Source : THE AGE NEWS
In biotech, discovering something that can change medicine might just be the easy part. Getting it from a laboratory bench into a hospital, or pathology clinic can actually present as many, if not more challenges than uncovering the discovery itself.
Imagine a hypothetical ASX junior we’ll call XYZ Bio. Its scientists have discovered a molecule they believe could treat an aggressive cancer. Laboratory results look terrific, management understandably gets excited and investors start reaching for their calculators. A simple rejigging of the pit shell and cut-off grades against today’s much higher gold price could potentially add fresh ounces that were previously considered uneconomic, essentially hiding in plain sight.
Well, maybe.
XYZ Bio doesn’t have a medicine yet. What it has is a promising scientific proposition.
Between that discovery and the first commercial sale sits one of the toughest obstacle courses in business. Laboratory research, pre-clinical testing, human trials, manufacturing, regulators, intellectual property, mountains of capital, and eventually, convincing doctors and patients the product is actually worth using. And there is no single course through this heady maze.
Drugs, vaccines, diagnostics, medical devices, cell and gene therapies and medical software can all take different routes to market. What they all share however, is the need to progressively turn scientific promise into hard evidence. For investors, knowing exactly where a biotech sits on that journey can be every bit as important as understanding the science itself.
XYZ Bio starts in the laboratory.
Scientists identify a biological target, develop something designed to influence it and begin testing whether the theory stacks up. That can progress into pre-clinical studies examining activity, dosing, toxicity and how a potential treatment behaves inside a biological system.
On paper, the road from there looks remarkably orderly. But biology frequently has other ideas.
Something can perform beautifully in a laboratory dish or animal model and behave very differently in a human being. That makes building the evidence required to bridge laboratory science and clinical development a critical early hurdle.
NeuroScientific Biopharmaceuticals is currently negotiating that part of the journey through its work across immune-mediated inflammatory and neurological conditions, building the scientific and pre-clinical evidence required to advance its technologies towards clinical application.Interestingly, the company today announced that it was sitting down with the FDA at the end of August where the FDA will review the company’s clinical,scientific and product development plan for its StemSmart product for Crohn’s disease to make sure its up to scratch for a formal Investigational New Drug submission slated for the end of this year.
To be clear, pre-clinical evidence isn’t second-rate evidence. It is answering an important earlier set of questions; whether the biology is sufficiently compelling, whether a potential treatment produces the intended effect and whether the evidence supports taking the next step. The considerably more expensive question of what happens in humans comes later.
Perth-based Argenica Therapeutics has already crossed that divide with ARG-007, its neuroprotective peptide. After extensive pre-clinical work, ARG-007 moved into its first human safety study and then progressed into Phase II testing in acute ischaemic stroke patients.
And the questions being asked are changing along the way.
First, is the scientific proposition worth pursuing? Then, can humans safely tolerate it? Only then can the clinical program start to address the question shareholders ultimately want answered; which is can the treatment improve outcomes in patients?
For a conventional drug, that progression broadly runs through Phase I, Phase II and Phase III trials.
Phase I generally concentrates on safety, tolerability and dosage. Phase II starts providing more meaningful evidence about efficacy while continuing to assess safety. Phase III typically tests the treatment across larger populations and provides pivotal evidence necessary for regulatory approval.
And with every step, the stakes, and usually the bills, get bigger. Which is why “positive trial” should never be the endgame of anyone’s reading of an ASX announcement. What was the trial designed to prove? Was its primary endpoint met? How many patients were enrolled? Was there a control group? Was the improvement clinically meaningful and statistically convincing?
An encouraging signal from a small group of patients and compelling evidence from a large, controlled study are very different beasts.
Amplia Therapeutics is negotiating that clinical-development hurdle with narmafotinib, its lead drug candidate for pancreatic cancer. Its Phase 1b/2a ACCENT study has generated high quality clinical evidence, including an outstanding objective response rate of 35.9 per cent among 64 patients receiving the 400mg dose showing a deep reduction in tumour size, along with a vanishingly rare five responses where the cancer completely disappeared. Median overall survival was reported at 11.1 months representing a significant 30 per cent improvement on chemotherapy alone.
Those highly encouraging results have allowed Amplia to turn its attention to the next stage of development as it builds the further evidence required to potentially progress towards a registrational Phase III study.
That is how biotech value can be built; one successful stage providing the evidence and confidence needed to attempt the next, usually more difficult and expensive, one. But then, somebody also has to pay for it.
For a small ASX biotech without significant commercial revenue, cash runway can become almost as important as clinical runway. Capital raisings, licensing agreements and pharmaceutical partnerships can all form part of financing an expensive development program.
Dilution isn’t necessarily a bad thing. The better question is what the new money can potentially achieve before the hat needs to be passed around again. And while the clinical trials are attracting the headlines, another question critical to the development puzzle is probably being asked behind the scenes – who is going to make the stuff?
Manufacturing doesn’t suddenly appear after Phase III. A developer needs suitable material for pre-clinical work and clinical trials, with manufacturing standards, consistency and quality requirements becoming progressively more demanding as the product moves closer towards market.
That challenge becomes particularly complex with biologics and sophisticated DNA and RNA medicines. Perth-based Syngenis is building capability in precisely this part of the pathway, specialising in synthetic DNA and RNA molecules known as oligonucleotides used across therapeutic, diagnostic and research applications.
For products destined for clinical use, Good Manufacturing Practice (GMP) becomes crucial. Strip away the regulatory language and the principle is straightforward, you need to be able to make the right product, the same way, repeatedly and to the required quality.
Syngenis is developing its manufacturing capability towards clinical-grade production, positioning the business to participate in a part of the biotech value chain that becomes increasingly important as DNA and RNA therapeutics advance. It is also developing a broader platform approach around oligonucleotide discovery and manufacture, potentially allowing it to participate across multiple products and development programs rather than staking everything on one drug.
For XYZ Bio meanwhile, the clinical evidence is eventually assembled. Management might be eyeing the champagne fridge. Shareholders might be eyeing their calculators. But crucially, the regulator is eyeing another pile of evidence. Approval isn’t the end of regulatory oversight. Medicines continue to be monitored after reaching the market because rare safety issues can sometimes emerge only when much larger populations start using them.
That, broadly, is the conventional drug highway: discovery, pre- clinical evidence, human trials, increasingly demanding manufacturing and quality requirements, regulatory review and eventually, if all goes well, approval.
But plenty of biotechs aren’t driving down that exact road. Vaccines travel through a broadly similar pre-clinical and clinical framework, although the equation changes because they can ultimately be administered to enormous numbers of otherwise healthy people. And because of this, the pathway vaccines have to tread can diverge quite significantly.
Safety becomes paramount and developers need to demonstrate immune response effectiveness and manufacturing consistency. Government procurement, public-health recommendations and competing products can then become important parts of the commercial equation.
Head across to diagnostics and again, the road looks like a different proposition. Perth-based Proteomics International is negotiating that pathway through its Promarker platform, which uses protein biomarkers to develop diagnostic tests targeting diseases including diabetic kidney disease and endometriosis.
A diagnostic doesn’t necessarily march through conventional Phase I, II and III trials. Instead, developers need to prove that the test reliably does what it says on the tin. At this point, two numbers suddenly become very important; sensitivity and specificity.
In simple terms, how good is the test at finding people who have the condition and how good is it at avoiding false alarms among those who don’t?
Proteomics has progressively worked through that evidentiary pathway with clinical validation of its Promarker technology while also building intellectual-property protection around its diagnostic pipeline.
PromarkerD has moved through to commercialisation, while PromarkerEndo has continued advancing towards commercial readiness and secured US patent protection, an important piece of the puzzle in the world’s largest healthcare market.
Clearing those scientific and intellectual-property hurdles then brings a diagnostic developer to the commercial ones, getting pathology providers to offer the test, doctors to order it and healthcare systems to potentially reimburse it.
Medical devices and software take us down another branch. Perth-based Singular Health has been working its way through that pathway with 3DICOM, its technology for converting conventional medical images into advanced three-dimensional visualisations.
Its desktop 3DICOM MD received US FDA 510(k) clearance, the official green light to sell a medical device, in 2022 and its cloud-based 3DICOM MD Cloud followed in January this year. Those clearances represent significant regulatory milestones and open opportunities in the enormous US healthcare market.
There were no conventional Phase I, II and III drug trials because the regulatory hurdle was different. Medical devices are generally regulated according to the risks they pose, while software itself can qualify as a medical device depending on its intended purpose.
Across Perth, Resonance Health offers a glimpse further down that road. Its medical-imaging technologies have progressed through development and regulatory clearances into international healthcare markets. For Resonance the challenge has shifted from getting technology approved to building commercial activity around it.
Then there are technologies that make swallowing a tablet seem positively quaint. Cell therapies, gene therapies and gene editing can involve modifying cells, introducing genetic material or attacking disease through entirely different biological mechanisms.
Arovella Therapeutics has been negotiating that particularly complex pathway with its off-the-shelf CAR-iNKT cell-therapy platform targeting cancer. Advanced therapies can bring development, manufacturing and clinical delivery much closer together. Pre-clinical evidence has to be assembled, the therapy manufactured to the required standards, regulators satisfied, ethics approvals secured and clinical sites prepared before the first patient can be treated.
Working through those steps is itself a major development exercise and demonstrates why an announcement saying biotech is “moving towards the clinic” can cover a considerable amount of territory. Different roads, then, but ultimately they all arrive at the same point being posed the same commercial question. Can somebody build a market for the product?
Perth-based Orthocell provides a useful example of how a company tackles that transition. Its Remplir nerve-repair product received US FDA 510(k) clearance in April 2025, opening the door to the enormous American market.
The company has since been putting the pieces required for commercialisation in place, including manufacturing, US warehousing, order processing and distribution, alongside engagement with the surgeons who ultimately use the product.
That is a different skill set from laboratory discovery or running a clinical trial, but no less important to the final outcome. FDA clearance opens the door. Manufacturing, distribution, reimbursement and clinician adoption help a company walk through it.
Back at XYZ Bio, the same commercial reality eventually arrives. After years of research, trials, manufacturing work, regulatory scrutiny and capital raising, it finally has a cancer drug it is legally allowed to sell. Now it needs doctors to prescribe it, healthcare systems to pay for it and patients to benefit from it.
And this is where biotech investors can sometimes get ahead of themselves. A company announces a breakthrough, the share price jumps and suddenly everyone is multiplying a gigantic addressable market by five per cent and buying a new boat on paper.
The better question is much less exciting. What has actually been proven? Where is the company on the obstacle course? What hurdle has it just cleared? What other hurdles need to be jumped? What will getting there cost? And if everything works, who is going to pay for it?
Taken together, the Australian companies scattered along our obstacle course show just how many different battles can sit between a bright idea and a commercial product. NeuroScientific is building the pre clinical evidence needed to move to Pre Investigational Drug status and from there to Phase 2 trials in humans. Argenica has crossed from clinical development into human Phase 2b trials and Amplia is at the clinical stage progressing to 1b/2b clinical trials to keep pushing narmafotinib forward. Syngenis, meanwhile, is tackling the manufacturing challenge behind increasingly sophisticated genetic medicines.
On different branches of the same journey, Proteomics is progressing diagnostics through validation, intellectual property and towards commercial adoption, while Singular has negotiated US medical-device clearance and Resonance shows what that pathway can look like once medical technology reaches international markets.
Arovella is working through the complex steps required to bring an advanced cell therapy into patients, while Orthocell is tackling the job at the other end – converting regulatory clearance into manufacturing, distribution and clinical adoption.
Different technologies. Different hurdles. Different stages. But together they provide a pretty good snapshot of what it takes to turn promising science into something that can actually reach a patient.And for punters every one of those hurdles successfully cleared can remove another layer of uncertainty and potentially another discount applied to what the science might ultimately be worth. That is the attraction of biotech.
Successfully turning an idea conceived in a laboratory into a drug, vaccine, diagnostic, cell therapy or medical technology capable of improving patients’ lives can create enormous value. But a gigantic market at the end of the road doesn’t make the road any shorter. In biotech, the treasure at the end of the obstacle course can be enormous. There’s a reason for that. Getting there is bloody hard.
