Biotechs cashed-up on capital raising: report

The Australian biotech sector's cash reserves totalled nearly three quarters of a billion dollars at the end of the 2003-2004 financial year, according to a report by biotech investment newsletter Bioshares.

And much of the funding comes from a massive 448 per cent increase in capital raised, both new IPOs and already listed companies.

Of the $681 million raised, $314 million came from just eight companies -- Chemeq, Prana, Ambri, Novogen, Ventracor, Psivida, Norwood Abbey and Metabolic Pharmaceuticals. The aggregated total of $734 million was nearly double the cash reserves of $386 million at the end of the 2002-2003 financial year. The number of listed companies has also risen, from 69 last year to 82 this year.

But companies are also spending more money, with the average net operational cash flow rising from $2.5 million to $2.9 million and the total net operational cash flow rising 16 per cent to $240 million.

BioShares' 'survival index' -- generated by dividing the total cash held by the net operational cash flow -- suggests that the sector has 3.3 years of funding available.

A look at the survival index for each company also points to a number of companies who are likely to need to raise more capital in the near future. Since the end of the financial year, a number of companies, including Cytopia, Living Cell Technologies, ChemGenex, PanBio, Chemeq, Prima and VRI Biomedical, have raised new capital, while others may need to look to the markets soon.