All research and development (R&D) spin-offs have significant risk attached to their commercialisation, but some cannot overcome the negative perception of that risk to attract the necessary capital.
Here, nine of the Top 25 Science meets Business R&D spin-off companies explain what it was about their product or business strategy that inspired confidence in their investors that theirs would be a viable business venture.
“An excellent intellectual property position is a key starting point. This is in addition to having a proven concept or great technology. A quality team to back up project execution is paramount. Understanding and being able to explain where your commercialised projects will fit into a market segment in terms of the need they will meet is also important.”
“SmartCap Technologies is a spinoff from CRCMining. CRCMining carries out industry directed research, which ensured that the research into fatigue management technologies was a high priority for the mining industry at the project’s inception.
In SmartCap’s case, the industry support was sufficiently high that Anglo American, one of the world’s largest mining companies, in conjunction with CRCMining, co-funded the development of the prototype commercial SmartCap products.
This ‘incubation’ of the SmartCap technology by a significant end user was extremely important to advancing from research into prototype products.
The prototype products performed sufficiently well for SmartCap to be selected by two other large mining companies for large supply contracts for fatigue monitoring technology.
So the support of significant end users, along with the commercial contracts the company had in place at that time, provided potential investors with the confidence to invest in SmartCap Technologies.”
“Pharmaxis has been restructured following a regulatory setback for our lead product. Rebuilding investor confidence has been critical to our longer term success. To do this we focused on three things:
1. transparency – explaining the business model and being clear about the risks as well as the opportunity;
2. building in meaningful milestones which marked development steps that significantly reduced risk and provided opportunities to realise value;
3. hitting milestones and delivering realistic objectives.”
“I think there are a number of reasons investors are drawn to our business: Admedus has two technology platforms which diversifies the risk for investors; we have a product on market; and we are generating revenue.
The first of the two platforms is our regenerative tissue platform, where we use our proprietary ADAPT tissue engineering process to turn xenograft tissue into collagen bio-scaffolds for soft tissue repair. The second is our Immunotherapies platform, where we work with renowned scientist Professor Ian Frazer and his team to develop therapeutic vaccines for the treatment and prevention of infectious diseases and cancers.
Our lead regenerative tissue product CardioCel, which is used to repair and reconstruct congenital heart deformities and more complex heart defects, has made the journey from prototype to commercial product and is on the market in the USA, Europe and parts of Asia.
Frazer’s previous success with the human papillomavirus vaccine (HPV) program that lead to the USD$2 billion product, Gardasil, is well-recognised and gives investors further confidence in our immunotherapy work.
As a result, Admedus has a good balance of validated science via approved products and an exciting product pipeline working with successful scientists. This balance, along with our diversified program portfolio, gives investors confidence in our business. “
Because the technology was engineered to take elite athlete monitoring from the laboratory to the field, value was seen in the data immediately as there was no precedent for this type of information. A new product category had been formed and Australian Olympians were now able to train in their performance sweet spot without getting injured because their coaches had objective data to guide their lead up to big events.
So this combination of pioneering a new industry in a popular space (elite sport), with the ability to create immediate value, certainly helped with the initial funding.”
“Neuropathic pain is a large unmet medical need because the currently available drug treatments either lack efficacy and/or have dose-limiting side-effects.
Due to this, my patent-protected angiotensin II type 2 (AT2) receptor antagonist technology – encompassing a potentially first-in-class novel analgesic for the treatment of often intractable neuropathic pain conditions – attracted initial seed capital investment from the Symbiosis Group, GBS Ventures and Uniseed Pty Ltd. In total $3.25M was raised and in mid-2005 the spin-out company, Spinifex Pharmaceuticals was formed by UniQuest Pty Ltd, the main commercialisation company of The University of Queensland.
The raison d’etre for Spinifex Pharmaceuticals at that time was to develop AT2 receptor antagonists as efficacious, well-tolerated first-in-class novel analgesics for relief of neuropathic pain.
In 2006, I discovered that AT2 receptor antagonists also alleviated chronic inflammatory pain in a rat model. This was quite unexpected as clinically available drug treatments for neuropathic pain, such as tricyclic antidepressants and newer work-alikes as well as gabapentin and pregabalin, do not alleviate chronic inflammatory pain conditions such as osteoarthritis. Thus the potential for small molecule AT2 receptor antagonists to alleviate chronic inflammatory pain conditions was patent protected by UniQuest Pty Ltd in 2006 and subsequently in-licensed to Spinifex Pharmaceuticals for commercialisation.
As both neuropathic pain and chronic inflammatory pain are large unmet medical needs, Spinifex Pharmaceuticals was able to raise additional venture capital from the initial investors as well as from Brandon Capital to fund Investigational New Drug (IND)-enabling Good Laboratory Practice (GLP) toxicology and safety pharmacology studies, as well as early phase human clinical trials. “
– Professor Maree Smith, Executive Director of the Centre for Integrated Preclinical Drug Development and Head of the Pain Research Group at The University of Queensland
“Investors understood that the intellectual property would be generated in-house and there was no “stacking” from the beginning.
We were fortunate at the outset to meet two venture capitalists and a number of high net worth individuals who saw the potential upside in our business plan, had already had some success with investing in biotech – e.g. Biota – and did not ask ‘who else is in?’.
That being said, we had very limited time and money to show proof of concept, and only after that and our first patent, did we convince those investors that we had something viable.”
– Dr Jennifer Macdiarmid, pictured above with Dr. Himanshu Brahmbhatt, joint Chief Executive Officers and Directors
For a country that makes up just 0.3% of the world’s population, Australia packs a heavyweight punch in science – generating 3.9% of the world’s research publications. However taking that research to market has proved a broader challenge.
Fostering the commercialisation of research success and encouraging collaboration between industry and researchers is at the forefront of the government’s renewed focus on scientific innovation, with over $1.1 billion earmarked to kickstart the “ideas boom” as part of the National Innovation and Science Agenda.
“Collaboration is key to turning Australian ideas into viable and lucrative commercial products and services,” says Christopher Pyne, Minister for Industry, Innovation and Science, adding that high-tech knowhow plus innovative R&D will drive jobs and wealth in the future.
“We must capitalise on the opportunities that are presenting themselves in the economic transition taking place in Australia by being agile, innovative and creative,” Pyne says.
Fibrotech develops novel drug candidates to treat fibrosis (tissue scarring) associated with chronic conditions such as heart failure, kidney and pulmonary disease, and arthritis. The company spun out of research by Professor Darren Kelly at the University of Melbourne in 2006, and its principal asset is a molecule, FT011, which helps prevent kidney fibrosis associated with diabetes. In May 2014, in one of Australia’s biggest biotech deals at the time, Fibrotech was acquired by Shire, a Dublin-based pharmaceutical company, for an initial payment of US$75 million. Further payments, based on a series of milestones, will bring the total value of the sale to US$557.5 million, and the deal was awarded Australia’s best early stage venture capital deal in 2014. At the time of the sale, FT011 was in Phase 1b trials for the treatment of renal impairment in diabetics – a market worth US$4 billion annually.
*Innovation ratio = patents published/cited
Founder, CEO & director of Fibrotech Therapeutics, Professor Darren Kelly
SOLD FOR:acquired by Novartis for US$200 million up-front payment plus milestone payments
Spinifex Pharmaceuticals was launched in 2005 to commercialise chronic pain treatments developed by Professor Maree Smith of The University of Queensland. Pharmaceuticals giant Novartis acquired the company in 2015 for a total of US$725 million, based on the promising results in Phase 1b and Phase 2 clinical trials. Spinifex’s treatment targets nerve receptors on peripheral nerves rather than pain receptors in the brain, making it possible to treat the pain from causes such as shingles, chemotherapy, diabetes and osteoarthritis without central nervous system side-effects such as tiredness and dizziness.
CEO/President of Spinifex Pharmaceuticals, Dr Tom McCarthy
Admedus is a diversified healthcare company with interests in vaccines, regenerative medicine, and the sale and distribution of medical devices and consumables. Currently, the company is developing vaccines for herpes simplex virus and human papillomavirus based on Professor Ian Frazer’s groundbreaking vaccine technology. In the regenerative medicine field, Admedus is the vendor of CardioCel®, an innovative single-ply bio-scaffold that can be used in the treatment of congenital heart deformities and complex heart defects.
For more than 25 years, ResMed has been a pioneer in the treatment of sleep-disordered breathing, obstructive pulmonary disease and other chronic diseases. The company was founded in 1989 after Professor Colin Sullivan and University of Sydney colleagues developed nasal continuous positive airway pressure – the first successful, non-invasive treatment for obstructive sleep apnoea. Today, the company employs more than 4000 people in over 100 countries, delivering treatment to millions of people worldwide.
BioDiem specialises in the development and commercialisation of vaccines and therapies to treat infectious diseases. The Live Attenuated Influenza Virus vaccine technology provides a platform for developing vaccines, including one for both seasonal and pandemic influenza. BioDiem’s subsidiary, Opal Biosciences, is developing BDM-I, a compound that offers a possible avenue for the treatment of infectious diseases that resist all known drugs.
Vaxxas is pioneering a needle-free vaccine delivery system, the Nanopatch, which delivers vaccines to the abundant immunological cells just under the skin’s surface. Preclinical studies have shown that vaccines are effective with as little as one-hundredth of a conventional dose when delivered via a Nanopatch. In 2014, Vaxxas was selected by the World Economic Forum as a Technology Pioneer, based on the potential of Nanopatch to transform global health.
Biotech company Acrux was incorporated in 1998 after researchers at Monash University developed an effective new spray-on drug delivery technology that improved absorption through the skin and nails. In 2010, Acrux struck a US$335 million deal with global pharmaceutical company Eli Lilly for AxironTM, a treatment for testosterone deficiency in men. It was the largest single product licensing agreement in the history of Australian biotechnology.
Listed on the ASX in 2003, Pharmaxis has two products on the market: Bronchitol, a treatment for cystic fibrosis; and Aridol, a lung function test to diagnose and assess asthma. In 2015, Pharmaxis sold the rights to a treatment for the liver condition nonalcoholic steatohepatitis, to Boehringer Ingelheim in a deal that could be worth US$750 million.
With a focus on ophthalmology, Opthea’s main product is OPT-302 – a treatment for wet age-related macular degeneration – which is currently in a Phase 1/2a clinical trial. Wet macular degeneration is the leading cause of blindness in the Western world. Opthea was formerly known as Circadian Technologies, acting as a biotechnology investment fund before transitioning to developing drugs in 2008.
Benitec Biopharma’s leading product is DNA-directed RNA interference (ddRNAi) – a platform for silencing unwanted genes as a treatment for a wide range of genetic conditions. ddRNAi has broad applications, and can assist with conditions as diverse as neurological, infectious and autoimmune diseases, as well as cancers. The company’s current focus inludes hepatitis B and C, wet age-related macular degeneration and lung cancer.
Using a wearable electroencephalograph (EEG), SmartCap monitors driver fatigue by measuring changes in brain activity without significant discomfort or inconvenience. It notifies users when they are fatigued and what time of day they’re most at risk. SmartCap was formally EdanSafe, a CRCMining spin-off company.
Cochlear delivers hearing to over 400,000 people worldwide through products like the cochlear implant. Pioneered by the University of Melbourne’s Professor Graeme Clark and developed with assistance from The HEARing CRC, the bionic devices were first successfully implanted by the Royal Victorian Eye and Ear Hospital for people with moderate to profound hearing loss. The global company now employs 2800 staff and assists people in 100 countries.
Founded by the CSIRO in 2007 to commercialise the UltraBattery, Ecoult was acquired by the East Penn Manufacturing Company in 2010. The UltraBattery makes it possible to smooth out the peaks and troughs in renewable power, functioning efficiently in a state of partial charge for extended periods.
Composite materials company Quickstep was founded in 2001 to commercialise their patented manufacturing process. Working with the aerospace, automotive and defence industries, Quickstep supplies advanced carbon fibre composite panels for high technology vehicles. In 2015, the company increased its manufacturing capacity, establishing an automotive production site in Victoria in addition to their aerospace production site in NSW.
The EDV is a nanocell mechanism for delivering drugs and functional nucleic acids and can target tumours without coming into contact with normal cells, greatly reducing toxicity. Above all, the EDV therapeutic stimulates the adaptive immune response, thereby enhancing anti-tumour efficacy. More than 260 patents support the technology, developed entirely by EnGeneIC, giving the company control over its application.
Joint CEOs and directors of EnGeneIC, Dr Jennifer MacDiarmid and Dr Himanshu Brahmbhatt
Snap’s FMx is a unique approach to video surveillance that forms cameras into a network based on artificial intelligence that learns relationships between what the cameras can see. It enables advanced real-time tracking and easier compilation of video evidence. Developed at the University of Adelaide’s Australian Centre for Visual Technologies, the system is operational at customer sites in Australia, Europe and North America.
Orthocell develops innovative technologies for treating tendon, cartilage and soft tissue injuries. Its Ortho-ATI™ and Ortho-ACI™ therapies, for damaged tendons and cartilage, use the patient’s cells to assist treatments. Its latest product, CelGro™, is a collagen scaffold for soft tissue and bone regeneration.
As the demand for effective energy storage grows, RedFlow’s zinc-bromide flow batteries are gaining attention. RedFlow has outsourced its manufacturing to North America to keep up with demand, while the company’s research and development continues in Brisbane.
Since 2002, precision engineering company MiniFAB has completed more than 900 projects for customers across the globe. MiniFAB provides a complete design and manufacturing service, and has developed polymer microfluidic and microengineered devices for medical and diagnostic products, environmental monitoring, food packaging and aerospace.
RayGen’s power generation method involves an ultra high efficiency array of photovoltaic cells, which receive focused solar energy from heliostats (mirrors) that track the sun, resulting in high performance at low cost. In December 2014, RayGen and the University of New South Wales (UNSW) collaborated to produce the highest ever efficiency for the conversion of sunlight into electricity. The independently verified result of 40.4% efficiency for the advanced system is a game changer, now rivalling the performance of conventional fossil power generation.
CSL is Australia’s largest biotechnology company, employing over 14,000 people across 30 countries. The company began in 1916, when the Commonwealth Serum Laboratories was founded in Melbourne. It was incorporated in 1991, and listed on the ASX in 1994. Since that time, CSL has acquired established plasma protein maker CSL Behring, and Novartis’ influenza vaccine business, and has become a global leader in the research, manufacture and marketing of biotherapies.
Dyesol Limited (ASX: DYE) is a renewable energy supplier and leader in Perovskite Solar Cell (PSC) technology – 3rd Generation photovoltaic technology. The company’s vision is to create a viable low-cost source of electricity with the potential to disrupt the global energy supply chain and energy balance.
EvoGenix began as a startup in 2001 to commercialise EvoGene™, a powerful method of improving proteins, developed by the CSIRO and the CRC for Diagnostics. It acquired US company Absalus Inc in 2005, then merged with Australian biotechnology company Peptech in 2007, to form Arana Therapeutics. In 2009, Cephalon Inc bought the company for $207 million.
With a vision to create sustainable energy through renewable biofuels, Muradel is a joint venture between the University of Adelaide, Murdoch University and SQC Pty Ltd. Their $10.7 million Demonstration Plant converts algae and biosolids into green crude oil. Muradel has plans for upgrades to enable the sustainable production of up to 125,000 L of crude oil, and to construct a commercial plant capable of supplying over 50 megalitres of biocrude from renewable feedstocks.
iCetana’s ‘iMotionFocus’ technology employs machine learning to determine what is the ‘normal’ activity viewed by each camera in a surveillance system and alerts operators when ‘abnormal’ events occur. This enables fewer operators to monitor more cameras with greater efficiency.
Phylogica is a drug discovery service, and the owner of Phylomer® Libraries, the largest and most structurally diverse suite of natural peptides. It has worked with some of the world’s largest drug companies, including Pfizer and Roche, to uncover drug candidates.
The research compiled by Refraction was judged by a panel comprising of: Dr Peter Riddles, biotechnology expert and director on many start-up enterprises; Dr Anna Lavelle, CEO and Executive Director of AusBiotech; and Tony Peacock, Chief Executive of the Cooperative Research Centres Association. The panel considered the following: total market value, annual turnover, patents awarded and cited, funding and investment, growth year-on-year, social value, overseas expansion and major partnerships.
