The Edge Financial Daily, Oct 29, 2007

US based LSON to set up subsidiary, conduct clinical trials in Malaysia

Cancer treatment company says trials likely conducted via local university collaborations

By Thomas Soon

SAN FRANCISCO: A United States based cancer treatment company Light Sciences Oncology (LSON) is expected to set up a subsidiary in Malaysia by early next year to undertake clinical research in the treatment of diseases.

Venture capital firm and life sciences merchant bank Burrill & Company managing director and general partner Roger E Wyse said that this was made possible via the involvement of the US$150 million (RM510 million) Malaysian Life Sciences Capital Fund (MLSCF), which is jointly managed by Burrill & Co and the Malaysian Technology Development Corporation.

He said that the clinical trials, which will most likely be conducted via collaborations with the local universities, may involve capital investments of up to US$30 million.

“The MSLF is currently invested in the US company based in Portland, Oregon, which expects to launch its IPO (initial public offering) in the next 12 months,” Wyse told The Edge Financial Daily.

He said MSLF would exit from LSON via IPO and together with other venture capital firms, it expected to invest directly in the LSON locally incorporated subsidiary.

He said that in line with the MSLCF’s mandate, the investment in LSON would result in the bringing in of technology and foreign investment into Malaysia.

“Other than cancer, that treatment system could also applicable to the treatment of other disease,” said Wyse, who is the co-chairman of the fund and a member of the Malaysian government’s international advisory panel on biotechnology.

He said that LSON was undertaking phase three clinical trials if the light-activated treatment for solid tumors, which includes a medical instrument that was designed by Pentamaster Corporation Bhd in Penang.

MSLF also invested in another company, the Cobalt group, which is involved in the research in the continuous production of biobutanol via the utilization of microbes. MLSCF closed the fund size on Nov 21, 2006.

Up to 70% of MLSCF will be invested directly in Malaysia-centric local and foreign biotechnology companies, and the rest will be fed into Burrill Life Sciences Capital Fund III (BLSCF III).

Wyse said that MLSCF was now invested in five foreign companies via BLSCF III. It expects to invest in a local Malaysian company by year-end.

He also said that MLSCF, whose shareholders now comprise local institutions, expected to raise another US$50 million, half of which may come from a financial group in the United Kingdom and the rest from two other local institutions.

“Biotechnology is a capital intensive space. Our investments involve the bringing together of other venture capital funds.

“We want to ensure that we have adequate capital to be the single largest new VC funds in those investments,” Wyse said, adding that this would ensure that MLSCF has the bargaining power in negotiating terms and the securing of board seats.

The 10-year MLSCF is expected to be fully directly invested in between 12 and 15 companies in over three years, and an additional 20 companies via BLSCF III.

“What we invest in must be attractive in terms of returns and it must help Malaysia grow in the local (biotechnology) industry,” Wyse said.

He said Burrill also collaborated with the Malaysian Biotechnology Corporation Sdn Bhd in the sharing of deal flows.

Wyse said certain deals that may not fit into MLSCF’s criteria, but could be a good fit for Biotech Corp’s vision for the development of the local industry.