AUSBIOTECH | VIEWPOINT
The importance of a quality board in attracting investors Many investors will tell you that one of most important things they look at when assessing an investee company is the calibre of the management team. And increasingly, they are focusing on the membership and calibre of the board, due to the direct impact the board can have on a company’s chances of success.
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eremy Curnock-Cook, managing director of BioScience Managers, said, “The board of directors is an often overlooked key asset of a biotechnology company. It needs to be well balanced, well chaired, appropriately skilled, prepared to evolve as the enterprise itself grows, develops and matures. The strength of its composition should be regarded as a critical contributor to successful outcome and impacts the quality of the investment, and the quality of that investment’s decisionmaking. Get the board right and it will often be the difference between success and failure. “Biotechnology is a complex business, requiring an unusual blend of scientific, commercial, financial, clinical and operational expertise. It is also an industry where companies often run into significant technical and commercial challenges when things don’t go as planned. But it is when things don’t go as planned that the best boards will truly prove their worth, and the weaker boards end up with a company that is out of capital and out of ideas. “Never is the competence of a board tested so much as when a technology fails to meet its nominated endpoints in a clinical trial or receives negative feedback from a regulator. We have seen a number of these cases in the Australian market over the past
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few years, and the ability of the company to recover is usually a function of the response of the board,” he said. AusBiotech has a long-held and genuine desire to support the development of boards and directors, the quality of company governance and disclosure, which in turn supports the broader industry’s development and attracts investment by increasing investor confidence. Innovative, technology-focused companies in the life science industry have different pressures, such as unique regulatory requirements and a different business cycle than many other industries. Directors of such companies therefore require additional, specialised knowledge that is not generally learned from available corporate governance materials or taught in mainstream governance courses. For the reasons outlined above and with the support of the Victorian Government, AusBiotech has recently completed the Guide for Life Science Company Directors, a resource to support and enhance the performance of boards of directors leading public and private life science companies. It is endorsed by the Australian Institute of Company Directors and its development was guided by an advisory panel of industry experts. The guide outlines, for
AU S T R A L I A N L I F E S C I E N T I S T
Dr Anna Lavelle, CEO , AusBiotec
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less experienced directors or those new to life sciences, issues typical to life science companies that are generally not typical in other industry sectors. The guide makes an excellent induction resource for new directors, those new to investing in life science companies or those working in research and considering commercialisation pathways. The guide is a companion document to the Code of Best Practice for Reporting Life Sciences Companies, which was developed with the Australian Securities Exchange (ASX) to support high standards of communication and market disclosure to promote investor confidence. Originally developed in 2006, the code was revised in early 2013 and the second edition launched by Victorian Minister Gordon Rich Phillips in May. The venture capital community is looking to companies for signs that they are implementing the code and taking the support of the guide seriously. Life science company boards are urged to take advantage of these resources by recommending and distributing them to current and would-be directors and displaying the code’s ‘web button’ on company websites. The guide, code and the web button can be found at www.ausbiotech.org/ biotechboards. ALS
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