Media Coverage AusBiotechâ¨25 March 2009â¨Bloomberg.net Company:â¨Date: Publication:â¨Page: na Cash-Strapped Biotech Failures May Follow Ventracor Collapse March 25 (Bloomberg ) â The failure last week of Ventracor Ltd.â¨sciences industry, may herald more collapses as a global capital drought forces cash-starvedâ¨companies to find partners or wind down. once the "darling" of Australia's life- Almost half the nation's 130 publicly-traded life-sciences companies risk insolvency in the next yearâ¨according to AusBiotech Ltd., a Melbourne-based industry group. Capital raised by listed biotechs plummeted to A$183 million ($129 million) in 2008 from A$943 million in 2007, the group has said. Ventracor, a maker of heart pumps, is the third and biggest Australian life-sciences company to fail inâ¨the past six months as the credit crisis starves research-based biotechnology companies of the cashâ¨they need to develop life-saving medicines and devices. Avexa Ltd., working on a drug to treat HIV,â¨said it needs new capital to complete tests and is looking for partners. "Ventracor is the sign of things to come," said Brigitte Smith, who helps oversee more than A$400â¨million of life- sciences investments as managing director of GBS Venture Partners Ltd. in Melbourne.â¨The next 6 to 12 months "could kill the whole sector," Smith said in a March 20 telephone interview. The maker of heart pumps went into voluntary administration after failing to attract enough money toâ¨continue U.S. trials of its VentrAsisst LVAD pumps for patients with heart failure, the Sydney-basedâ¨company said March 19. It had approached more than 130 potential investors in Australia, the U.S. andâ¨Europe over more than a year, and was also unable to convince its existing owners to buy new stock,â¨the company said in the statement. Once a Darling The shares were halted from trading on Feb. 6 at 8.3 cents, giving Ventracor a market value of A$24.9 million. They were first sold to the public in 1993, and in August 2003 closed at a record high of A$3.08 valuing the company at A$516 million. "It was once a darling stock, and I doubt anything else will come of it," said David Blake, co-editor ofâ¨Bioshares, a weekly report on Australia's life-sciences industry. Investors haven't shied away from the industry completely, even though most companies have yet toâ¨turn a profit. Last week GBS Ventures stopped accepting money for a new A$122.5 million fund. It hasâ¨helped finance three projects and was the main participant in a $24 million fundraising for Peplin Inc.,â¨an Emeryville, California-based developer of a gel to prevent certain types of skin lesions becomingâ¨cancerous. The stock has gained 66 percent in Australian trading this year. Ventracor's demise comes after Portland Orthopaedics Ltdâ¨and knee replacements, went into administration in December. In October the same fate befell Apolloâ¨Life Sciences Ltd., a developer of drugs for diabetes, arthritis and psoriasis. Both are based in Sydney. a developer of prostheses for use in hip Next at Risk Avexa, developing a treatment against a form of drug- resistant HIV, may be among the next at risk,â¨Blake said. The Melbourne-based company said last week it expects cash to dwindle to A$9 million inâ¨June from A$20.5 million at Dec. 31. "We would need a capital injection for our projects to go forward, whether it be through partnership orâ¨capital raising, or a combination," Julian Chick, the company's chief executive officer, said in a Marchâ¨23 telephone interview. Even though the stock surged 81 percent in two days last week after tests showed its medicine, calledâ¨apricitabine or ATC, helped patients, it's still down 87 percent from a record high in March 2007. Avexaâ¨is talking to "more than one" potential partner, Chick said. "If we weren't to get any more capital, and not partner ATC at some stage, then we would have toâ¨consider what we do as far as conserving capital goes," he said. That may include "slowing downâ¨programs, or perhaps taking suboptimal licensing arrangements." Companies with "strategically relevant" products are most likely to survive, said Gordon Black, whoâ¨invests in life- sciences stocks for East West Capital Ltd. in Sydney. "The market conditions are forcing a rationalization," said Black, a managing director. "Companies thatâ¨have something to offer will get through, some will get acquired, and others will wind up. Watch thisâ¨space."
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