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biota targets rivals

  1. 4,756 Posts.
    Sourced from "The Australian"

    By Geoff Easdown
    August 18, 2003

    TECH boom high-flyer Biota is actively engaged in merger talks with several locally-based rivals.

    Chief executive Peter Molloy said such consolidation was needed to help stem the cash and brain drain of new Australian drug discoveries.

    While refusing to name targets, the one-time scientist made it plain his once-troubled biotech now had the institutional muscle to embark on this adventure.

    He pointed to Biota's budding relationship with overseas merchant banker Babcock and Brown.

    The banker, with a $US200 billion ($304 billion), 30-year record of deal-making, recently snapped up a 7.5 per cent stake in the Australian biotech and a seat on the Biota board.

    Mr Molloy said Babcock and Brown was committed to the strategy. He said, noting with some emphasis, that it was Babcock and Brown that approached Biota to help its quest to foster Australian biotech consolidation. "It was a marriage of like-minded people," Mr Molloy said.

    His long-term plan involves building a well-resourced Australian biotech robust enough to avoid having to sell compounds too early.

    The ideal would be to take discoveries to second-stage clinical trials before entering partnerships with overseas drug companies.

    The picture he presented was markedly different from the one that confronted the company a few months back. While he admitted Biota was still burning cash, he appeared brimful of confidence, talking openly of next-stage and long-term developments.

    In March Molloy and his fellow directors were facing off against a would-be raider who was seemingly hellbent on winding the company back to grab hold of its $24 million war chest.

    West Australian businessman Farooq Khan was defeated in May, Babcock and Brown dipped its toe into Australian biotech waters for the first time in June and flagged what market watchers knew would be an attempt to bring about the industry's consolidation.

    Along the way Biota also announced a cross licensing deal with Sankyo for its Flu Net product and separately accelerated attempts to "partner" its common cold program with a major overseas drugs firm.

    Biota's US operation has also begun seeking partners for its AZT-mimic program, which aims to develop a new HIV/AIDS drug.

    "We have 16 companies targeted as potential partners and we're allowing ourselves 12 months to complete the task," Mr Molloy said.

    The mood change seen in Mr Molloy this past week was similarly reflected in Biota's share price.

    Biota stocks which slumped to 33.5¢ in March have almost doubled, closing at 66¢ on Friday.

    With two teams of 16 scientists working on drug research on both sides of the Pacific, Biota believes it is able to put its American connections to advantage by developing partnerships with the big pharmaceutical companies with the money to take Australian developed compounds through expensive clinical trials.

    But winning better deals in partnership program would involve Australian biotechs taking their own discoveries through to further stages of development, not selling off the newborn, he said.

    "What we do in this country is that we sell off our first born very early because we need the funding," Mr Molloy said.

    Cheers,

    Fig Jam

    I don't hold BTA
 
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