Biotechnology company backed by four fund managers
Australian biotechnology company Alchemia Limited started with an idea to use its carbohydrate chemistry expertise to synthesise a drug to treat deep vein thrombosis. Now, with venture capital invested through four Australian Government-backed fund managers, the company has an approved drug on the market in the USA.
The Alchemia team is focused on discovering and developing products that make a difference.
Over the past decade, the Brisbane-based biotechnology company has moved from being a high-risk, early-stage idea to an established business with near-term revenue and profitability.
Dr Tracie Ramsdale, Alchemia’s founding CEO and the driving force during the company’s formative years, says the company’s research has been supported by four venture capital fund managers since 2001, from or through the Australian Government’s Innovation Investment Fund (IIF).
The company’s first drug, fondaparinux, a generic version of GSK’s Arixtra® for the prevention of deep vein thrombosis, has now been approved by the United States’ Food and Drug Administration (FDA).
This approval means the company’s licensee, Dr Reddy’s Inc will be able to sell the drug on the US market.
Alchemia’s share of profits will fund its future research and development and provide a return to shareholders.
In parallel, Alchemia has developed a cancer stem cell-targeting technology with a phase III product for colorectal cancer, and uses the same carbohydrate chemistry capabilities to develop VAST®, a small molecule drug discovery platform.
Tracie said the company’s success had come through hard work, long hours and perseverance, but venture capital has also played a big role.
“Our success has been helped by continued and timely financial assistance through the Innovation Investment Fund, Tracie said.
“The company was built around an idea to develop a new type of carbohydrate chemistry for drug discovery.
“For the first two years the research was funded by the company’s founders. This proof-of-concept stage was very exciting and the positive results obtained gave us the encouragement needed to continue.
“Our goals were very ambitious and we needed access to larger amounts of capital, in order to realise them.
“We were fortunate to find financial support from the Australian venture capital community to develop our novel technology. Some venture partners brought business and financial expertise, while others helped by offering access to much-needed global networks.
“The Australian Government has been with us along the commercialisation journey. The R&D Tax Concession has assisted and now the new R&D Tax Incentive will allow us to continue to invest in research to improve our pipeline of innovative products.
Four fund managers have been integral to Alchemia’s continued success: Start-up Australia, AMWIN, GBS Venture Partners and CM Capital.
Start-up Australia was involved in floating Alchemia on the Australian Stock Exchange.
“Start-up Australia is a specialist venture capital manager in the life science sector. Our primary focus is to deliver financial returns for our investors by creating high-growth companies, says Stephen Robinson, the company’s Executive Director.
“We build high-growth companies focused on developing products for international markets, for example, drugs to treat major diseases.
“In most cases, Start-up Australia is the first investor in a company and helps the company to reach the stage where it can commercialise its product or technology internationally.
“When companies are in their early stages, we are very involved – often to the extent of helping to write their business plans and hiring management. We sit on the board of each of the companies we have funded, until the company has grown substantially.
Stephen said Start-up Australia was Alchemia’s first institutional investor and backed it because it had good technology for which a successful high-growth company could be built.
“We were initially involved in setting up labs, hiring the first employees, and in business planning. Later, the focus shifted to capital raising and business development.
Start-up Australia was involved in floating Alchemia on the Australian Stock Exchange in 2003, working closely with the investment banks and overseeing the listing process.
AMWIN director Su-Ming Wong said Alchemia’s technique was unique.
“AMWIN has supported Alchemia since our initial investment in February 2001, says Su-Ming Wong, AMWIN’s Director.
He said AMWIN decided to support Alchemia because it had a unique technology that helped assemble carbohydrates to be used in drug development.
AMWIN has invested in 10 early-stage companies across information technology, biotechnology and mining technology sectors. AMWIN has enjoyed a number of successes including Looksmart, SEEK and Gekko Systems and remains the largest shareholder in an exciting biotechnology prospect, EnGeneIC.
Three of the manager’s IIF investment were biotechnology-related companies like Alchemia, six were in the IT sector and one is in the mining sector.
The AMWIN Innovation Fund is managed by CHAMP Ventures, which now focuses on mid-market buy outs and expansion capital for later-stage companies.
GBS Venture Partners
GBS is Australia’s largest venture capital investor in life sciences.
Brigitte Smith, Director of GBS Venture Partners said they first invested in Alchemia in 2001.
“Alchemia had a novel manufacturing technology which would help produce carbohydrate-based medicines, Brigitte said.
“To keep Alchemia at the forefront of carbohydrate chemistry, and to practise their novel method of production of fondaparinux the company needed funding to continue developing its technology.’’
Brigitte said that GBS Venture Partners mainly invests in new drug and device-development companies, supporting companies at all stages from raw start-ups to those at final-stage clinical testing.
Sometime after Alchemia listed on the ASX, GBS Venture Partners sold its shares at a profit.
“This contributed to our track record of making money from early-stage venture investing in biotech companies, and we now have more than $400 million in funds under management.
“Across all of our funds, we have helped around 40 companies start or grow their businesses, Brigitte said.
CM Capital (Coates Myer)
CM Capital manages more than $260 million across three funds.
“We invest in early-stage technology, both in life sciences and telecommunications and IT and have recently invested in one green energy company, says Dr Carrie Hillyard, a CM Capital partner.
She said CM Capital currently manages three funds – one is an Australian Government co-investment Innovation Investment Fund – Coates Myer IIF, licensed in round one of the IIF program. The others are institutional funds with superannuation fund investors. CM Capital manages more than $260 million.
“Alchemia was the first life science investee in our IIF. We chose Alchemia because we had been following its progress with its novel technology development. We undertook fairly extensive due diligence and knew the company and its management team well and it had interesting technology, Carrie said.
The Coates Myer IIF had looked at a number of potential investments and Alchemia had novel defensible technology for carbohydrate-based drugs and the best prospects for growth, at the time.
It has taken longer than expected but Carrie said now was an exciting time.
“The first product, generic fondaparinux, partnered with Dr Reddy’s and utilising Alchemia’s novel technology, was approved during July 2011. Alchemia will be one of the first Australian life science companies to have a marketed drug and revenues leading to profitability. The Australian biotechnology industry is maturing and Alchemia is poised to be one of its success stories.
Innovation Investment Fund
The IIF Program is a venture capital program that supports new innovation funds and fund managers with expertise in early-stage venture capital investing.
It co-invests with private sector investors in venture capital funds to assist early-stage companies to commercialise the outcomes of Australia’s strong research capability.