STARPHARMA (SPHRY)

[ImpulsivWunder]

Local biotech shines through overseas listing (from Austrailia)

Thursday, 13 Mar 2008 12:13PM

ASX-listed biotechnology firm Starpharma may not have flagged much interest from local investors, but the company has attracted the attention of US funds.

According to Jackie Fairley, chief executive of Starpharma, targeting US investors was a “natural avenue of support”, particularly when local investors continue to shy away from the biotech sphere.

“Biotechnology is still a relatively new sector to invest in and there is low investor understanding of the development timelines of biotechnology companies. This is partly because there is limited institutional support for biotech which puts you in the hands of the retail market, which is often volatile,” said Fairley.

Starpharma first opened its doors to American investors in 2005 when it launched a level one American Depositary Receipts program. The firm’s issued capital grew by over 10 per cent over a two-year period before Starpharma’s OTCQX – a US listing service – debut on 26 March last year.

Fairley said the firm saw an increase of over 55 per cent in trading volume “almost immediately” following its launch on the OTCQC. Approximately 25 per cent of the company’s shares are now held by US investors, with The Dow Chemical Company listed among the company’s largest shareholders.

“We recognise the limitations of just relying on domestic investor support in such a specialised sector,” said Fairley.

Biotech also sits at the speculative end of the market, which makes it a vulnerable target when the broader market is depressed, she said.

“By accessing US investment we are fundamentally diversifying our investor base and accessing investors with much better understanding of biotechnology, a greater number of specialist professional funds and a much larger pool of general capital generally,” said Fairley.

US investment firm Platinum Partners for instance invested $2.8 million in Starpharma last August.

“We invest in companies that we feel have the correct risk reward ratio based on our internal subjective measures,” said Michael Goldberg, principal of Platinum Partners.

Ruth Liew