London calling for local biotechs

By Pete Young
Monday, 18 February, 2002

The London Stock Exchange is spruiking for business from Australian biotech companies who want to transmute their intellectual property into financial capital.

LSE executives like head of Asia-Pacific global business development Jane Zhu are conducting Australian briefing tours to tout the benefits of listing on the LSE.

On a recent outing here, Zhu highlighted the LSE's pace-setting techMark Mediscience board, launched three months ago and aimed specifically at healthcare companies.

It is reserved for established life science companies in the areas of biotech, medical technology, specialised pharmaceutical, drug delivery and diagnostics who are looking for a capital market that commands high visibility with investors in this sector.

By listing on a biotech-specific board, they won't get lost in the crowd as they would with a more general technology board such as Nasdaq or the LSE's Nasdaq-equivalent, techMark, Zhu argues. So they enjoy a higher profile with potential investors plus a capital-raising environment that is much richer than they could find on their home Australian turf.

The UK's breakthrough achievements in biotech, from DNA co-discoverer Francis Crick to Dolly the clone, have made it a fertile investment climate for healthcare companies, Zhu says.

There are 450 biotech companies listed in the UK (including Australian company Cochlear) with a total market value of more than A$20 billion.

Because of that, the LSE supports a population of more than 400 biotech-sensitive market analysts and researchers, representing a far deeper pool of expertise than any other exchange in Europe, Zhu says.

By early this year, techMark Mediscience held 48 companies (though none from Australia) and was the third most actively-traded of the LSE's 30 different subsectors. Its index, which stood at 4950 shortly after its November launch, had climbed to 5750 by early December.

Also sparking interest is the LSE's Alternative Investment Market (AIM), a secondary board with relaxed listing rules designed for young, growing companies. It has attracted attention from Australian mining and technology businesses. One recent arrival on AIM is Virotec, a Gold Coast company with mine-cleaning technology which listed with help from lawyers McCullough Robertson.

At an LSE Brisbane breakfast seminar sponsored by the Queensland branch of AusBiotech, interest in AIM came from companies like drug developer and contract manufacturer Progen Industries Ltd.

Even though it is already listed on the ASX and Nasdaq, Progen sees value in using AIM for any spin-offs it might float in future.

"I do think there is considerable merit in the listing in the UK," said Progen chief financial officer Milton McColl.

It gives access to a larger pool of potential investors to grow the shareholder base, he notes. It is also much easier for an Australian company to attract the attention of UK-based venture capitalists from a perch on the LSE.

Then there's the fact an average AIM listing raises two or three times more capital than the $10 million available from an average ASX biotech float.

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