Australian biotech’s biggest money makers

The biotech sector has delivered big time for some of its key players.

Summary: The biotech sector is known for its inherent risk, but some have done very well and so have their shareholders. Below is a listing of the biggest financial winners from the Australian biotech sector.
Key take-out: Not all of the biggest players have crystralised their gains, but more than half have.
Key beneficiaries: General investors. Category: Growth.

Who would have thought there was so much money made from Australian biotech?

The story below is an edited extract from a special 500th edition of Bioshares, the specialist investment publication run by editor David Blake. (David has also been an occasional Eureka Report contributor). As David says of the sector he has covered over the last 13 years, “Failure has been a consistent feature (in biotech, pharma and healthcare companies). That’s what you would expect from a high-risk sector: But there’s also been a tendency to throw the baby out with the bathwater!”

Indeed, it’s fair to say a close look at these tables is inspirational, not just because some of these entrepreneurs and biotech IPOs have made great returns for their investors, but also since it reveals a sector that puts Australian innovation and scientific technique on the global stage. Let’s hope we’ll see lots more companies such as CSL, Mesoblast and Cellestis in the near future. (Eureka Report managing editor James Kirby).


One of the metrics for determining the success of an emerging sector such as biotech is to look at whether key players in that sector have enjoyed financial success. In the table below, we list some of the big financial winners from Australian biotech over the last decade.

Some of the gains in the table can still only be considered a paper gain. However 14 of the 21 people in this list have already crystalised substantial gains, either selling stock on market and with nine having prospered through acquisition of the businesses they held shares in.

Topping the list is Mesoblast founder and CEO, Silviu Itescu, with a total net worth of $412 million, with the majority of that held in company scrip. Second on the list is Sirtex Medical founder Bruce Gray, with a net worth of $149 million. Gray has already realised $50 million of that gain from sale of shares and maintains an 18% stake in the business.

In third and fourth places are David and Paul Duchen, who founded the generics business Arrow Pharmaceuticals which was sold to Sigma. The Duchens made in excess of $200 million from the business. Their timing was exquisite, their business plan was perfect and their execution was textbook.

Former CSL CEO, Brian McNamee, is in fifth place. McNamee sold $17 million of shares in 2004 and at last record still holds just under $52 million in shares, giving him a net current value of $71.4 million. Axon Instruments founder and now Chancellor of Monash University Alan Finkel made an estimated net gain of around $US64 million from the sale of that business to Molecular Devices. This calculation assumes Alan held on to half of his Molecular devices shares for 2.5 years, when that company doubled in value because it was also acquired.

The gentlemen from Cellestis, Tony Radford and Jim Rothel, made a very tidy $47.9 million profit when their TB diagnostic business was acquired by Qiagen in 2011. Rothel and Radford partially have CSL boss Brian McNamee to thank for that, with the technology being spun out of from CSL.

The acquisition of diagnostic technology group Vision Systems has put three people on this list. They are CEO Jim Fox, who exited with $16.9 million, director Bruce Parncutt with $6.6 million and executive Finance Director Euan Pizzey with $6.3 million.

Not surprisingly Acrux has delivered some significant wealth for its inventors and management. Inventor Barrie Finnin has, we assume, largely exited with a net gain estimated at around $15 million. Former CEO Richard Treagus has increased his wealth by about $8.6 million, based on his last reported holdings. And inventor Tim Morgan cashed out his 8.8 million shares arguably a little early between 2005-2007, netting an estimated $7 million.

Nanosonics is set to increase the net wealth of a number of its management and investors. Chairman Maurie Stang is sitting on a scrip value of $11.5 million. His brother Bernard is doing slightly better at $11.6 million. Nanosonics investor Steve Kritzler is sitting on $9 million worth of shares.

Genetic Technologies founder has just under $10 million of shares in that company. QRxPharma CEO and founder John Holaday has an $8.4 million stake in that business. Phosphagenics' Co-CEO and founder Harry Rosen has a shareholding worth $7.7 million.

And the scientist behind the successful biotech Peplin emerged with a $6.4 million gain.

Biggest Personal Winners from Australian Biotech Commercialisation, 2000-2013

Person

Company

Position

Notes

Value of shares sold to date     ($M)

Estimated value of current and past holdings ($M)

Silviu Itescu

Mesoblast

Founder & CEO

Includes $12.9 million of shares sold in 2007 at $2.15/share

$12.9

$412.8

Bruce Gray

Sirtex Medical

Founder and inventor

Maintains 18% holding in SRX

$50.1

$149.0

David Duchen

Arrow Pharmaceuticals

Former Chairman & Founder

Based on estmated exit prices from sale in Sigma shares

$115.0

$115.0

Paul Duchen

Arrow Pharmaceuticals

Former CEO & Founder

Based on estmated exit prices from sale in Sigma shares

$88.0

$88.0

Brian McNamee

CSL

Former CEO

Last reported holds 835,669 shares in CSL

$19.7

$71.4

Alan (& Elizabeth) Finkel

Axon Instruments

Former CEO

Assumes held shares until Molecular Devices was acquired in 2007, in USD

$64.0

$64.0

Tony Radford

Cellestis

Founder and former CEO

Sold in 2 tranches, first $4.2 million then remainder at $3.80 acquisition price

$47.9

$47.9

Jim Rothel

Cellestis

Founder and former Executive

Sold in 2 tranches, first $4.2 million then remainder at $3.80 acquisition price

$47.9

$47.9

Jim Fox

Vision Systems

Former CEO

Based on acquisition price of VSL of $3.75

$16.9

$16.9

Barrie Finnin

Acrux

Inventor

Estimate on shares sold between 77 cents and $3.50

$15.4

$15.4

Bernard Stang

Nanosonics

Shareholder

Based on current holding

$0.0

$11.6

Maurie Stang

Nanosonics

Chairman

Based on current holding

$0.0

$11.5

Mervyn Jacobson

Genetic Technologies

Founder

Based on current shares held of 127 million

$0.0

$9.9

Steve Kritzler

Nanosonics

Shareholder

Based on current holding

$0.0

$9.0

Richard Treagus

Acrux

Former CEO

Based on last known holding of 2.08 million shares

$0.0

$8.6

John Holaday

QRxPharma

Founder & CEO

Currently holds 7.6 million shares

$0.0

$8.4

Harry Rosen

Phosphagenics

Joint CEO

Currently owns 64.2 million shares

$0.0

$7.7

Tim Morgan

Acrux

Inventor

Estimate based on shares sold between 2005-2007 for 60-77 cents per share

$7.0

$7.0

JB Parncutt

Vision Systems

Former Director

Based on acquisition price of VSL of $3.75

$6.6

$6.6

James Aylward

Peplin

Inventor

Based on acquisition price of $1.03

$6.4

$6.4

CE Pizzey

Vision Systems

Former Executive

Based on acquisition price of VSL of $3.75

$6.3

$6.3

Best Australian Biotech Listings

The table below lists the best ever performing biotech listings on the ASX. There have been some stunning performances, however only 10 from the approximate 130 listings have seen their share price more than double over that time.

Once again the impact on financial market conditions from the GFC cannot be ignored. Approximately 40% of biotech companies that listed have either been delisted, changed business focus, or a have acquired a new biotech business development activity.

CSL has been the standout success in the sector, delivering almost an eight 80-fold gain from when the company listed in 1994. The consolidation of the blood products industry through two, large, well-executed acquisitions has delivered stunning success for the company.

Bionic ear company Cochlear has delivered an extremely impressive return for investors also since it listed in 1995. The company's share price has increased 25-fold over the last 18 years.

Cellestis, which was acquired in 2011, experienced a 1400% increase in share price during its time on the ASX. Mesoblast to date has recorded over a 1000% gain in price. Sirtex Medical has delivered just short of a 900% gain. Medical Developments to date has achieved a 540% increase from listing, with most of that gain having occurred in the last 12 months. And Heartware, Arrow Pharmaceuticals and Acrux have delivered shareholders a gain of between 300%-400% since listing.

Top Performing ASX Biotech Listings

Date of Listing

Company

 Listing Price

 Current/ Final Price

Change

Current Value $1,000 Invested at Listing

Notes

1994

CSL

$0.77

$61.91

7975%

$80,752

 Note 3 for 1 share split

1995

Cochlear

$2.50

$65.19

2508%

$26,076

2001

Cellestis

$0.25

$3.80

1420%

$15,200

Acquired in 2011

2004

Mesoblast

$0.50

$5.82

1064%

$11,640

2000

Sirtex Medical

$1.00

$9.82

882%

$9,820

2004

Medical Developments

$0.25

$1.60

540%

$6,400

2005

Heartware

$0.50

$2.36

372%

$4,720

2002

Arrow Pharmaceuticals

$2.75

$11.60

322%

$4,218

Acquired by Sigma in 2005. Note five for one share split

2004

Acrux

$1.00

$4.12

312%

$4,120

2000

Peplin

$0.40

$1.03

158%

$2,575

Acquired in 2009

2000

Axon Instruments

$0.20

$0.36

80%

$1,800

Acquired in 2004


This is an edited version of an article published in the 500th edition of Bioshares, released this week. Author Mark Pachacz is Research Principal for Bioshares. Go to www.bioshares.com.au

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