By: Shelley Nortier

Posted: 2002/08/21 Wed 19:00  | © MoneywebKZN 1997-2002

Heather Sherwin, Head of Bioventures -- an R80m fund jointly managed by Gensec and Real Africa Holdings -- has been examining several interesting investment opportunities in this and the broader biotechnological field, some of these involving KwaZulu-Natal operations.

Stem cell research is a very costly business and none is being done in SA. The R80m Biotech fund intends to find at least five companies that it can invest in over the next two years. "This is a long term investment and we hope to see returns within five years. It's high risk, but then the potential returns are in the region of 30% to 40%," says Sherwin, who's a Natal University graduate with a PhD in cell biology and an MBA from Cape Town University.

"The Biotech fund was established to invest in local technology, help market it and prevent it being sold to outside investors at a fraction of it's real value, " she says.

The first company that Bioventures invested in (R12m) last year is Shimoda, which she says is one of the most exciting biotech companies in SA. It was established in 1995 by Greg Gilbert in the Knysna forest to focus on the research and development (R&D) of novel therapeutic compounds, with a focus on cancer therapies.

The area around Knysna is highly bio-diverse and conveniently situated between East London and Stellenbosch, both of which have good research facilities. JSE-listed financial services group Peregrine, which has its roots in KwaZulu-Natal, together with several private investors, provided venture capital funding.

Peregrine Investment Banking director, Darren Shur, was appointed as financial director of Shimoda Biotech in February 2002. He says that Gilbert is one of those unusual people who are able to combine science and business. "R80m might seem a lot but it's a drop in the ocean compared to the sums invested in such ventures internationally. US start-up companies can expect to receive funding upwards of (US)$40m,"

Shimoda CEO, Lawrence Penkler, says the commercial potential of such technologies is attracting considerable attention from the international pharmaceuticals industry at present.

In 1998 more than 100 000 US deaths reportedly resulted from adverse reactions to prescription drugs -- the fourth-largest official cause of death. As a consequence drug delivery research has become a major target for investigation.

Response rates to some cancer therapies are as low as 20% to 30% because the drugs are so toxic that they can only be prescribed in small quantities. The solution would seem to be a carrier that targets and delivers the drug directly to specific cells. This would make lower doses more effective, with fewer side effects.

The second company that Bioventures has invested in is Amandla Water which received a R6m grant to market their waste water treatment technology. Sherwin explains, "Waste water treatment is not a sexy area of research but a vital one."

Amandla water has secured the exclusive global marketing rights to Pond Enhanced Treatment and Operation (PETRO) wastewater treatment technology ? a South-African-developed biological treatment.

Charles Polson, Amandla Water's director of operations, says "There are currently 17 PETRO systems in operation, most of them in SA. The Bioventures investment will enable us to actively promote the technology in the international market,"

PETRO is a treatment process that was co-patented by Pieter Meiring of consulting engineers, Meiring Turner and Hoffmann and the South African Water Research Commission (WRC). The WRC funded the R&D for the process that was undertaken by Pieter Meiring and Dr Oleg Shipin.

The Newcastle local authority used the PETRO system to double the capacity of its existing plant.

According to Sherwin, Bioventures is currently looking at other potential ventures but not many of them come up to her exacting standards. "When companies want to do clinical trials in countries that don't have medical councils, warning bells start ringing," she says. "I'm looking at a few promising companies and hope to make an announcement of a new
investment within the next two to three months."