Biotech’s bright hopes

After a rough few years for the Australian biotech sector, it’s worth checking in on the industry again and celebrating some of the small but important wins being enjoyed by its leading lights.

Yesterday there was a very positive announcement from Victorian biotechnology company Acrux, which focuses on developing drug delivery technologies that allow drugs to be administered through the skin via sprays and liquids.

The company said it had received regulatory approval from Swiss authorities to start marketing Acrux’s product Ellavie, a spray that helps treat menopause symptoms.

The spray has marketing approval in the key United States market and Sweden; the latter approval means Acrux can seek marketing approvals in other European countries through a system where approvals in one European country are recognised in other ones.

The company is now on the hunt for potential marketing and distribution partners in the European Union. The company says the estrogen therapy market outside the US is valued at $US360 million a year.

The Ellavie product sits alongside Axiron, a treatment for men with low testosterone levels that is delivered via an underarm roll-on.

This company is already on the market in the United States and a few weeks ago Acrux’s marketing partner, pharmaceutical company Lilly, told a JP Morgan healthcare conference held in January that Axiron had “achieved 10% share of market in total prescriptions and that over one in five new patient starts are going to Axiron.”

Acrux’s announcement comes after a pretty reasonable period for the Australian biotech space.

It all started in December 2010 when drug developer Mesoblast announced that a US drug company called Cephalon would buy a 19.9% stake in the business for $220 million to gain access to the company’s products. Cephalon made an upfront royalty payment of $130 million and could make payments of $1.7 billion after certain milestones are achieved.

More recently, we’ve seen a bit more money coming back into the sector. BioMD listed on the ASX in the middle of last year after getting support from mining billionaire Andrew Forrest. In November, Biosceptre International Limited announced it had raised $8 million for its cancer drugs.

Make no mistake, the biotech sector is still a very tough place to do business. Reports out of the JP Morgan healthcare conference suggest that big, mainstream investors have not returned to the sector after fleeing when the GFC hit in 2008.

But specialist firms are starting to invest again. Industry website Fierce Biotech spoke to Dave Rosa, CEO of device company Sunshine Heart which is listed on the ASX.

He said that while venture capitalists are still wary of the sector’s risk profile, there is money around.

“In 2008, you couldn’t raise money at this stage under any circumstances,” he told Fierce Biotech during the JP Morgan event. “But it is easier to raise money now.”

The catch, of course, is that valuations are much lower – something that’s happening across many sectors.

But at least the money is flowing. That will help Australia’s biotech sector to continue to tick off small milestones on the way to big wins.