As Australia’s biotech sector matures, investing in life sciences is a capital idea

• AusBiotech’s head of investment says the local life sciences sector has started to find the winning mix of good science, capability and access to capital
• The industry now hosts close to 1600 entities and employs 350,000 people
• The upcoming AusBiotech Invest forum will draw together investors with both private and publicly listed opportunities

AusBiotech head of investment Kerri Lee Sinclair says the success of the local life sciences sector depends not just on good science, but the right capability and adequate capital.

Like the converging circles in a Venn diagram, the three factors are coming together – a virtuous confluence that has eluded the sector in the past.

“They often don’t all happen at the same time,” Sinclair says. “We can have lots of ideas and no science, or lots of science and no capability to execute.

“Or we have the capability and science but might not have the capital required.”

On AusBiotech’s numbers the sector is booming – and the pantheon of the 150 or so ASX-listed biotechs is only the tip of the iceberg.

AusBiotech reckons the life sciences ‘ecosystem’ hosts close to 1600 biotech and medtech companies – double the number of eight years ago.

The sector employs 350,000 people, about 1.7% of the working population – and more than three times the crowd that crammed into the MCG for last month’s AFL Grand Final.

As for ASX listed biotechs, their collective market capitalisation has surged from $50 billion in 2017 to around $250 billion today.

VC whets its appetite for early-stage plays

Crucially, capital is flowing into the sector after some relatively lean years.

According to the Cut Through Report, which tracks local venture capital (VC) activity, biotech/medtech accounted for $86 million of the $812 million of deals in the June quarter, across five transactions.

That makes the sector the third best funded in Australia, behind only fintech and cleantech.

The biggest deal in the space was a $40 million series C round for the unlisted Polyactiva, which is developing an ocular implant for the hard-to-treat eye disease glaucoma.

Five years ago, attracting such big licks of funding would have been nigh on impossible.

Sinclair says generalist VC funds are expanding their mandates to invest in themes such as longevity, chronic disease and women’s health.

“They are realising that (life sciences) is an asset class they need to understand and invest in.”

Speaking from experience

Having recently joined AusBiotech, the Canadian-born Sinclair brings first-hand experience from an earlier growth sector: the internet in the 1990s.

Having started out at search engine pioneer LookSmart in 1997, Sinclair founded her own start-up, AgentArts, in 1999.

The firm sold to Microsoft in 2007 and she moved into executive, board, and investor roles across a range of Australian tech companies going global.

“We are starting to see the same pattern with life sciences,” she says. “Founders build a business, get boards together and exit or partial license their tech.

“They then come back and do it all again or move onto boards or start investing in the sector themselves.”

She says the transition from pure science to raising capital is not as easy as it seems – not that anyone is suggesting it’s a shoo-in.

“But these experienced founders are bringing back experienced boards that know how to get through clinical trials and have regulatory experience.

“The companies are moving from having evidence-backed science to clear commercialisation pathways.”

Sinclair says companies need a different operating mindset to move to commercialisation.

“I have been through the journey and know how hard it is”.

Shortening the odds of success

Sinclair adds that biotech is converging with other emerging disciplines such as data analysis, advanced manufacturing and AI.

“This is fostering innovation and shortening time to market,” she says.

“We are in a really good place for growth of the sector. I’m not saying it’s perfect, but it’s definitely starting to come together.”

In the case of AI, human researchers might pick one out of 50 experiments as likely winners.

“AI will review all 50, including the 49 that didn’t work and bring that into better decision making,” she says.

“Now you might get to 143 experiments and 92 now work. The more data and the less time and money to figure out the innovation, the more innovation you will get.”

The projects that move to expensive human trial stage are more likely to be the worthy ones.

“You can’t derisk the outcomes 100%, but you can get better at picking the good ones.”

AusBiotech Invest

Sinclair was speaking ahead of AusBiotech Invest 2025, a one-day forum to be held in Melbourne on October 21 – ahead of AusBiotech’s broader flagship AusBiotech International Conference starting the next day.

AusBiotech Invest focuses on connecting investors with approximately 25 presenting companies.

A half-and-half mix of private and ASX-listed entities, the companies will speak for eight minutes before making them available to investors who want to learn more.

Sinclair says investors who prefer listed plays can learn much from the private sphere, where the lion’s share of activity takes place.

“A private and public company pitching on the day might have similar purposes,” she says. “This forum is the only place you can see them together.”

AusBiotech expects around 200 attendees, who will also hear from luminaries including:

• ASX head of listings Blair Harrison
• Canadian VC fund Lumira Ventures’ head Gerry Brunk
• Meg Hooton, a former Australian nurse who runs the US contract research organisation IQVIA Biotech

A panel discussion will include representatives from Cochlear, and global and local investment firms Archimed, One Ventures, 5 Horizon Capital and Brandon Capital.

Sinclair says industry participants and investors share an admirable common trait.

“We’re not investing in things that are destructive to the world,” she says.

“These companies are helping to solve some of Australia’s and the world’s most complex health challenges.