Issued by the BioMelbourne Network
The BioMelbourne Network welcomes the $83 million Innovation Investment Follow-on Fund (IIFF) announced today. We hope this is only the first step, as $83 million shared with the wider innovation sector will not deliver the necessary funds that the biotech sector desperately needs and which it lost with the close of the Commercial Ready program last year.
The depletion of the biotech sector means that Australia is at risk of loosing the return on medical research effort and investment in institutions and universities which need the biotech industry to take discoveries forward to turn them into products that will save lives and jobs. The biotech industry is the delivery arm of the medical and agricultural research community.
“An $83 million carrot is an appealing incentive for the ailing biotech sector, particularly in Victoria, but biotechs will be competing for funds with ICT and clean tech companies who are traditionally more attractive prospects for a venture capital funding model,” said Michelle Gallaher, CEO of the BioMelbourne Network.
“I’m concerned that the valuable Victorian biotech sector may not see much of this money and if so, it’s likely to only be a few companies that are already of interest to the venture capital community.”
The fund, open to early stage start up innovation companies including, ICT, clean tech and biotechnology, and admistered by venture capital fund managers, will be likely to favour companies who have a clear pathway to delivering a return within less than 5 years. The short delivery time ensures that the fund will be infused with the returns of initial investments with a view to creating sustainability.
The short delivery time is reasonable and expected in ICT start ups, but biotech companies rarely deliver a return within a five year timeframe.
“The reality is that only a few biotechs will be the likely to capture the interest of Innovation Invest Follow on Fund.”
“I hope the investment criteria of the fund acknowledges and addresses the very different profile that biotechs present when pitching for funding from VC’s, to that of other innovation-driven companies.”
Chief executive Officer
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The BioMelbourne Network’s concerns are:
Ø Competition – slice of the pie
All innovation industries will be have access to apply for funding which means biotechs need to compete. The slice of the pie for biotech is likely to be relatively small.
Ø We need access to funding now
Biotechs need access to capital now. Six months will see the reduction or demise of a large number of small companies. We hope the fund is ready to assess applications within weeks or months.
Ø Biotech investment profile can’t match ICT on delivery of returns
Biotechs require more cash (to get through clinical trials) and more time to reach market and deliver back on the investment. We hope that there are quarantined funding for longer term investment opportunities that suit the typical biotech profile.
As each week rolls by the Victorian biotech companies are making critical decisions to either mothball research projects and or cut highly qualified staff to ensure their lead projects make it into the clinic.
The consequence of allowing the biotech sector to slip will probably be most apparent in the 5-10 year time frame. Short term decisions, that the sector is forced to make to survive into the next year, are exactly that – short term.
But the consequences will be long term and will play out on patients who have certain diseases in the loss of highly skilled professional jobs and talent from the sector and the fact that fewer new drugs will make it to the market, particularly in those disease areas in which patient numbers are smaller and market returns are likely to be less.
About the BioMelbourne Network
The BioMelbourne Network is the peak industry forum for the leaders of the Victorian biotechnology industry.
Established in 2001, The BioMelbourne Network plays a specific role as a facilitator, influencer and direction setter by drawing on the collective leadership interests of the sector to achieve significant results for the industry as a whole.
Victorian Industry Focus The sole focus is developing the Biotechnology industry. The Network has a membership of more than 180 companies covering: medical biotech, agricultural biotech and medical devices and well as services to the biotech industry.
Leadership Level Membership and contribution is targeted at CEO / Company Director / Industry Leadership level, to drive the Victorian industry.
Driving the Industry Agenda The Members of the BioMelbourne Network will play an influential role in driving the Victorian biotechnology industry’s agenda, through close connections between scientific, government and business leaders.
Global Outlook The Network is the first point of contact for local and international companies looking to do business in Melbourne and Victoria.
Contact for Interviews:
0423 056 952
03 9271 1115