QBF to make first investments

The Queensland BioCapital Fund (QBF) appears set to throw its considerable weight into the venture capital scene in the most practical way possible - by making its first investments.

The $100 million life sciences venture capital fund has winnowed down a list of 50 proposals to a shortlist of two which look likely to become its first investees sometime in the next month.

One of the potential bio-investees is based in Queensland and the other is an inter-state proposal, according to QBF chief executive officer Dr Kathryn Radford.

Although she declined to name the groups, Radford said QBF is in the process of negotiating terms which if successful will culminate in formal investment commitments by the fund.

Settling the details of terms and conditions might take another month and the final letter of commitment will be contingent on the successful completion of due diligence.

However reaching the term sheet stage is an important milestone for the QBF which was created last year by the Queensland Government to ease the imbalance between supply and demand for venture funding in the life sciences sector.

Radford, who has a PhD in bioengineering and 20 years of experience in the international pharmaceutical and biotech sectors, was appointed CEO on December 2 last year.

She has been under pressure to mould the QBF into an operational entity and select an initial batch of investee companies as quickly as possible.

The pressure has not been eased by the recent departure from QBF’s executive ranks of commercial manager Stephen Barnard.

Barnard acted as the public face of QBF in its early days and his unexpected departure suggests the organisation may still be grappling with administrative issues.

However Radford said Barnard left because his contract had expired and his role in managing QBF’s setup phase had come to a natural conclusion.

Meanwhile the QBF has completed the buildup of investment managers and analysts on its staff to the full complement of six who are evenly split between the two categories and who will work in tandem, said Radford.

Half the new team have overseas backgrounds which embrace Canada, Ireland and the UK, although all were recruited in Australia.

They have been conducting assessments and initial screening of nearly 50 proposals which have come forward for QBF funding to date.

A vital component not yet put in place by the QBF is the right person to fill a position designed to give the fund its own presence on the US venture capital and life sciences scene.

Radford, who spent part of March in the US interviewing for the post, said a preferred candidate has been selected but no contract has yet been signed.

Filling the slot is a pivotal move for QBF because its strategy is focused on exiting its investments through trade sales or share market listings in US and Europe. Exiting through an Australian Stock Exchange listing would not generate the level of returns called for in its business plan, Radford argues.

On another front, the QBF is forging alliances with a number of pre-seed and seed funds in order to achieve mutually beneficial objectives, Radford revealed.

It has already signed a pact with the University of Queensland’s research commercialisation arm Uniquest and has held informal discussions with the State Government-backed pre-seed fund BioStart. It envisages pursuing similar arrangements with the Uniseed joint venture between the universities of Queensland and Melbourne.

The alliances would unlock synergies such as pre-seed funds providing resources to shape initial proposals into business plans of a quality that could be fed into QBF’s further screening procedures.

Meanwhile, it appears the venture fund has quietly altered its thinking about the number of individual proposals it is prepared to invest in. Last year QBF sources were talking about making investments in as many as 20 fledgling biotechs.

Its current thinking is that bio-investees may number only half that figure, but that each one might absorb correspondingly larger amounts over time via multiple tranches.