Current Portfolio Investments

Hunter Immunology Ltd

Hunter is developing a new class of immuno-modulator that works by activating the cellular component of the immune system instead of the antibody component. The immuno-modulator, HI-164OV, targets a particular bacterium that is known to exacerbate lung diseases. H.influenzea is an opportunistic pathogen in the respiratory compromised, and associated with problems in COPD patients and asthmatics. COPD is a multi-billion dollar market, and the leading cause of death in smokers.

The IB Fund Team has been monitoring Hunter Immunology, for several years under previous and current management, and due diligence identified value in the company’s immuno-modulator programme. There are several elements of value with this immuno-modulator, with the key advantages being the immuno-modulator’s potential ability to have adjunct and synergic properties with existing therapies, the potential to manage a large patient population and the immuno-modulators first-in-class potential.

HI-164OV has undergone early human trials (n=38;18 subjects, 20 placebo); where in moderate-to-severe COPD patients, there was

• A statistically significant reduction in the number of hospitalisations,
• A significant reduction in the number of prescribed courses of antibiotics following active treatment.  Additional analysis showed also a significant reduction in the total number of days of antibiotic usage,
• A trend towards reduction exacerbations in patients treated with corticosteroids.

The Phase IIa data, particularly the reduced hospital admission, attracted the attention of several pharmaceutical/large biopharmaceutical companies. The IB Fund Team invested in Hunter Immunology to conduct a broader Phase IIb trial. Completion of this trial would allow the company to attract further attention from pharmaceutical companies and allow HI-164OV to enter Phase III studies.

Biota Holdings Ltd

The IB Fund Team has monitored Biota Holdings for several years, and due diligence identified multiple programmes of value within the company. The greatest mid-term value is Biota's second generation influenza therapeutic, the long-acting neuraminidase inhibitor, Laninamivir. Laninamivir provides a longer period of action, which allows it to be administered only once a week, instead of twice daily; as compared to the anti-influenza drugs Relenza™ (GSK/Biota) and Tamiflu® (Roche/Gilead).

Lanimamivir is co-owned with Daiichi Sankyo; who focuses on marketing the product into the Japanese market.

In April 2011, Biota received a US$281 million contract from the Office of Biomedical Advanced Research and Development Authority (BARDA) within the Office of the Assistant Secretary for Preparedness and Response (ASPR) at the U.S. Department of Health and Human Services (HHS) to fund all manufacturing, clinical studies and regulatory costs to take Laninamivir into the US market.

Pharmaxis Ltd

The IB Fund Team’s due diligence identified a management team of the highest quality, and value in Pharmaxis both as an acquisition target due to its focus on respiratory diseases, and as a consolidation vehicle for investigational respiratory medicines. The company has demonstrated a strategic intent to grow organically and by acquisition to become a multinational specialty pharmaceutical company. Specifically, via the recent acquisition of Topigen Inc, the company looks more like a division of a pharmaceutical company. This action increases the probability a Tier I pharmaceutical company would consider Pharmaxis as an acquisition because of its holistic strategic value in respiratory medicine.

Pharmaxis developed a diagnostic test for Asthma, therapeutics for various mucus-forming respiratory disease, including bronchiectasis and cystic fibrosis; as well it recently acquired investigational clinical stage treatments for asthma.

The lead therapeutic, Bronchitol, has completed Phase III clinical trials.  It is awaiting regulatory approval in global markets.

Alchemia Ltd

The IB Fund team’s due diligence identified high value in the two lead technologies. The first value event is the revenues that should be delivered once Dr Reddy Laboratories receives marketing approval for Alchemia’s generic version of Fondaparinux into the US Market.  The second value event is the registration trials upon the reformulated irinotecan anticancer agent.

• There are no other generic versions of Fondaparinux close to, or in, the market. Only branded Fondaparinux (Arixtra®) is marketed.
• The company has completed Phase IIb clinical trials on reformulated generic anti-cancer compounds. This reformulation increased the drug’s anticancer activity.

In addition, the company has a carbohydrate drug discovery platform that could speed up identification of drugs, saving pharmaceutical and biotechnology companies many years of product design and millions of development dollars. This drug discovery tool has the potential to generate modest revenues.

HeartWare Inc.

HeartWare developed a superior Left Ventricular Cardiac Assist device. The device is called the HVAD™ pump. The HVAD™ is a life saving device for cardiac failure patients. Heartware also has superior prototypes of the next-generation devices.

At the time of investment there were three such Left Ventricular Assist Device (LVAD) companies of note, addressing end stage cardiac failure patients - Ventracor, Thoratec and HeartWare.

The IB Fund Team’s due diligence indicated that there was significant market opportunity for HeartWare, with few competitors that could challenge HeartWare’s technologies. We identified Heartware as the future leader in the cardiac-assistance sector.

Portfolio Investments Crystallised

Arana Therapeutics Ltd

Acquired by Cephalon Inc

Arana (created by the merger of Peptech Ltd and Evogenix Ltd), was Australia’s leading antibody therapeutic company.  The combination of Peptech’s record of success in licensing technologies resulting in a $200M plus royalty stream, a pipeline of antibodies, access to Domantis’ antibody fragment technology, and Evogenix’s targeted antibody technology; created an internationally recognised, fully integrated, investigational antibody development technology; with the potential to rival the larger US biopharmaceutical companies.

The IB Fund Team’s due diligence identified that Arana represented a fresh pipeline of assets, albeit early, with sufficient cash to acquire a later stage asset and to develop its pipeline to late clinical stage.

The IB Fund Team identified Arana as a company of interest to global biopharmaceutical companies, specifically due to the high number, and value, of acquisitions occurring over the previous few years.

Peplin Inc

Acquired by LEO Pharma A/S

With the senior management changes in late 2008, Peplin complied with the Fund’s investment thesis.

• The science was solid and late stage.  The lead product (PEP005) was in Phase III clinical trials with completed Phase II and preliminary Phase III data suggesting PEP005 demonstrated efficacy.
• The company prepared for acquisition, as demonstrated by the company migrating to the USA,.
• The appointment of a US based and proven dermatology management team that had succeeded in building and selling other dermatology companies,

With these attributes the IB Fund Team was confident Peplin had a high probability it could be acquired within the IB Fund’s investment horizon.

The lead product PEP005 addressed 3 market needs.  Firstly, dermatology companies were being consolidated after years of neglect by the market.  Secondly, no effective and low-toxicity therapies existed for actinic keratosis (AK).  Finally, AK is a common condition in Caucasians.

Acrux Ltd

On Market Transaction

The growing use of hormones, particularly to manage the decrease of endogenous hormones in the middle-aged and elderly, is an emerging trend.  This natural (or surgically caused) hormonal decline has recently been defined as a medical condition.  Acrux’s lead products target decrease oestrogen and testosterone in both men and women, in an exciting new delivery system. Acrux had developed a unique delivery system for many drugs through the skin in a safe effective manner.

The competition for the product is high, but competitors use gels, creams or patches.  In contrast, Acrux used a transdermal ‘puffer’ that enables convenient administration by ‘spraying’ onto the patient’s skin; an important consideration of patients where lifestyle and convenience is important.  As a lifestyle drug, convenience is as important as efficacy, with is the core value of Acrux’s technology.  The IB Fund Team’s due diligence confirmed that convenient application of widely used drugs is the core value proposition Acrux, and the single factor that would drive penetration into the market.

The Fund’s due diligence further identified that for maximum penetration, Acrux would have to license or sell products to one or more multinational company(ies). Acrux had already launched one product (Ellavie™) onto the US market, via a partner, proving the Acrux team not only had the development but commercialisation skill set required to deliver shareholder value.

Acrux is also a Pooled Development Fund structure, which meant any gains made by investors would be tax exempt.

Bionomics Ltd

On Market Transaction

The IB Fund Team’s due diligence identified multiple programmes of value within Bionomics. The two lead compounds are undergoing in-house development, both in sectors of interest to the broad pharmaceutical industry.  The Fund identified that if one or both reached significant milestones. Bionomics would be an attractive acquisition target or be able to secure a company-making out licensing agreement of one or both technologies.

• BNC105 is an anti-cancer drug that has a dual mechanism-of-action causing both the disruption of cancer cell blood vessels, and cancer cell specific toxicity. BNC105 is in the class of therapeutics called vascular disrupting agents (VDAs).
• BNC210 is an anti-anxiety drug. Animal and human studies suggest that this investigational drug is non-sedating, unlike some conventional multi-billion dollar anti-anxiety drugs.
• In addition, the Multiple Sclerosis programme is licensed to Merck Serono, with the potential for up to US$47 million in milestone and commercialisation payments per compound progressed.