Bio Pharma signs $3.5m contract

A $3.5 million dollar conditional contract with an Asian company could give startup Bio Pharma Pty Ltd the push it needs to move into commercial production.

Bio Pharma is banking on the supply contract with Daewoong Chemical Co of South Korea to pry loose from investors the extra working capital it needs to expand its production facilities in Queensland.

The pact, due to be signed on June 18, calls for the Queensland biotech to supply chenodeoxycholic acid extracted from animal bile from which the Korean company will produce pharmaceutical products.

The deal is conditional on Bio Pharma raising $2.5 million in fresh funds over the next three to six months, according to general manager Bob Bothof.

Founded in 2000, Bio Pharma to date has raised $2.8 million in startup finance from investors and AusIndustry contributions to hone its technology for recovering high value medicinal compounds from animal material.

But as a medium risk, medium return investment, Bio Pharma has been trapped in a no-man's land as it searches for funds to complete its transition to commercial operations.

The $2.5 million injection it requires is too low a figure to tempt interest from the big venture funds but too high for the business angel community, says Bothof.

The new supply contract with Daewoong could alter that equation. Under the contract, Bio Pharma will provide feedstock which Daewoong will covert to ursodeoxycholic acid, an active ingredient in traditional Chinese medicines which previously have been sourced from bears.

Although the South Korean contract is focused on animal bile, Bio Pharma claims its technology can be applied to virtually any pharmaceutical, nutraceutical or fine chemical batch extraction process using biological materials.