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Four years on …. lessons learned September 2011 What were the initial aims of the MRCF? • Established in 2007 to provide early-stage funding for Member Institutes • Established as a collaboration between the Institutes and Investors • A flexible investment structure • An initiative that increases the commercialisation capabilities for each Member – in a sustainable way • Provide training and capability sharing through IRC process and Internship • Bridge the “valley of death” funding gap from basic R&D through translational/development funding into funding clinical evaluation (Phase I & II) • Provide a return to the Superannuation Fund investors 1 MRCF key features • All risk capital from private investors ($30M) and, more recently, the Federal Government ($20M) • Operational costs comes from: o Investors, o 4 State Governments, and o The participating Institutes ($35K per Institute per year) • Fund can invest up to $4 million in each opportunity – Investors have follow-on and co-investment rights • Fund has ‘first right of review’ of technologies where an Institute is seeking investment financing for a technology, but not a first right to invest 2 Membership is now 29, national and growing… Victoria (11) Alfred Health (Alfred Hospital) Baker IDI Burnet Institute (Austin) Centre for Eye Research Aus Deakin Institute of Biotech Florey Institute Neurosciences Melbourne Health Murdoch Children’s Research Inst Peter MacCallum Research Institute St Vincent’s Institute Walter and Eliza Hall Institute NSW (8) Centenary Institute Garvan Institute Heart Research Institute Hunter Medical Res Institute New England Area Health The George Institute The Victor Chang Cardiac Research Institute Woolcock Institute Being relaced by i3 (UTS) in 2011/12 Illawarra Health WAIMR WA Department of Health AIBN Centre Clinical Research Diamantina Institute Molecular Bioscience Mater Medical Research Institute QIMR WA (3) Telethon Inst Children’s HR QLD (7) QLD Department of Health 3 A structured and consistent review process Member Institute 1 Member Institute 2 Member Institute 3 Member Institute ……29 Member Institutes identify opportunities within their institute and bring them forward to the investment Review committee Investment Review Committee (IRC) Investment Review Committee is comprised of a representative from each member Institute and the Fund Manager Investments are recommended to the Fund Manager Fund Manager completes full due diligence, approves and recommends to Trustee Trustee provides final approval, ensuring that the Fund Manager has completed a comprehensive and consistent review process 4 Technologies reviewed and progressed • 172 Opportunities have been disclosed • 60 have progressed to the detailed review process • 11 investments made and 1 now closing Device/ drug delivery - 15 Therapeutic - 31 Diagnostic - 6 Other - 8 Current Investments The 11 investments in the portfolio are: • BACE Therapeutics - developing novel drug candidates for the treatment of Alzheimer’s Disease • Fibrotech Therapeutics - developing novel drug candidates for the treatment of tissue fibrosis prevalent in a range of chronic conditions. • Fluorotrop - developing a novel assay for determination of HIV co-receptor usage (tropism) • Global Kinetics Corporation - developing a ”wrist watch” data logging device to record success of therapeutic intervention in Parkinson’s Disease • MiReven - in vivo proof of concept studies to demonstrate the clinical potential of a defined micro RNA as a novel anti-cancer agent • Osprey Medical - developed to avoid the often severe kidney damage that can occur during coronary interventions • Global Kinetics – device monitoring therapeutic effectiveness of Parkinsons Disease therapies • Otifex - developing an intranasal betahistine spray for the treatment of Otitis Media with Effusion (OME) in children • Polyactiva - developing an ocular implant for the treatment of glaucoma • SeeD4 - developing a diagnostics test for use with whole blood to determine the CD4 status of HIV positive individuals. • Vaxaas – developing a novel transdermal vaccine patch • Labour Diagnostic project funding – proof-of-concept for the use of the ratio of two pregnancy hormones to predict the timing of when a pregnant woman will deliver her baby MRCF Commitments and Leverage Investee Institute MRCF Committed Co-investment/ Matching Leverage Total $1M $3M $3.2M $7.2M Fibrotech St Vincent’s Fluorotrop Alfred $304,000 SeeD4 Burnet $377,000 Global Kinetics Florey $990,000 $250,000 Osprey Medical Baker $1.522M $10.5M BACE Therapeutics WEHI $620,000 $100,000 Labour Diagnostics Hunter MRI $275,000 $205,000 $480,000 PolyActiva CERA $1M $1.2M $2.2M MiReven WAIMR $647,750 Otifex MCRI $564,000 $304,000 $2.5M $2.9M $1.24M $1.1M $13.3M $720,000 $647,750 $564,000 $1.12M 7 $7.1M Total $30.12M MRCF Board of Directors Directors Affiliation Background Hon. Alan Stockdale (Chairman) Baker Current National President of the Liberal Party Director, Senetas Corporation Director, NSW Treasury Corporation Former Senior Executive, Macquarie Bank Former Treasurer of Victoria Former Barrister Denise Allen Burnet Managing Director, Chelcor Pty Ltd Director of Av Super and Utilities of Australia Former Managing Director of Citigroup Asset Management 20+ years in superannuation and investment Ross King Garvan Managing Director, JBWere Goldman Sachs 20+ years investment banking experience Former senior executive at Anglo American Wayne McMaster Florey Peter Mac Partner, Mallesons Stephen Jacques Head, National IP and Life Sciences Practice Former Managing Partner at Allens Arthur Robinson Winsome Hall Investors Chairman, Zurich Superannuation Director, State Super Financial Services Director, Aria Superannuation Previously, Branch Secretary of large public sector union Hon. Peter Beattie QIMR/AIBN Clemson University and University of Queensland Previously Commissioner to the Americas Previously QLD Premier 8 MRCF Manager - Brandon Capital Partners • Dedicated Life Sciences investment fund manager • Funds under management - $10 million Medical Research Commercialisation Fund – 2007 - $40 million IIF funding for MRCF awarded Nov 2010 - $50 million Innovation Investment Fund – BBF1 – Jan 2008 • The Brandon Team - 7 Investment Professionals (Melbourne/Sydney) - International Venture Partner (US) & Advisor (EU) - Office Manager and CFO • Brandon team all have relevant local and international experience - Scientific (PhD’s) and business (MBA, FINSIA) training - Operational pharma/biotech management, deep drug development experience, business development and technology transfer - Venture investment 9 Lessons learned… • Nearly all early stage opportunities are not investment ready. They often require: -A thorough IP review including Freedom to Operate searches (often by a qualified US attorney) – needs budget allocation - Contact with prospective exit partners (big pharma, med device companies) to understand what they need to see in a data package - Sometimes a refocussing of clinical trial program to a more manageable format (recruitment issues, length of the trial program etc) - Recruit project management expertise - A realistic budget and timetable • This can lead to frustration by the Institute. Need to keep the Institute informed/involved in the process (Stakeholder management) The Challenges…. • Access to co-investors is a major issue (capital scarcity – no new funds being formed) • 10 year closed end funds not aligned to biotech investing. New models needed? • Look at the Californian Institute for Regenerative Medicine. Can we adapt it? • Continuing role for Government. • Long term investing by Government has the potential to produce significant cost savings to the health care budget (indirect returns), Government bond issue? • Capital efficiency is key.