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Ep. 26 The Australian Advantage; How Global Biotechs Are Accelerating R&D with Agilex Biolabs
56 Plays23 days ago
In this episode of Spark Time, we sit down with Steve McIntyre, CEO of Agilex Biolabs, Cameron Smith, Chief Business Development Officer, Agilex Biolabs and Mike Burfield, Partner with RDI partners, a leader in Australian R&D tax services.We dive into why Australia has become a strategic hub for global biotech development, and how Agilex Biolabs is helping companies move faster, smarter, and farther with their non-clinical and clinical development, global regulatory readiness, and access to a 43.5% R&D tax rebate.From cutting-edge BioA and tox capabilities to decoding the strategic and financial advantages that most U.S. biotechs miss, this episode is packed with insight for anyone looking to stretch their runway and accelerate drug development timelines.Listen in to learn how to make Australia part of your R&D strategy.
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Transcript
Introduction to Sparktime Podcast
00:00:00
Speaker
Welcome to Sparktime, where biotech's thought leaders, investors, CEOs, and industry experts break down the evolving story of life sciences. Hosted by Danny Stoltzfus and Will Riedel, two scientists and strategic communicators, we dive deep into how biotech leaders can shape the narrative, win investor confidence, and communicate breakthrough science in ways that truly resonate.
00:00:21
Speaker
From emerging trends and cutting-edge technologies to what investors and partners really want to hear, we go beyond the usual echo chamber, bringing you fresh insights, unexpected perspectives, and the strategies that set biotech's top players apart.
00:00:34
Speaker
If you want to sharpen your corporate messaging, decode industry shifts, hear from voices shaping the future of biotech, and get inspired, then you're in the right place. Let's get into it.
Exploring Australia's Biotech Ecosystem
00:00:44
Speaker
me Well, welcome again, everyone, to Sparktime. In this episode, we sit down with Steve, Cam, and Mike from Agilex Biolabs and RDI Partners.
00:00:56
Speaker
And for our listeners, the precipice of filing in i and IND, it may be especially interesting to hear... about all the preclinical and the clinical trial incentives down under. But we also get a peek into the Australian biotech ecosystem today, where really there's been some surprising insulation from the current global uncertainty. And I'll, of course, let them speak to why. But I would say stick around if you want to hear why the world trusts Australia with its clinical trials.
00:01:26
Speaker
Okay, today we're joined by Mike Burfield. Mike is one of Australia's foremost experts on the Australian R&D tax incentive program. He spent nearly two decades helping innovative companies in Australia and internationally to access millions in government funding through compliance, smart, and streamlined strategies.
00:01:44
Speaker
Mike's built multiple companies around making the R&D process less painful and more empowering. He's passionate about putting tools into the hands of founders and making tax incentives easy to navigate and for building digital tools that reduce dependency on expensive advisory firms.
00:02:01
Speaker
We're also joined by Steve McIntyre. He's the CEO of Agilex Biolabs, one of Australia's most respected bioanalytical laboratories known for supporting drug development programs from discovery through to clinical trials.
00:02:13
Speaker
Steve's led Agilex to significant growth and positioned it as a key player in global biotech and pharmaceutical development. particularly for companies looking to take advantage of Australia's clinical trial environment and R&D tax benefits.
00:02:25
Speaker
Steve is helping shape how the global biotech ecosystem thinks about clinical trial execution, scientific rigor, and strategic partnerships. He brings clear insights, grounded perspective, and deep industry knowledge.
00:02:38
Speaker
Finally, we're joined by Cameron Smith. Cameron is the head of business development at Agilex Biolabs, where he leads client relationships and strategic growth initiatives across the biotech and pharma sectors.
00:02:49
Speaker
He sits at the intersection of science and strategy and is often the first point of contact for CROs and sponsors exploring clinical research in Australia. He plays a key role in shaping how Agilex partners with global innovators.
00:03:01
Speaker
Cam combines a strong scientific background with commercial insight, making him a trusted advisor to biotech executives navigating trial planning, regulatory strategy, and R&D incentives.
Trends and Challenges in Biotech
00:03:12
Speaker
i'd but I'd like to start us off with a question to you, Steve.
00:03:16
Speaker
So you have a very unique vantage point as the CEO of an Australian service provider, but with a primarily US target audience, you know small to medium biotech client base. So can you tell us about what trends you've seen in the biotech industry over the last 12 months? you know we're We're living in this time of constant uncertainty.
00:03:38
Speaker
What has that led to in biotech? um Well, from our little vantage point down here at the end of the world, ah i think I've seen three trends that have knocked on within our business.
00:03:54
Speaker
um It's a bit like that Crowded House song, Four Seasons in One Day, and that's what's happened in the last year to all of us. um And there's a great line at the start of that song, running ah trying to catch the deluge in a paper cup.
00:04:08
Speaker
And I think that's what everyone in the industry has been doing for the last um at least six months. And then the other side that makes it tricky for us is that overall the investment...
00:04:20
Speaker
changes have moved on to put to affecting what kind of molecules are invested in and certainly large molecules are being invested in at a far greater rate than small molecule.
00:04:31
Speaker
So for us, we're watching a big percentage change in our business from small to large molecule at a far, far faster clip than we had anticipated our budgeting.
00:04:43
Speaker
which is fine. we So we're pivoting and reacting to that in real time. um And I think finally, with all of that change, it i think it puts an emphasis on partnerships as well, that any single company in this whole space needs to have good partnerships.
00:05:03
Speaker
um and good communications within the partnerships to deal with this and these uncertain times because facing it on your own, people are going to get tapped out for sure um just by spending money on change when the change has got no end, if ah if if if the environment's really um certain.
Australia's Growing Role in Biotech
00:05:24
Speaker
So I think that's probably how how I see the last 12 months. Cam, I also want to get your thoughts on this from write the BD perspective. So what are you seeing from your chair in terms of the global trends in the industry in Australia?
00:05:40
Speaker
Yeah, so i mean I think the whole world is suffering from somewhat of a whiplash from the ah current economic times. um And if there's one thing that any industry doesn't like, it's its uncertainty.
00:05:55
Speaker
um What I would say though is that Australia, one of the great benefits of it is that we're kind of insulated from um sort of global disruption in the economy because of the advantages that that come with Australia.
00:06:10
Speaker
um So what we what we tend to see is that during good times, it's it's very, very good in Australia and even um during bad times, people look for the more sort of speedy, more cost effective options.
00:06:25
Speaker
so um So we're kind of insulated from that um is what I would say. um Over the, I mean, I can only comment on my perspective from the last three years being in Australia. You can probably hear from my accent, I'm not Australian.
00:06:39
Speaker
um so i've ah I'm originally from Scotland. that's your name hopefully you can Hopefully you can all decipher what I'm saying. But ah but yeah, so i can I can comment from a European perspective, but having been in Australia for the last three years, it seems to be a bit of a boom time.
00:06:58
Speaker
um You know, all the metrics that that we track, you know, if you look at the the sort of number of RFPs that we've got coming coming through, um it's jumped 30% year on year. We're also seeing an increase in international visitors coming from, um you know, all over the world to conduct vendor assessments, conduct conduct audits.
00:07:21
Speaker
that's a pretty solid commitment um to Australia. So we're seeing those numbers um escalate. And I think people are beginning to look outside of the the sort of more common um jurisdictions to get things done um quickly and also shield themselves from from the uncertainty of somewhat.
00:07:40
Speaker
um In terms of the trends, as Steve steve mentioned, that we're we're seeing um ah ah change from small molecule to biologics. I mean, that that's not a ah's not a new trend.
00:07:52
Speaker
um So luckily, we've we've sort of kept ahead of that curve and made sure that we've implemented the the appropriate technical resources, the equipment, and the general know-how because the model in which you approach biologics versus small molecules are are completely different. you know, the small molecule trials tend to be um sort of shorter, faster, um quicker turnover, whereas it's the biologics programs tend to be ah much longer, more complicated and take a sort of higher level of um of technical expertise to conduct.
00:08:26
Speaker
so um So that's on us as ah as a business to stay ahead of that trend. So we're we're keeping ahead of that. But in general, I would say it's ah it's a great time to be in Australia. Yeah, absolutely. ah It's very interesting to hear how it's boom time in Australia.
00:08:41
Speaker
i think you need to calm the farm a little bit in the sense that you're talking to ah bioanalytical company. So whilst it's boom time in Australia for phase one trials um and...
00:08:57
Speaker
And Mike will talk more about that in a minute, I'm sure. But um in terms of the BioA aspect of it, um China in particular, as of January this year, ah with has basically withdrawn all the BioA work from their Phase I trials.
00:09:13
Speaker
So they've taken that home to China. So they were about 20% of the market here in terms of Phase I trials. So 20% of the market for the bioanalytical providers like us disappeared.
US-China Relations and Biotech Impact
00:09:26
Speaker
um So whilst the market's growing and we'll make that up and that that's all fine, um we are kind of an anomaly within within the whole diaspora of of clinical trials um because of the impact of that little geopolitical activity.
00:09:47
Speaker
Yeah, so Steve, while we're there, you know how how has the US-China relationship impacted biotech? um I think, look, ah um I'll be honest, I think... um Again, up and down, hard to follow.
00:10:05
Speaker
But when China does make a decision, everyone goes. So that's um ah that's what's happened here. We have a very strong partner who are the largest private bio-a laboratories in China. and we So we're working with them and and in a way it's we're kind of lucky. We can understand what's happening there without really having huge amounts of financial damage ourselves, and it's that's where partnerships are really important at this time.
00:10:39
Speaker
um So that's that's that's good. I think it's also united Europe a lot more, and so we're finding a lot more interest in Europe, in Australia, which is exciting. um that those Those are the sort of um things that are going on right now.
00:10:59
Speaker
And then when you overlay potential tariffs on pharmacical on pharmacy um and so on and favored nation status for drug pricing, then that that again will be, ah it's almost like it's 3D issue problems, not straightforward um on off decisions going on at the moment. So I think China's got a way to run yet.
00:11:25
Speaker
um I think they'll have there'll be a lot of talks and positiveness, but let's see how it all settles in the end. But I think it's very important to understand when you're thinking about the US-China relationship in terms of drug development, you really need to think about each stream because they're all going to be affected differently.
00:11:46
Speaker
Some depend on equipment that moves from China to the US that may or may not have tariffs. um some depends on knowledge, and then some of them touch on defence um ah threats and issues that cause these decisions as well. So it's ah it's quite complex, um and I have to say um anyone who's in drug development absolutely needs to try and understand it and stay on top of it. You can't just ignore it.
00:12:21
Speaker
just to um Just to add to what Steve's saying there, we've we've certainly seen um a pullback from um Chinese biotechs on shoring as much of the the drug development process as possible and and that goes for um bioanalysis as well.
00:12:38
Speaker
um like what actually inverse to that, we have seen us clients, um, starting to approach Australia more for, um, toxicology services. So for the preclinical services, so, you know, they'd, um,
00:12:55
Speaker
because of the uncertainty around the Biosecurity Act about running certain studies within within China. um We've had sponsors approach us just saying, look, we don't want to take the gamble.
00:13:06
Speaker
um You know, we we want to take advantages of things that can be done within Australia. um You know, what can we do for us? So on one hand, when we've seen um Chinese biotech pull back from services like and bioanalysis,
00:13:20
Speaker
we've seen US clients approach us for other services because of the the sort of geopolitical um issues that are going on. So as Steve says, it's it's complex and there's ah there's give and take on both
Australia's Tax Incentives for Biotech
00:13:32
Speaker
sides.
00:13:32
Speaker
So that's a really interesting point, Cam. I kind of want to pull that apart a little bit and ask a following question. from a communications perspective, what Will and I spend a lot of time doing is thinking about how biotech companies in the US can be de-risked, and especially when they're talking about what their plans are with their board and their investors and interested parties. And so...
00:13:58
Speaker
To me, if I'm interpreting correctly, right now it seems like if you can figure out a way to do work in Australia, perhaps it is a more cost-efficient and de-risked option given the uncertainty of the US-China relationship. And maybe that's a ah good time to talk a little bit about this, the Australian incentive or the Australian advantage or whatever hey you the catchphrase of the day is to describe it because we've heard about it in the US said I think there's a lot that um our clients don't understand when we talk to them about it. So perhaps you could kind of unpack that a little bit for us because honestly, sometimes it sounds a little bit too good to be true.
00:14:45
Speaker
Sure. so um So how we tend to define the the benefits of um Australia come down to the speed in which you can initiate clinical trials, um not having to compromise on the sort of quality of the clinical trials or or the surrounding services um and also the cost.
00:15:05
Speaker
So um we can maybe go into a little bit later, um some of the ah particulars around the speed. um But in general, biotechs coming down are able to get clinical trial approval in the space of sort of four to six weeks.
00:15:19
Speaker
um combined with um a cost advantage and and Mike is certainly the specialist on this, so the fair time to go into more detail on the RMD tax incentive, but there are um there is a model available for and biotechs to gain 43.5% as a tax advantage.
00:15:40
Speaker
um So we tend to define it by by those three characteristics, that the speed, the quality and the cost. um We know that for every day that goes by, um that's ah that's a big impact on ah a pharmaceutical company. Everybody's competing with everyone else.
00:15:57
Speaker
So any time advantage that that can be gained is ah is huge. um If you can do that without having to compromise on the sort of quality that you would see, um and you know add in the added benefit of the of the cost advantage, it makes it ah an excellent place for um small to medium sized biotechs and even large pharma. We've seen ah we've seen an influx in large pharma taking, you know making the decision to come down to Australia, make the big investments and move some of the R&D teams here.
00:16:24
Speaker
um So there's really something on offer for both biotechs and and large pharma. but with regards to the the specifics about the R&D tax incentive, I'll certainly defer to to Mike because he's a specialist in this ah and this area.
00:16:40
Speaker
yeah i I'd love to get Mike's opinion on this. I mean, it sounds amazing. And and for any of our listeners who haven't heard of the R&D tax incentive in Australia, i I encourage you to reach out. But Mike, I'm curious,
00:16:54
Speaker
You know, we we do know a lot of companies consider running programs in Australia because of the the generous incentives. But I'm curious about the pitfalls that you see and U.S. s companies moving forward in Australia.
00:17:05
Speaker
Yeah, okay. Thanks for that very much. they up It's not so much that there are pitfalls. There are issues that can arise predominantly driven by people that don't understand food. incentive is.
00:17:24
Speaker
Now, I'll elaborate on that. A lot of people in the market promote the R&D incentive as ah the R&D rebate. They avoid the term tax.
00:17:36
Speaker
It's not a rebate. It's not a grant. It's not a magical rebate that the Australian government wants. generously returns to companies that invest in clinical activities in Australia.
00:17:47
Speaker
It's a tax program, but it's a tax program where you need to think of it a little bit like this. um The R&D incentive for companies that have a turnover of less than $20 million, dollars smaller companies, the R&D incentive works as a 43.5% refundable tax offset.
00:18:05
Speaker
Now, don't want to bore you with tax, but basically what this means is that it enables you to cash out your tax losses 43.5% of your R&D spend rather than carry those losses forward into a future year.
00:18:24
Speaker
Now, when you think about that, you know, what does that mean and why would you do that? The policy and both the both the australian taxation office and the department of industry Science and Resources, who jointly administer the administrative program, is to create an incentive whereby Australian companies can accelerate their expenditure in R&D with the hope of getting to, or with the intent of getting to the point of commercialisation faster.
00:18:55
Speaker
where they then become taxpayers, right? The other policy intent of the program is to encourage R&D activities that would not have occurred necessarily without the tax incentives.
00:19:08
Speaker
So when we understand those two key points, the pitfalls start to fall away, provided that we understand that it is a tax program.
00:19:20
Speaker
Now, people get scared of that, right? It's a tax program. Tax programs are actually good because they are rules-based. They are enshrined in law.
00:19:31
Speaker
but This is not something that the R&D incentive is, you know as I said before, it's not a grant where the rules are easily changed. The rules that relate to the R&D incentive are enshrined in tax law.
00:19:45
Speaker
it is a It is a program where if you are able to demonstrate your eligibility, at both an activity company and cost level, you are entitled to this benefit.
00:20:03
Speaker
So when we then unpack that a little bit further and we talk about what are the pitfalls, the pitfalls ah exist by not understanding the rules. and There are very specific rules that relate, for example,
00:20:18
Speaker
to group turnover, right? Only small companies are entitled to the refundable part of the R&D offset. Larger companies can still get a benefit, but it's in the form of an accelerated deduction, simply put, right?
00:20:35
Speaker
It also exists where people don't understand that as a tax program, that the Australian company needs to demonstrate that it is that it has a business purpose.
00:20:48
Speaker
In other words, that its expenditure that it incurs on activities have the potential to lead to future income. on The final piece I'll say in all of this is that we need to understand that the R&D incentives,
00:21:03
Speaker
is a, that works as a triumvirate really of three different types of taxes, tax law or tax guidance. There is Australian R&D tax law, which then follows very closely to Australian corporate tax law.
00:21:20
Speaker
And then overarching all of this is international tax guidelines or transfer pricing. But I don't want to go down that rabbit hole, but unless you want me to, but I'll talk for hours.
00:21:33
Speaker
Just in terms of um we talk about some only this scheme only for being available for small companies, I think is the cutoff rate still $20 million dollars US turnover?
00:21:44
Speaker
Yeah, $20 million Aussie turnover. It's Aussie. that's an US. yeah That's not US s and that's a group turnover test. So what's 20 million Aussies roughly about 11 million US. s so But in terms of establishing group turnover, we have to look at the turnover of the Australian company, the parent company and any company that can
00:22:11
Speaker
ah Control is typically 40%, right? Turnover is income in the ordinary course of business. It's not invested funds or similar like that. so But in 99% of the cases that we deal with, we're dealing with pre-revenue entities that have a pretty decent share spread in the parent company.
00:22:32
Speaker
So, Mike, I want to ask you a question about something that you said that piqued my ear. You said that to receive the tax ah incentive, the Australian company needs to have purpose. And so is this only available for companies in Australia?
00:22:50
Speaker
Well, I mean, the program works by eligible expenditure on eligible activities a um ah for eligible entities.
00:23:01
Speaker
An eligible entity must be an Australian entity. So it's short, yeah, it's only available to Australian companies. But ah foreign owned a group can establish an Australian presence by incorporating a wholly owned subsidiary in Australia.
00:23:20
Speaker
So that strikes me as you know setting up a kind a new company in another country with a completely different set of laws and accounting practices. That that that sounds ah like a bit of a hassle. So you know if if if done correctly, is the company establishment time, does that does that take a long time?
00:23:42
Speaker
it's it's ji It's a question we get asked a lot. In reality, it's one of the simplest things in the world. It literally, the This is not me being a smart aleck. It literally takes me about half an hour to establish an Australian entity.
00:23:56
Speaker
In fact, we only need to know three things. We just need to know what you want to call it, who's the shareholder, and who's the what what is the the registered head officer of the shareholder.
00:24:08
Speaker
Then that company will be incorporated. Now, it won't be fully operational. but it will be an incorporated body It will have an Australian company number, ACM.
00:24:19
Speaker
It will have an Australian resident director because every Australian company must have one. And it will have a registered head office. So as an established entity, it will be able to incur eligible expenditure and it will be able to execute agreements.
00:24:40
Speaker
I mean, to be fully operational, to open a bank account, to onboard foreign directors to the Australian company and to apply for and receive an Australian business number, it takes about 60 to 70 days ah in total elapsed time.
00:24:58
Speaker
But none of those things really should hold you up. So, Mike, ballpark, what's the range of costs to go through that setup process? What, just the setting up of the Australian entity?
00:25:09
Speaker
Yeah. again Look, honestly, it'll cost you about $4,000 Australian dollars or about $2,000 US dollars to set up an Australian company that is fully operational with a functioning bank account that the parent company's representatives has access to and can transact an Australian company, number of company and and the like. So about $4,000 Australian dollars full service to get to that.
00:25:35
Speaker
reasonable But then there are certain services that service providers at a corporate level need to provide. I mean, the people will charge you fees for doing the tax and accounting work, obviously, for the Australian subsidiary. I mean, it needs to lodge business activity statements and tax returns.
00:25:54
Speaker
You will need to have an Australian resident director and that there would be fees attached to that as well.
Successful Biotech Collaborations in Australia
00:26:00
Speaker
Then you need to prepare and lodge R&D registrations, which is one of the critical documents in the process to know if you can benefit from the incentive.
00:26:09
Speaker
So, I mean, realistically, we see in the marketplace, and without you quoting us of me quoting you a specific figure and without getting all salesy on you, we are a one-stop shop, so we do all of that.
00:26:20
Speaker
But we hear people where it's in the range of between sort of, know, $30,000 a $50,000 year in terms professional service fees. and terms of professional service um we are in the lower end of that scale But we don't like to compete on price, of course.
00:26:40
Speaker
they are In terms of the but clinical study, of I can't really comment. We see phase one studies like anywhere between one and three million dollars Australian. All right, so Mike, I know you said that you weren't going to bore me, but there was a lot of language in there that I didn't understand.
00:27:02
Speaker
I'm going to try and like break it down into language that I understand because I'm not nearly as intelligent as you are when it comes to these things. But if I go to CAM and we're talking at Bio and I say, hey, CAM, I really want to do my preclinical tox study with Agilex,
00:27:20
Speaker
how does How does Cam work the magic to make this happen? Or maybe Cam, you should answer that because I'm talking to you at the conference and not Mike. Well, I mean, the the the main thing from my perspective is Agilex and no one at Agilex is tax specialists.
00:27:37
Speaker
So we we always defer um to Mike and the RDI group um to advise on on this process. now we can go into um our our services and our history with um international sponsors who have made the decision to come down and set up the affiliates that um that Mike is talking about um but we would always defer to to someone like Mike and our DI team um for this sort of information but this is crucial so this is the this is the probably the first step that
00:28:09
Speaker
um any biotech would take when making the decision to come down to Australia. um So speaking of bio actually, so so Mike is actually going to um join us at the Agilex booth specifically for um sponsors to come and have a ah consultation with Mike to understand this process in more detail because you know this is the this is the crux of everything. So before they make the decision about, you know we're coming down to um Australia for their phase one or for any other um services, these this is typically the conversation that they have first.
00:28:45
Speaker
um So we would always defer to um to Mike in the group because you know their experience had been in this game for 10 years plus. ten years plus um So that's why we wanted to to include Mike in our standard bio so that you know individuals can come and learn firsthand and from Mike about the process.
00:29:05
Speaker
so yeah I want to jump in on one something that's really important with that. and Sorry, Cam. I appreciate the answer. Is that the... the the The first step forward is to understand why.
00:29:19
Speaker
And the first question we will always ask a potential sponsor in Australia, become a sponsor Australia, is why Australia? is that because the motivation informs the structure in which they establish.
00:29:33
Speaker
So we talk about quality, cost and speed, right? um Depending on in that hierarchy of motivations, what ranks highest is that will inform the way that the Australian company might be set up.
00:29:48
Speaker
But the important piece in all of this is that you don't have to set up an Australian company to to engage with Agilex a clinical trial in Australia. it's only ah ah good The rule requires, but for example, with clinical trials, is that there must be an Australian corporate sponsor.
00:30:08
Speaker
It doesn't mean that company must be a subsidiary of yours. It can be the CRO or other providers in Australia can act as the sponsor of a clinical trial.
00:30:20
Speaker
But it is not mandatory that you have an eligible entity to engage the services of agilex and do clinical work in australia yeah that's that's absolutely correct so we've got a long list of sponsors who have decided to to come to australia um not for the r d tax uh process um they're they're aware of it but um they're either not interested in and taking advantage of it or um You know, they they just don't qualify for it.
00:30:51
Speaker
But we have a long list of clients who are just coming down. we've We've worked here before. We know the speed. We know the quality is there. um Those are the reasons for us coming down. So um as Mike said, it's certainly not a prerequisite for ah working in Australia.
00:31:07
Speaker
Got it. If listeners want to connect with you after the podcast, guys, what is the what is the best way for them to do that? And what else have we not talked about about the opportunity in Australia that you think is worth sharing?
00:31:20
Speaker
You know, you can reach out to us in ah in a number of different ways. um So if you want to reach out to me, ah email address is really simple, cameron.smith at agilexbiolabs.com.
00:31:31
Speaker
um You know, feel free to reach out to me with any questions at all. um But what I would say, and this is something that was a little bit novel to me when I moved to Australia, is so Australia is highly collaborative.
00:31:45
Speaker
um So I've previously worked at a ah large global CRO that ran most of the services that you would need. um, from a preclinical stage right through to to market access.
00:31:57
Speaker
So, um, we, we never really collaborated. we We kept all of the services internally, all of, all of the communications internally. And then when I moved down to Australia, i was really pleasantly surprised to see how collaborative the ecosystem was down here. So, you know, over the past several decades, the ecosystem for, um, preclinical and clinical trials, um,
00:32:19
Speaker
is is built up tremendously. um And the the really nice thing about it is that if someone, if ah an international biotech is taking the trouble to um discover um Australian ecosystem for the first time, everybody within the industry is is really excellent and saying, you know what, um if you're looking for CDMO, for example, we have someone who we can put you in touch with.
00:32:42
Speaker
um If you're interested in discussing um you know the the tax program, we can put you in touch with the RDI group. There's a number of different groups and there's great connections there that the referrals just sort of um flow freely because we know that if they're taking the trouble to consider Australia, we'll take the time to plug them into the the ecosystem and make it as easy as possible for them.
00:33:03
Speaker
so on So even if your immediate need isn't um you know preclinical toxicology or bioanalysis, um you know still feel free to reach out because we have these connections within the ecosystem and we can point in the right direction.
Cost and Competitive Advantages of Australia
00:33:17
Speaker
you kind of just summarise the way that I pictured in my head cam. It's like, I feel like if someone here in the US were to happen upon a meeting with you guys at Bay, for example, that you're almost like the gateway into the Australian ecosystem, if you like, of clinical trial work, because like you say, even if they're not ready to do, you know, tox work with you guys, but you know, you'd be, you'd be making the connections to the, to the people that maybe are, um,
00:33:46
Speaker
who they're looking for. And i so that's one thing that, that just made me think about, but the other flip side of that is, is you know, I don't, I think US-based sponsors are probably much more aware of the fact that you can do clinical research in Australia and get the tax rebate that Mike just described. But I think its to me it sounds like if we were to talk about starting preclinical work in Australia with you guys, for example, with light preclinical talks,
00:34:20
Speaker
as an example, then they probably got the ability to save even more getting into the the Australian ecosystem even sooner. Does that sound right to you? Yeah, well, absolutely. I mean, there's um there's a number of different advantages for coming down. So over the past six months, for example, um if we were specifically talking about the US market, and the US Australian dollar um exchange rate has gradually increased um over the past six months.
00:34:49
Speaker
um So that's given more value to the and the sponsor just based on the exchange rate. So over the past month with the you know the the tariff announcement and the uncertainty, the exchange rate peaked at a 20-year high, one US dollar to almost 1.7 um eud So that that's now corrected a little bit to 1.56. But the operating costs in Australia remain significantly lower than and the US or Western Europe.
00:35:17
Speaker
But combine that with and the exchange rate um and you know some of the tax incentives, if they are able to access it, offers a really sort of competitive environment, both for preclinical activities and and clinical activities. Because I think the and the misconception um for whatever reason um is that these things only only apply to um clinical trials if they were taking place in Australia when actually it's ah it's more broad than that.
00:35:48
Speaker
Yeah, it's kind of like a myth that we need to debunk, right? Like we hear people say it, but you know it doesn't sound to me like there's any truth in that. end i want to I want to just kind of probe at what you just said then. So like we know that the tax rebate can be up to 43.5%. But if you took into account the lower operating costs and the current exchange rate, what do you think in total people might be saving?
00:36:14
Speaker
Can you give me any sort of number on that? I mean, i'm yeah I'm going to take a stab at this, but I'm going to say 60%. i'm go to say around sixty percent let me let's Let's bring it all together. So if a company decided to take advantage of this opportunity, you know, end to end, how long would it take to set up that compliant entity to get approval to run the study and complete that standard phase one program?
00:36:38
Speaker
I'd say if someone was thinking of doing it, they need to remember that in Australia, they're not trading off quality for price. there's They're going to save up 60%. of costs on their phase one trials.
00:36:53
Speaker
And I think that um time, which is a critical thing in any for any small to medium biotech, it's going to take them a day to set up an entity. It's going to take them about 60 days to fully comply and understand and be operating, have purpose in Australia for tax reasons.
00:37:15
Speaker
um And then they're off and running. And so it is really um quick. It's very competitive price-wise, both because of the tax rebates and and the state of the Australian dollar.
00:37:29
Speaker
And you're not trading off quality, which I think is really fundamental if you think about total costs of your study.
Australia's Performance in Clinical Trials
00:37:36
Speaker
When they do make that decision to come to Australia, a lot of issues and problems melt away and they end up knowing and that they're dealing with quality ecosystem that can support them and they've got more money to do more with their program.
00:37:55
Speaker
just to um Just to add to that and and sort of finish it off, you know, that there this is the reason that Australia punches above its weight in terms of number of clinical trials.
00:38:06
Speaker
So if we look back at data from the last couple of years, um in terms of number of clinical trials, Australia is ranked third after the US and China in terms of number of phase one um clinical trials.
00:38:20
Speaker
um And you just have to look at the difference in um population between those two countries. You know, the US is what, 13 times the size of Australia um and China about 50 times the size of Australia.
00:38:33
Speaker
So it really speaks volumes when we see and those sort of numbers ah come up in the rankings and who we're competing with. There's a reason for that um and it tends to be the speed, the quality and the cost that we see down here.
00:38:47
Speaker
I just want to jump in with one thing I'd say here is that we would never want to see and never encourage or i want to see people do anything solely for the purpose of obtaining a tax benefit.
00:39:02
Speaker
oh the We want to see companies predominantly that look at the quality and speed advantages and look at the cost benefit as simply the icing on the cake. we in our In our experience, we found that those companies have had the best outcomes from Australia and have been able to operate within the confines of the R&D tax incentive in a far more compliant way.
00:39:29
Speaker
yeah i I agree. I mean...
00:39:35
Speaker
i I think I'm just, I'm reflecting back to my days of actually being the one, you know, having to get ready to file an IND and run a clinical trial and I mean, I do agree that speed was absolutely critical. We were looking to save a day anywhere that we could to get the data faster. So 100% hear that as really important.
00:39:58
Speaker
I'm just wondering, and of course, i mean, one of my major frustrations, we'll can attest to this as well, was communication was terrible sometimes, and that was what would slow you down. yeah.
00:40:10
Speaker
communication and speed kind of go together but at at as well as quality like quality is so critical because to Steve's point you don't want to waste time and money we're having to reanalyze data or redo assays or we do experiments so I think all of that is really relevant but In my mind, like every single day that you wait for data, there is a cost associated to that. and It may not be a cost in terms of how much is the clinical trial costing me, but it's all the other costs that go on on the daily activities, right? Yeah.
00:40:48
Speaker
I want to try and wrap this up and and give everyone some sound bites to take away from you because to me this sounds really exciting. So if I am ah small to medium biotech that's in the U.S., I am somewhere in the range of entering the clinic.
00:41:03
Speaker
If I come to Australia, I get speed and I get quality and you're – ranked number three for running phase one trials after only China and the US. That shows to me that there's something good going on down there that we should be trusting in. Is that correct?
00:41:18
Speaker
Yeah, you've got most of the world trusting us with their trials, saving up to 60%. on their expenditure, um then ah that's got to say something. So speed, cost, quality of of research, it's um pretty great. So I want to thank all of you for coming on the podcast to tell us about it and um spreading the good word because the more people know about it, the more work can be done and the more drugs can make it to market. So thanks, everyone.
00:41:48
Speaker
To get in into touch with Agilex Biolabs, you can find them at agilexbiolabs.com. Of course, they're also on LinkedIn. To reach them directly for more information about what we discussed today, be sure to reach out to Cameron.Smith at AgileXBioLabs.com.
00:42:03
Speaker
To hear more information about the R&D tax incentives that Australia offers, feel free to also reach out to Mike Burfeld, partner at RDI Partners. You can reach him at mburfield at rdipartners.com.au.
00:42:18
Speaker
Well, thanks again to our listeners for joining Sparktime. We welcome you to join next time as we continue to explore the ideas, the thinkers and the innovations that continue to drive biotech forward.
00:42:29
Speaker
We hope to see you there.