Zahra Champion’s view of biotechnology goes well beyond medicine. For her, biotech includes agriculture, the environment, industrial applications and marine.

Also, New Zealand has a proud history in biotech. Glaxo, part of GSK, the pharmaceutical giant, was founded in NZ. The disposable plastic syringe was invented in NZ and an NZ researcher[2] shared the Nobel Prize for discovering the molecular structure of DNA.

The a2 Milk Company (ASX: A2M), dual-listed on ASX and NZX, began life in 2000[3] as a small NZ biotech. A2 Milk, now a global dairy-nutrition company, is capitalised at $3.48 billion.[4] A2 Milk is one of NZ’s most successful companies and an exemplar of applying innovative biotech research to NZ’s traditional industry strengths.  

Champion says more industries can harness NZ’s biotech. “New Zealand’s sweet spot is using our clean-green image and coupling it with unique microbes to create biofuels, bioplastics, synthetic meats and green recycling to support a growing circular and bio-based economy. There is an emerging relationship between sustainability and biotech. NZ also has a small number of established human healthcare biotech companies. Several are going through a significant growth phase.”

Obstacles to biotech growth

However, for all these strengths, NZ has never fully capitalised on its biotech potential. The industry had 211 companies and $2.7 billion of annual revenue, according to the 2020 Aotearoa New Zealand Boosted by Biotech; Innovating for a Sustainable Future study that BioTechNZ published. 

Champion says there are three main obstacles to biotech growth in NZ. The first is the lack of a coordinated national biotech strategy, which the study identified and BioTechNZ advocates for.

The second obstacle is awareness. The NZ biotech sector has suffered from a lack of promotion overseas. NZ biotech research discoveries and its emerging biotech companies haven’t been sufficiently showcased to the world. 

Access to capital is the third obstacle. The study found “access to capital was considered by far the most significant constraint for both commercialisation and research activities”. Most NZ biotech companies relied on funding from their networks or the NZ government. Fewer biotechs raised funds from professional investors. 

Some NZ-based biotechs are raising capital through listing on ASX. In September 2021, Pacific Edge (ASX: PEB) dual listed on ASX. The prominent NZ biotech company is developing and commercialising cancer diagnostics. Capitalised at $664 million[5], Pacific Edge was one of the largest biotech listings on ASX in years. 

Based in Dunedin, Pacific Edge increased the institutional placement that accompanied its ASX listing from NZ$60 million to NZ$80 million after high investor demand. The company’s Retail Offer for existing eligible subscribers was also oversubscribed. Pacific Edge raised NZ$23.5 million, from an initial target of NZ$20 million. 

In July 2020, Aroa Biosurgery (ASX: ARX) sole listed on ASX. The Auckland-based company raised $45 million through an Initial Public Offering (IPO) on ASX, to further develop and commercialise its soft-tissue regeneration technology. 

Other NZ healthcare companies listed on ASX include Adherium (ASX: ADR),  AFT Pharmaceuticals (ASX: AFP), EBOS Group (ASX: EBO),  Fisher & Paykel Healthcare Corporation (ASX: FPH), Living Cell Technologies (ASX: LCT), Neuren Pharmaceuticals, (ASX: NEU),  Oceania Healthcare (ASX: OCA), Summerset Group Holdings (ASX: SNZ), TruScreen Group (ASX: TRU), and Volpara Health Technologies (ASX: VHT).

ASX On The Board asked Champion about the prospect of more NZ biotech companies listing on ASX and BioTechNZ’s work to expand the country’s biotech ecosystem:

ASX On The Board: Zahra, why is capital raising for NZ biotechs still an obstacle?

Zahra Champion: New Zealand does very well in biotech research for a country its size. But our small size can also impede biotechs that need to raise large amounts of capital to grow internationally. There’s plenty of seed capital available for promising biotechs. Often, they will raise up to $5 million to develop laboratory research. It gets much harder when emerging biotech companies need to raise tens of millions from private investors through rounds of capital raisings. 

Investment networks are another issue. For a long time, NZ didn’t have sufficient venture capital or private equity funding for local biotechs. That’s changing as lifescience venture capital firms, such as Brandon Capital Partners (an Australian firm) and other VC firms, focus more on NZ biotech. Generally, we are starting to see more interest from professional and retail investors in NZ biotech. 

Capital-raising experience is another factor. We haven’t had a lot of people in the NZ biotech sector raise large amounts of capital from global investors or take their company through an IPO on ASX or NZX. As the NZ biotech ecosystem expands, we are developing those capital-raising skills and experience. 

OTB: Why is there an opportunity to apply NZ biotech research to the country’s industrial strengths in agriculture, renewables and other areas?

ZC: To develop greater scale in NZ biotech we need to think about its application more broadly across industry and harness our economic strength. In some respects, biotechnology underpins NZ’s economy (the NZ bioeconomy was worth $49.4 billion in 2020[6]). 

There’s so much potential for biotech collaboration in areas that NZ does really well in: breeding new fruit, vegetable, arable and ornamental crops with novel characteristics, animal breeding and genetics for desirable traits and our forestry and wood products. Our knowledge of these technologies can be used create, biofuels, bioplastics, plant-based meats, in cellular agriculture and new medicines are just a few examples. Through biotech, we can help develop industries of the future in NZ.

Think about some of the most successful NZ-listed companies, such as a2 Milk and Fonterra Co-operative Group. They started as biotechs but morphed into something very different and much larger. Aroa Biosurgery began as a biotech and is now a blended biotech and medical-device company. So, being a biotech is often a platform for developing into something else in NZ.

Again, it comes back to building an ecosystem for biotech in NZ, connecting researchers to companies across industries, and improving access to capital. The key is having a nationally coordinated biotech strategy to achieve these goals.

OTB: Do you expect to see more NZ biotechs list on ASX in the next five years? 

ZC: I do. ASX is doing really good work on the ground in the NZ biotech sector. It’s no surprise that companies, such as Aroa, have chosen to go straight to ASX with their listing. Through Blair Harrison (ASX Senior Manager, Listings in Auckland), ASX is meeting with biotechs and raising awareness of capital-raising opportunities through an ASX listing. From my perspective, ASX has been great to deal with. 

The other issue is access to global markets. By their nature, a lot of biotechs are targeting international markets for their product or service. Listing on a larger exchange, such as ASX, makes sense for NZ biotechs with global ambition. They can access a bigger capital pool and larger investor base than they can in NZ.

Also, there’s a much larger research ecosystem in Australia for biotech stocks compared to NZ. We don’t have a lot of investment firms researching emerging biotechs and scoping out opportunities. Research on emerging biotech companies is vital to raise awareness, promote their story and attract investors. 

OTB: How is BioTechNZ helping build the NZ biotech ecosystem?

ZC: We are the peak body for biotech in NZ and joined the NZ Tech Alliance (a group of independent tech associations) in 2018. Our members include small and large NZ biotechs, university research groups and, increasingly, stakeholders such as banks and supporting companies that work in the NZ biotech sector. We have a few Australian-based members and would like to get more. 

BioTechNZ is growing quickly and having a significant impact through our industry research, submissions, media placement, events and our work to connect biotech stakeholders. There’s rising demand from researchers, entrepreneurs, innovators, investors and regulators for BioTechNZ to help connect and grow the NZ biotech industry. 

We’re particularly proud of the 2020 Aotearoa New Zealand Boosted by Biotech; Innovating for a Sustainable Future study. For the first time, we have mapped out the NZ biotech sector. Understanding the size and scale of the sector – and its needs – is an important starting point to build a national strategy to grow the sector. The report highlights just how much potential there is in NZ biotech and its importance to the broader NZ economy. 

BioTechNZ created the first Medical Cannabis Conference for New Zealand (MedCan) and is currently creating a Life Science Conference and Biotech Summit in Wellington (March 2023). The last big conference for the biotech sector was the NZBIO Conference in 2017. 

To learn more about BioTech New Zealand, visit www.biotechnz.org.nz

Sources:

[1] 2016 Scientific American Worldwide Assessment

[2] New Zealand born Maurice Wilkens shared the 1962 Nobel Prize with Watson and Crick for discovering the molecular structure of DNA.

[3] Through A2 Corporation

[4] Based on ASX listing. At 19 April 2022.

[5] Based on ASX share price. At 19 April 2022.

[6] 2020 Biotechnology in New Zealand study