Why?

Why notWhen I launched this site, I wrote a very extensive and passionate analysis as to why I was doing this. I don’t think anyone read it, but if you want to read it you can still find it here.

In a nutshell, I think we can do better. Australia has very decent biomedical research, plenty of smart people and lots of good ideas. The best ideas currently go overseas because there is this pervasive belief that there is no capital, and no commercial leadership here at home. Yet, plenty of small public companies raise hundreds of millions of dollars every year. In effect, the Austrailan Securities Exchange (ASX) has become a domestic substitute for venture capital. I also think there is no shortage of human capital either.

We have about 150 ASX-listed companies that are broadly classified as “healthcare” (including pharma, biotech, medtech, health services) and while there are a few good companies, most of it is poor quality. Until we clear out the garbage, enable the market to transparently identify what are good opportunities and what are not, we limit the momentum for new (quality) offerings to tap the public markets for early-stage capital. Even worse, underperforming equities actually spoil it for everyone else and there is little doubt that most pools of capital in Australia don’t consider ASX biopharma to be investment-worthy.

A real tragedy for the future of our economy.

Moreover, I am increasingly of the conviction that private equity ownership and capital intensive / long horizon investments like biotech are a poor fit for each other. Therefore if we had an efficient and quality public market, where share ownership can change over time and fundraising (for quality deals) can be fairly rapid, this could be transformational to Australian biomedical innovation. Unfortunately, right now, the ASX healthcare / biopharma sector is a bit like a murky dam on some remote outback farm. It’s muddy, it’s infested with tiger snakes and yabbies, and nobody in their right mind would swim in it.

This site is an attempt at some objective “buy side” commentary (noting that this is not a financial advisory site) in the hope is that it can help – in time – to clean out the swamp.

4 thoughts on “Why?

  1. Hi Chris,
    Hope things are well for you.
    just letting you know, us Mum and Dad investors were all the richer for your acute analysis of the Australian Biotech scene.
    I personally have made some fortunate investments based on your posts, and got out of some bad ones thus, saving more money.
    Cheers and thanks again,

    Jim

    Like

  2. Thanks for posting all these content. I’m honestly surprised by the lack of analysis (at least on the web) to this whole micro-cosmos of small healthcare/biotech stocks in the ASX.

    I mainly wanted to ask if you had any tips on how to spot a “zombie stock” on this long-tail, for someone with no healthcare or biotech background. Are there any financials that to a trained eye would indicate zombieness in this industry?

    When looking at small cap biotech stocks I frequently see charts that look great over the last year, but once you zoom out you can see how their market value decreased > 10x since say 2005 or the 90’s. Some of them have many of these huge peaks followed by plains of nothing. It’s hard to tell if they are zombies to be avoided or they might increase their stock 10x one more time once some clinical trials are completed.

    Like

  3. I had a similar experience as Jason. Thanks for reporting on it. If innovation and ideas are to fly in this country then the innovator needs some protection from these modern day buccaneers, these raiders of ideas, these plunders of human effort that masquerade as businessman and investors.

    Like

Say something useful (or at least interesting)...

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s