Entrepreneurs, take heart…

Any of you reading this who has ever raised money or been on the road, been involved in business development or sales, will know the feeling I am about to describe. After a very excellent day of meetings in Sydney, mostly around raising some philanthropic funds for a project I am working on, I got to the airport to catch the “last plane out of Sydney” … er… back to Melbourne. Sitting in the wasteland of the “rotunda” gates 10-13 (complete with urine-soaked seats) in the Qantas domestic terminal, that song almost always pops into my head, my tired brain’s feeble attempt to cheer me up, to inject some vigour from my youth.

I had a great day. But then I look around the terminal and all I see are tired people. Weary travellers. Road warriors. Burnt-out, overweight execs killing time before making it home after a long day, knowing that when they walk in the door their children will be long-asleep having pootled off to dreamland wondering where the hell their bedtime story went. But that’s ok, because you’re living the dream, you’re doing something worthwhile, you’re “moving the needle” and anyhow, most of the time your family just thinks you are a pain the arse anyhow.

So you momentarily perk up, get a little philosophical about another hour of your life in an airport terminal. There’s probably still a glass of red left in the bottle sitting on the kitchen counter for when you walk in the door. You realise you’re just tired, and all is well with the world.

Then you make the mistake of deciding to kill a few minutes by perusing your non-critical email and reading the Biotech Daily.

Now I am a big fan of the BD and I genuinely respect David’s contribution to our ecosystem (worth the subscription). I like the reminder of all that has happened, and the succinct summary of the day’s news, especially as I sometimes miss events of interest. I also have grown to love and appreciate the little sprinkles of sarcasm in the news headlines that David so carefully crafts. Tonight’s edition was particularly rich in subtle journalistic scatology, for example: PORK CRC TO ASSIST ANATARA DETACH PIG DIARRHOEA TRIALS

That’s pure poetry. Lyrical, even.

But then I start to digest the last couple of weeks (pardon the pun). What an underwhelming and pathetic lot of companies we have to offer as inspiration and homage to our would-be Aussie entrepreneurs with the next great bioscience idea. We’ve got Novogen’s little palace coup, sitting on the thick-end of $40m that it frankly doesn’t have the foggiest idea what to do with, let alone the balls to kill all the rubbish programs that Graham Kelly “sold in” to the business. In fact that the only thing that Novogen has been able to muster since GK left in terms of “sophisticated” communication was a couple more patent filings and a new acronym.

Outstanding stuff, guys. Bravo.

We’ve basically got a botched NASDAQ listing for Benitec, and while I am genuinely gunning for them to still bring in a few shekels, it ain’t much of an inspiration and today’s 11-odd% share price dirtnap was highly deserved. I say deserved not because Frenchy et. al. didn’t work hard, or do their best, but because they forgot that they were still an ASX-listed company. Having said that, I read all the rubbish on HotCopper today and were it not for the fact that I am permanently banned from either posting, or having links to this site posted on HotCopper*, I would have held no punches back from the handful of annoying shareholders that insist on referring to the company in the “we” context, as though they are pounding the pavement on Wall St, doing the deal – or wielding a pipette in a lab somewhere in… ah… Balmain.

As if the disasters of the past week or two weren’t enough (and don’t get me started on iSonea**) there are a whole treasure trove of little turds in tonight’s Biotech Daily. The first one to jump out at me was the headline:

ANALYTICA RAISES FURTHER $65k

Oh my goodness. Stop the press. $65k? Say it ain’t so.

Of course I understand that this is still part of a general spate of financing-related disclosures for Analytica, but still. Despite a lot of goading from readers, I have elected never to comment on this company because basically I can’t think of anything to say that isn’t mired in smut. Sure I respect that pelvic floor rehabilitation / incontinence is a very real problem. Certainly, my heart goes out to all the amazing women who have valiantly borne us our beautiful children but then struggle to run or have a little giggle without a little pee pee, but the PeriCoach product is just ridiculous. It’s the design outcome that you would expect to get when a male electrical engineer gets the idea that there might be a good business opportunity in putting some BlueTooth-enabled pressure sensors in the vagina. I’ve seen the product, it doesn’t look like as much fun as the website suggests (is that why everyone is wearing surgical masks, because they are laughing???).

What a missed opportunity to source a really decent quality motorised dildo and add some pressure sensors. It would probably sell a lot better too and at least the FDA would have enjoyed reviewing the 510(k).

ACTINOGEN XANAMEM PHASE I TRIGGERS 5m MARTIN ROGERS SHARES

I don’t have much that is pleasant to say about this one. I do respect that deal-makers get to bring in a little extra bacon and I am sure that shareholders of Actinogen sleep soundly at night, knowing that Marty is clearly on top of things. But don’t you think it’s a bit premature?

The commercial value inflection point is when a trial is concluded, reported and a decision made about whether the data is compelling for a Phase II study (or not). Especially for a CNS program. Someone who really believed in their company would have made their spiff contingent not the technical “final dosing” of a patient, but on a positive outcome of the study represented by the deal Mr. Rogers put together. An “on time and budget” clinical activity is not the value creating event, the successful end-point of the study is. And why is a non-executive chair getting compensated for an operational outcome?

With these kinds of irrelevant and meaningless incentive structures de rigueur, no wonder we have so many zombie ASX bioscience executives ploughing ahead with meaningless activities in order to hit their pre-ordained wealth creation milestones that don’t actually involve them delivering any value to shareholders whatsoever. Nice job, Martin. Real elder-statesmen stuff. I note that almost 70% of the company’s share price has been wiped off since late April, so this is truly a reward for a job well done.

PORK CRC TO ASSIST ANATARA DETACH PIG DIARRHOEA TRIALS

Speaking of swine, I always love a good Anatara update. I especially love the ones where there are lots of $ numbers flashed around but nothing of substance and nothing disclosed. I think there were two big pieces of news in this announcement. The first revelation was that I honestly didn’t realise that “Detach” wasn’t actually approved yet for all those piggies out there with the shits. The way the company talks about it, I figured if I wanted to, I could put in an order for a couple of tonnes of processed pineapple stem tomorrow. Since all kinds of bromelain-based products are considered by the TGA as safe for human consumption, and given all the great “clinical data” in animals, I didn’t figure the regulatory burden of feeding pigs processed pineapple was really a major remaining hurdle for the company.

The second piece of good news was obviously the little reminder that, despite little or no regulatory obstacles from the TGA or the FDA, that the company still continues think about wasting shareholder capital on human studies. Obviously from the appropriately muted reaction of shareholders, management is perhaps now taking their bromelain supplements via the suppository route.

So I stop reading BD (feeling a little depressed) and go back to reading my email and I see an invite to give a talk. Oh the irony. In a few weeks time I get to meet a room full of young, bright and energetic budding biotech entrepreneurs at the University of Melbourne. They want to ask me why Australia doesn’t have a more inspiring bioscience industry? They want to know why, despite all the Nature papers and poster prizes they’ve won at international conferences, none of their research seems to be of interest to potential investors? Oh, and where are the investors? Is it just Chris Nave at Brandon Capital or is there anyone else?

They want to know whether they would be better off going overseas to try and cut their teeth as biomedical entrepreneurs.

When I look at the pig de-crappers, the “super-benzopyrans” (no such thing), the re-hashing of flea-bitten molecules into another recycled public shell, meaningless executive compensation milestones … and even the odd bit of jail time, it’s hard to mount a convincing argument that our best and brightest should stay and change the system. What do you think I should tell them?

I want to hear your opinion.

And please don’t post your comments on either HotCopper or Aus Biotech forum because if you have anything critical to say, you’ll just get censored like I did.


*Cautionary note to readers, if you post a link to this site on HotCopper you will be censored because HotCopper doesn’t actually care about shareholder rights and apparently now it also has jurisdiction to deem external content as ‘defamatory’. I thought that this was the role of the courts, but apparently not.

**Unfortunately, many readers that used to pick up my posts through the Aus Biotech LinkedIn forum will have missed my post on iSonea, as well as my $5,000 competition offer, because Aus Biotech also has decided to start censoring my posts because they are not in line with their new “communications policy” which effectively eliminates any constructive or critical discourse about their member companies. Or use of the word “shit” or “turd”.

17 thoughts on “Entrepreneurs, take heart…

  1. Hi Chris,

    I’m up early to prepare my classes for Melbourne Uni today, but first things first — I always put your posts at the top of my list.

    Yes, things are a bit grim at the minute. I’ll only comment on AusBiotech, which I left years ago after a number of experiences that made it clear that it was essential to toe the organisation’s line about the state of the Australian biotech sector. Basically I think the organisation exists to promote the personal fortunes of the entrenched leadership, both hired and elected. It’s sad — Bio Melbourne is much more realistic in their views.

    I’m not sure if my class at Monash is, in disguise, the group you are referring to in your final paragraphs. If so, I hope you will indeed come and talk with them. I had dinner with one of Chris Nave’s colleagues a few weeks ago and asked him about the MRCF’s seemingly low investment rate — four to six deals per year. His view was that there were not more investable deals than that coming out of the sector. And we spend how much per year on medical research?

    OK, back to the lectures.

    Best regards

    Michael Vitale

    Liked by 1 person

    • Nah, it wasn’t a veiled reference but I will be there (just haven’t got on top of my email this week – apologies).

      I see plenty of more investable deals on the academic side of the fence and from places like CSIRO. They just require a lot of work to make them a success, like all early-stage ventures. Cherry picking doesn’t define an industry.

      Like

  2. I’d like you to talk to them about ethics Chris. In particular, about conflicts of interest and divergence between scientific ethics and commercial ethics (and lack thereof in both instances). An example, for me, is the disturbing tendency to manipulate people by claiming your goal is to help people when the end goal is to gain money, influence or power. These activities are not always mutually exclusive and there are excellent examples in the world of success in navigating this difficult territory (I’ll go with B & M Gates here).

    However, if you are using the victims and saviours language of school ma’ams, prophets, and priests, prostituting the sad stories of your “target market”, implicitly influencing recruitment sites, and using persuasive emotional language you’ve probably crossed the line. Behaviour can change, ethics evolve.

    Give them an exercise to do where they can test their ability to engage with ethical dilemma. Because if B & M Gates got it wrong with Microsoft, a mass of computer potential would never have been realised. But if a biotech gets it wrong, a mass of human potential may never be realised.

    Giving them a bullet point guide to “signs of the line” will at least help them to begin to learn when it is being crossed. From there it is up to them.

    Liked by 1 person

  3. Of course you are entirely right about ALT…they are facing some serious competition from this company…

    http://www.minnalife.com

    …which has an impressive array of aesthetically pleasing products that provide activity inducing positive feedback (the more one squeezes, the more they vibrate, the better one feels). Now that is a product. So good it makes me think seriously about getting a sex change.

    Liked by 1 person

    • That’s not just an exciting product, that’s direct competition as far as I am concerned.

      I think you should get a sex change, Dr. Heiter. I suspect it would do you a world of good. If your namesake is anything to go by, you might even try doing it yourself?

      Like

  4. Hi Chris,

    While the temptation always exists to avoid dashing students hopes and dreams, the simple fact of the matter is that you need to tell them how it is.

    There will be a very small number in the class that will make it into the industry relatively easily, mostly overseas. There will be a much larger group that will try, spend years on the fringes in and out of work, only to move on when the reality of life in Australian biotechnology truly hits them.

    They will do much better if they are prepared for what they will face.

    The fact of the matter is that it is a lot easier overseas. More importantly, there are many more older professionals to learn from. Experiential learning is important, but accessing the knowledge of those with significant experience is just as important. It fast tracks the individual’s development and is ultimately a better outcome for the Australian industry if they choose to come back.

    Cheers,

    Marc

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      • If you want to say something useful then show them a clip of Alfredo out of Cinema Paradiso telling the young bloke to leave and never return, not even for a holiday. Support, funding, career structure, understanding, you name it, it’s all elsewhere.

        Problem is, they face exactly the same dashing of hopes and expectations if they stay in academic research in Australia and for the same reasons. Mark Oliphant had Florey and Bragg tell him coming back would be career suicide, and in sixty years we have come full circle, if we ever moved in the first place…

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  5. I think we need to come up with new creative ways to match up people willing to support health/biotech research and people with truly fund-worthy research projects ready to go.

    Grateful medical patients are an under-tapped source of financial support.

    Doctors’ waiting rooms are a huge untapped opportunity to inform bored patients about exciting worthy health/biotech projects seeking funding.

    The giving vehicle could be set up along the lines of Kiva, the micro-financing success story.

    Some clever people select the fund-worthy projects and publicise them, and the would-be givers read about them and decide which projects resonate best with them.

    They give as much as they want. On Kiva, the minimum is $25. All those small amounts of giving get pooled and once the price target is achieved the research people get the go-ahead to do Step One of their project.

    If their project fails for whatever reason, they get eliminated from further funding rounds. If they succeed they get to apply for larger amounts of money.

    The beauty of this scheme is that it is outcome-focused, not profit-focused.

    For example, I would support clever research that got Australians to eat more vegetables as a permanent lifestyle change or got young Australian university students not to regularly binge-drink to the point of blackouts.

    Achieving either of those goals would be very difficult (many researchers have tried and failed!). But if some researchers had demonstrated early success and were wanting funding to test a clever idea, I’d be happy to contribute. I wouldn’t need to make a profit from the exercise; I would just like to know how “my team” went. If they succeeded, I’d back them some more. If they failed or worse, didn’t finish, then I’d move onto a better prospect.

    Football isn’t my religion, but apparently a favourite topic of conversation at Australian social gatherings is discussing how everyone’s “Dream Team” is performing.

    Well, maybe one day people could talk about how their health/biotech researcher “dream teams” are going!

    My mother in law inherited about $500,000 late in her life from a cousin. She decided to donate the money to “good causes”.

    Her heart was willing, but she didn’t really know where to start. In the end, she consulted her beloved Choice magazine which had written an article recommending the best charities in terms of the amount “wasted” on admin charges.

    She actually found the decision-making process painful and I think she wished she didn’t have this annoying money problem to deal with at the of 86.

    I was a bit disappointed when I learned of her 5 choices. They seemed so “big bureaucracy” and removed from the excitement of specific nitty-gritty projects.

    I think she would have enjoyed visiting a website that outlined a whole lot of pre-vetted research projects seeking funding and to pick and choose the ones that resonated best with her. Anything to do with breast cancer, atrial fibrillation, osteoporosis, chronic pain, back pain, falling over, hearing loss would have caught her interest, for starters!

    She actually sat on that money for about four years, not knowing what to do with it. She did’t have much fun in those last few years. I reckon following the progress of her “dream team” might have given her lots of pleasure.

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  6. Hey mate,

    You came back. And, dare I say, the industry is better for it.

    Without your U.S. experience, I highly doubt you would have a quarter of the knowledge/experience you have now. More to to the point, I doubt you would have truly understood the importance of, much more, become a counter balancing voice in a nation/industry prone to be internally focused.

    The US, as you know, has a number of high profile, independent, very knowledgable individuals willing to call bullshit on and influence companies not really focused on making money out of their stated aim.

    We either bring the experience in or send our best and brightest out and hope they come back.

    Cheers,

    Marc

    Like

  7. It seems to me that Australia have a real good scam and spam industry to support, so called entrepeneurs, who make it their living, to come up with obscure ideas to promote, and found a new public company on.(The west aussies are particularly good at it.)
    These ‘entrepeneurs’ may have had their business going for a few years already, but have not made any money and are starting to accrue unsustainable losses.
    However, they want to keep the Government grants and the R&D funds going,(as it’s a particulary comfortable lifestyle) and they have had no luck at all, sourcing venture capital, so what do they do?
    They find a professional company administrator and head straight to the ASX . Look for a shell of a company that has already been through the mill and then weave a take over.
    The Professional company administrator , with more spin than Shane Warne (and less real hair) milks the PR system and navigates a course to make this old idea seem like the next best thing.
    Of course, no instituitions fall for the caper, but plenty of Mum and Dad investors do.They are looking for somewhere to put their hard earned money, to multiply quickly and easily, so are very happy to back the flavour of the month.

    As one of those Mums and Dads I have had loads of experience at being put through the mill of broken dreams and promises by speculative Public Companies run by professional operators who know a lot less about running a business than they do about the ins and outs of milking a public company.
    Hopefully for the genuine entrepeneur, for every Mum and Dad that are wisened up to the scam or just tired out, there will be another Mum or Dad to take their place

    Like

    • Jim, maybe you’re onto something.
      Moronically designed R and D rebate schemes may be inadvertantly enabling zombie perpetual loser biotech companies!
      Apparently as soon as a company hits $20m turnover the R and D handouts stop, even though the company could continue to spend heaps on good R and D. Yet companies like Progen who are celebrating 25 years in business this year and have $154m dollars in accumulated loses on their books can continue to claim the R and D rebate.
      Why not have a R and D rebate scheme that rewards success rather than punishes it?
      Why not ask perpetual loser companies to put a good case forward for why they should continue to get tax-payer support? It’s such a punishing scheme – no sliding scale or anything: as soon as my company hits $20m turnover, whammo! no more 45% in dollar rebate for my continuing massive R and D spend. Why would I ever want to cross that $20m threshold?
      Is this really how the R and D rebate scheme works? Who put this scheme together? It’s so silly it can’t be true!Does anyone know how the Australian R and D rebate scheme really works?

      Like

      • Ugh… I hate Progen. Did you know that they even wrote in their annual report that 25 years as a public company (with an irrelevant market cap) is an “accomplishment”, a selling point?

        Like

  8. PGL has secret deals with your pals at Ausbio and BLT. Seems they couldn’t crack the nut so they struck a deal. If I recall the Drongo was in on the act too. I think there was to be a merger of equals with AVX.
    So unless you are privy to the detail of the secret deals, then it is impossible to know if this is good or bad in spite of the failure to perform for so long.
    The answer lies post-TPP. Not pre.

    Like

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