Biotechnology investing for the social good – making money and a difference

Biotechnology investing provides investors chance for capital growth and to do social good ticking ESG boxes
Ausbiotech receives increasing enquiries about gifting, bequesting or investing in medical companies for social good
Presicent said developing life-changing therapies is challenging undertaking requiring resources and resilience

There are many foundations and charities which aim to tackle health conditions through funding medical research to develop better treatment options, improve patient outcomes and quality of life.

People often bequest money in their will to these organisations, donate after a loved one has been struck down by a particular illness or at funerals ask for donations to a an organisation in lieu of traditional flowers.

And while these organisations do great work, what about considering investing directly in medical companies for the greater good? Biotechnology investing is one sector which stands out for not only potential to deliver quality returns but also contribute positively to society.

Australia’s biotech representative body AusBiotech CEO Lorraine Chiroiu told Stockhead many of us unfortunately have a personal connection to catastrophic disease and, motivated by our experiences, are seeking avenues to put our philanthropic and investment dollars where we can make a meaningful and sustainable difference.

“AusBiotech is receiving increasing enquiries from people who want to gift, bequeath or invest in a way that gives the best chance of new medical treatments and cures making their way to people experiencing disease,” she said.

“For example, we recently received a call from a father whose only son had passed away from cancer. Nobly, he wanted to make a purposeful investment into a company working to provide treatment for the disease that took his son in the hope that other families wouldn’t have to go through the same suffering as his family.

“Indeed many biotech companies have been founded by grieving family or friends that are passionate about finding a cure for a disease that took their loved one too soon.”

Business foundations ‘influenced by a strong value-driven purpose’

Chiroiu said biotechnology companies are the vehicles that move medical research along the translation and commercialisation pathway to patients.

“Companies operating in the life science and medtech sectors are in a unique position where business foundations are often influenced by a strong value-driven purpose – one that offers positive social impact as the company develops life-saving and life-enhancing technologies.

“Focusing clearly on patient impact, social good is codified into biotech companies’ DNA and are a great avenue for ethical investors to consider diversifying their portfolio.”

She said we are living in an age of profound acceleration in medicinal discoveries and healthcare options, as well as a time that the Covid-19 pandemic has brought biotechnology – especially in the form of vaccines – into sharp focus.

“As we emerge from the pandemic, the chronic health challenges and increasing burdens of disease associated with ageing populations around the world has many of us wondering how we can help move medical research from the bench to the bedside – the answer is via business,” she said

Australia’s biotech industry is on a strong growth trajectory, through substantially increasing numbers of organisations. Figures released by AusBiotech show the sector has grown 43% since 2019 and 60% since 2017.

“Amid a thriving and expanding biotech industry in Australia, feeding the need for commercialisation, clinical development and growth is key and the diversity of investment sources remains a pressing issue,” Chiroiu said.

“Capital is the lifeblood of these companies and in response to this increasing need, AusBiotech has bolstered its investment program with a goal that Australian and overseas investors increasingly see Australian life sciences research and small-to-medium enterprises as viable and attractive investment options.”

Biotechnology investing ticks ESG boxes

Global X head of investment strategy Blair Hannon told Stockhead biotechnology investing is well positioned to tick the boxes of environmental, social and governance (ESG) considerations of both institutional and retail investors.

“For environmentally minded investors, the biotech industry has a low carbon footprint as most work is research-driven and not energy-intensive and as such, adding biotech exposure can help lower the average carbon footprint of a portfolio,” Hannon said.

“The biotech industry is highly regulated – as measured by the S&P Biotechnology Select Industry Index – and is free of any violators of the UN Global Compact (UNGC), which is a widely-followed benchmark of corporate good behaviour.”

Hannon said alongside many other sectors, biotechs are striving towards ESG targets. Whilst a diversified biotech ETF such as its S&P Biotech ETF (ASX:CURE) is not explicitly tracking an ESG framework, Hannon noted many biotech companies within the fund focus on social good as their technology aims to aid people from all walks of life with disease treatments or even eradication.

Aiming to delivering both shareholder value and game-changing therapies

Prescient Therapeutics (ASX:PTX) CEO and managing director Steven Yatomi-Clarke told Stockhead bringing life-changing therapies to patients is an incredibly challenging undertaking that requires resources and resilience.

PTX is at the forefront of game-changing personalised cancer treatments with a strong pipeline of promising therapies. The company has a growing list of collaborations with leading cancer organisations globally including Peter McCallum Cancer Centre, University of Texas MD Anderson Cancer Center, Yale, Oxford and UPenn.

“Companies brave enough to take on this challenge call on investors to fund the research and development – at least, until they become profitable,” he said.

“But at Prescient, when we accept a dollar from an investor, we are focussed on growing that into more than one dollar.”

He said in the last two years, Prescient has spent around $8m of shareholder funds, but through consistent delivery of milestones and progress, the company has translated this $8m into over $100m of shareholder value.

“So shareholders have enjoyed a handsome financial return, but additionally, they can be satisfied in knowing that their investment has resulted in incredibly exciting progress to create therapies that we believe are going to change lives.”

AusBiotech is aiming to educate potential investors in life sciences companies about the unique ecosystem, through in-person events such as its AusBioInvest 2022 in Perth in October as well as plain English resources including The Guide to Life Sciences Investing

At Stockhead, we tell it like it is. While Prescient Therapeutics is a Stockhead advertiser, it did not sponsor this article.