't even aware of this at all. How many of you have ever heard, for instance, of the leading role played by Western Australia?
"The biotech community in Western Australia is slightly smaller than that in Israel, but we have a tremendous entrepreneurial spirit, because this is an isolated region and people have to look out for themselves," says Brian Leedman, VP investor relations at drug delivery giant Psivida Corp. (Nasdaq: PSDV; ASX: PVA; XETRA: PSI), in an interview with "Globes." Psvidia is considered one of the great successes of the State of Western Australia in biotech.

Western Australia takes pride in its isolation. "Our capital, Perth, is 5-6 hours by plane from Sydney. It is the most isolated capital city in the world," says Leedman. Isolation is a something that Israeli companies are familiar with, and indeed, the problems of the biotech market in Australia (especially Western Australia) are similar to those of Israel, but there are also differences between the two.

Social awareness and plenty of cash

For a start, they're not short of money. Western Australia is a leading global supplier of raw materials. "We supply China with nearly all its gas and iron," says Leedman, who is also a board member of the Australia Israel Chamber of Commerce. "It has resulted in us having a high proportion of millionaires. The richest man in Australia owns a mining company."

This situation is good for biotech companies - an abundance of angels keen to give back a bit of their good fortune to the community by investing in a company with a medical solution. One of the factors working in both biotech and cleantech companies' favor is the Australians' high level of social awareness.

Mining companies also compete for money, principally on the stock markets. "It's tough competing on the stock market with leading mining companies, which offer a product that can be easily understood and which they have had a lot of success with so far, "Leedman explains. "Not all of the biotech companies that floated on the stock exchange in Australia in the first wave, roundabout 2000-2002, made it to the market, and those that did usually shed their initial investors en-route. These investors had lost money by the time they pulled out and today they're sorry they didn't leave earlier. If there was any profit, the ones who made it were those who entered after the market had already given up, so to speak, on the company." In a situation like this, raising further funding on the market at an improved value is very difficult, even if the company is progressing according to plan.

Recently, the Australian Stock Exchange carried out a survey which found that anyone who would have invested in the 24 biotech companies that floated between 1998 and 2000, would have recorded a 150% return on investment, against a negative return of 7% had they invested in a random selection of 24 companies not from the biotech sector. And yet investors are still pretty skeptical.

Conservative investors

Psivida itself, which has developed two products for the treatment of chronic eye diseases, currently has a market cap on the Australian Stock Exchange of $210 million. Leedman says the company realized pretty quickly the difficulty in trading on the stock market in Australia, and opted for additional listings overseas, first on the Frankfurt Stock Exchange, and then on Nasdaq as well. "We raised $40 million," he says. "Last April we signed a collaboration agreement with Alimera , which will finance the entire development program for us through to the market stage, with $78 million in payments for milestones and double digit royalties after we reach the market." The company has a further agreement with Pfizer Inc. (NYSE: PFE), worth a total of $165 million. Psivida's share price has plummeted over the last five years, losing 90% of its value, but since the agreement with Alimera Sciences, it has risen and is now twice its record low.

Psivida has developed two products for niche markets, which are marketed by Bausch & Lomb, but the product that was sold to Alimera is its flagship product for the treatment of diabetic macular edema. Psivida's method uses an injectable device that releases a constant amount of drug to the back of the eye and is designed to have a duration of between 18 to 36 months, instead of a few weeks. In addition, the company also has several products currently in Phase II and Phase III clinical trials.

Globes: What other sources of investment are there in Australia for the early stages? Angel funds? Venture capital?

Leedman:"Wealthy people sometimes invest in companies directly, but private money always runs out fast. It is rare for an angel to invest in the second round. There is a venture capital community, but it is not as developed as in Israel."

Like their Israeli counterparts, Australian companies also have difficulty raising investment from international funds and private institutions in Europe and the US at the early stages. "Foreign investors are very conservative, they do a lot of checking, and by the time they're done, an Australian company, with its energy and entrepreneurial flair, usually finds that it's easier for it to list on the market," says Leedman.

What is a company from Western Australia like you looking for in Israel?

"I'm wearing several hats on this visit. First of all, I am here to look for Israeli investors for Psivida. Secondly, I have a meeting with a large company here, Teva, to look at the possibility of licensing our technology for use in one of its products. Aside from this, I am also here as a representative of the Australia Israel Chamber of Commerce, and we have a lot more to contribute to each other."