215 Life Science patents (classification A61K) were issued by the US Patent and Trademark Office on Tuesday 30 August 2016 (click here), Two of them went to Australian assignees.
US Patent 9,427,443 has been granted to the animal health company Jurox Pty Ltd for a formulation of the anesthetic alfaxalone that can be administered parenterally without invoking a histamine response.
US Patent 9,428,587 has been granted to the privately held Sydney cancer antibody company Biosceptre for antibodies to P2X7 receptors which, when expressed on cells without their usual function ion channel function, is indicative of cancer cells.
Everyone agrees that mental illness is something we need to do more about. So it's heartening to know that the Australian Life Sciences industry is potentially able to do something about it. A couple of years ago I wrote about a diagnostic tool being developed by a Sydney-based company now called Medibio (ASX: MEB). That company believes that its technology can become the basis of world’s first quantitative, evidenced-based test for mental illness. It's made a lot of progress since my report came out. Earlier this month Medibio reported that a study at the University of Ottowa in Canada had shown that its diagnostic could accurately classify mental illness, using only measurements of circadian heart rate, in 83% of cases. Psychiatrists can generally only manage 70% accuracy while primary care practitioners only get it right 33-50% of the time. When you consider that the economic burden of depression is larger in many countries than the burden of cancer there is considerable upside to be gained from tools that improve diagnosis and therefore treatment efficiency and patient management. Click here for some background reading on Medibio.
Three months ago I started NDF Research as an equities research business focused on Life Sciences companies that were publicly traded on the Australian Securities Exchange (ASX). One of the reasons that I did this was that I think there's going to be a serious boom in Life Sciences stocks in this part of the world and I wanted my new firm to be part of it. If you've never been to Australia, hopefully after reading this blog piece you'll be interested in travelling Down Under to do your homework on this coming boom.
To understand why Australia is rapidly becoming a global Power in Life Sciences, I want to draw an analogy with men's basketball. Time was when the US reigned supreme as the global power in basketball and everyone else trailed way behind. Then things started to change. America had easily won gold at every Olympics since 1936, then got very narrowly beaten by the Soviet Union at the basketball final in the Munich Olympics in 1972 (indeed, I think the Commies stole that match - click here). They came back in 1976 by beating Yugoslavia, and they triumphed in 1984 against Spain, but in 1988 the unthinkable happened - the US was relegated to bronze while the USSR took gold and Yugoslavia silver. It happened again in 2004 when America was at bronze again while Argentina and Italy fought it out for gold and silver. It wasn't that America had weakened. It was that the rest of the world was learning how to play the game properly and America had to innovate and go to the next level in order to maintain its lead. To its credit, the last three US Olympic basketball teams have done that.
Now don't get me wrong. American is still the No. 1 Superpower at basketball and at biotechnology. My point is that a lot of other countries are learning to do biotech as adventurously and as professionally as America has traditionally done, not unlike how a lot of countries have been improving with their basketball talent. And Australia is one of the rapidly improving countries.
On the ASX there are around 100 listed Life Science companies. ASX is home to Cochlear, the company that gave the world the cochlear implant, and ResMed, which was the pioneer of the CPAP machine. It's also home to CSL, one of the world's largest pharma companies and a global leader in plasma therapeutics. Sirtex, the global pioneer of brachytherapy, is an Aussie company. So is Ellex, one of the world's leading medical laser companies. We're pretty good at this Life Sciences game..
Emerging from underneath these established companies are around 95 drug and medical device developers that you have probably never heard of, but, were they traded on Nasdaq and headquartered in San Diego, Cambridge Ma., or the Bay Area, they would be worth orders of magnitude more than they are currently valued at on ASX. Why so cheap? Mainly because Australian investors are only just realizing the treasure trove they are sitting on, having spent most of the period from 2003 to the present time focused on mining and oil stocks. I routinely describe our Life Science companies, without mentioning their names, to sophisticated US investors and ask the question 'how much would you be prepared to pay for this?' and when I tell them the price they are astounded at the undervaluation.
The reason I think the valuation gap is about to close is that we now know how to play the game much better. Our clinical trials are structured much better. Our partnering discussions with Big Pharma are more two-way than they use to be. And our early stage R&D has become much more commercial in orientation. We're catching up fast, and I think eventually our stock prices will catch up as well.
Want to start looking at this treasure trove? Spend some time at ndfresearch.com, where there's plenty of useful information, including a list of companies to look at, and a league table that suggests that, after the US and the UK, we are the No 3. power in biotech globally. Not unlike our basketball team. At the Rio Olympics we finished fourth, and we only missed the bronze to Spain by a single point.
Great article today in The Australian's Criterion column by Tim Boreham headlined 'Medical devices could cure your financial ills'. Medical devices is area of Life Sciences that Australian investors take to the easiest. Check out Tim's article to understand why.
If US patent issuance is any guide Australia's Life Science sector bats above its weight. We analysed patents granted by the US Patent and Trademark Office in 2015 where the patent classification was A61K, which broadly describes patents over new drugs, medical devices and cosmetics. On our reckoning Australia was the 15th highest recipient of Life Sciences patents in the world in 2015.
This morning we at NDF Research published our second report. This one is on a Melbourne and Perth-based drug discovery company called Dimerix (ASX: DXB)
Dimerix is being built around new ways to identify G Protein-Coupled Receptors, the target of a significant number of present and former blockbuster drugs. Dimerix’s Receptor-Heteromer Investigation Technology (Receptor-HIT) allows druggable GPCR combinations to be identified. Dimerix’s lead DMX-200 candidate, a combination of two existing drugs, irbesartan and propagermanium, is now in a Phase II study in patients with proteinuria, which is symptomatic of a range of kidney problems. Following recent guidance for the FDA, Dimerix is now making plans to take DMX-200 into a pivotal study in Focal Segmental Glomerulosclerosis, an Orphan kidney disease. We value Dimerix at 2.4 cents per share base case and 5.9 cents per share optimistic case. Our target price of 4.0 cents per share sits at the midpoint of our DCF range.
Click here for our initiation report.
248 Life Science patents (classification A61K) were issued by the US Patent and Trademark Office on Tuesday 23 August 2016 (click here). Two of them went to Australian licensees.
US Patent 9,421,205 has been granted to the Cancer Therapeutics CRC for FAK inhibitors.
US Patent 9,422,522 has gone to Regenertech Pty Ltd, an Australian company owned by the New Zealand physician Dr Vishal Bhasin. This latter patent covers a method of differentiating fibroblast cells into adipocytes, a technique potentially useful in organ regeneration. Check out our list of recent US patent issuance by clicking here.
Last week I did two interesting interviews
Firstly I did a podcast interview with Tom Orr at Bellmont Securities on the Life Sciences sector. In that interview I discuss our recent report on ResApp Health (ASX: RAP) as well as my contention that sometime in the next few years we could potentially enjoy a full-blown speculative boom in Life Sciences stocks here in Australia. Click here to listen to Tom's podcast. For background reading you might also enjoy an article I published last month The Coming Boom in Australian Life Sciences.
Secondly I did an interview at Livewire with Adam Allcock of Katana Asset Management and Andy Gracey of Australian Ethical. Click here for that interview.
The Life Sciences Report have just published an article of mine on why the ASX is a great place to find undervalued Life Science companies. I wrote this piece just after I got back from Bioshares and not long after I had done an analysis of Australia's competitiveness in Life Sciences vis-à-vis the other powers in the field such as the UK and Germany (click here for that work).
Check out my article by visiting The Life Sciences Report's web site, thelifesciencesreport.com.
I have just returned to Sydney from Queenstown, New Zealand where the annual Bioshares meeting took place over the weekend. I call Bioshares 'JP Morgan South' because it is the premier Life Science investment conference for our part of the world. If you really want to know what is happening in biotech and medical devices in Australia and New Zealand - which I argue is the next big thing for the sector globally - then you really need to be at Bioshares. Plus, the venue is a refreshing place to be. Nothing like the sunrise over Lake Wakatipu on a brisk July morning to lift your spirits. I came back from Bioshares 2016 pretty bullish on the state of our sector. For one thing, attendance was at a record high. For another, so many companies have improved their story over the last twelve months, and there were many great companies that were new to me. Thank you to David Blake, Mark Pachacz and Paris Brooke for making it all happen.
A personal highlight for me at Bioshares is the traditional 'Peasants' Dinner', which is one of the events that opens the meeting. The Peasants' Dinner is for all of us who aren't CEOs of biotech companies (plus a few who are), and the venue for the gathering, Gantleys, is one of the best restaurants in a town renowned for its fine dining establishments. Thanks to co-owner and sommelier Brent Rands for hosting us, and to FB Rice for their generous sponsorship of the night. Peasants' gives our industry a chance to honour some of its quiet achievers through the Red Hat Awards. Here were the 2016 winners:
Best New Peasant – Rob Birrell, former CEO of Genetic Signatures. Rob worked with one of the founding fathers of biotech in Australia, the late Dr Geoff Grigg, to build Genetic Signatures over many years. This year's award recognises Rob's dogged and imaginative persistence with the Genetic Signatures project through thick and thin.
Best Re-Rating – Brian Leedman, ResApp Heath. ResApp (ASX: RAP) was 2.6 cents per share at the time of Bioshares 2015. It was 40 cents as we were sitting down to dinner in Queenstown last Thursday. This award also honours Brian's tireless labour over many years to promote the Life Sciences sector in Western Australia.
Financier of the Year - Daniel Moore, Armada Capital. Daniel worked for the best part of two years to get Race Oncology (ASX: RAC) on the ASX as a public company. His Red Hat Award recognises the successful outcome of that journey.
Hall of Fame. Eddie Grieve, ASX. Without the ASX we wouldn't have a Life Sciences sector in Australia and New Zealand, and the sector therefore owes a big debt of gratitude to Eddie Grieve. Eddie is ASX's Senior Manager, Listings Business Development. In that role he has taken a strong personal interest in the fortunes of the sector.
Cage-Rattler of the Year - Dr Christian Behrenbruch, Factor Therapeutics. Every industry needs a cage rattler to help keep people's thinking fresh. Chris Behrenbruch, through his oftentimes trenchant commentary on the Life Sciences sector in Australia in recent times, has been just such a cage rattler. Not everyone, mind you, has enjoyed the rattling. At Peasants we staged a ritual in absentia burning of Chris' Red Hat certificate.