Case Study : QRxPharma Ltd – an example of a university start-up company
This case study is provided as an example of the start-up company pathway as outlined in Topic 2, Subtopic 2.2
Case study description
| Key inventors |
Professor Maree Smith, Dr Paul Masci, Professor Martin Lavin, Professor John de Jersey, and Dr Luke Guddat |
| Innovation |
Analgesic and hematologic products |
| Institution |
The University of Queensland, Health Sciences Faculty |
| Commercialisation model |
Start-up company |
| Established |
2002 |
| Investors & shareholders |
Listed on the ASX |
The University of Queensland's pharmaceutical start-up company, QRxPharma Limited (QRX), listed on the Australian Securities Exchange (ASX) in May 2007, making history as Australia’s biggest biotechnology float. The company, which had an initial market capitalisation of $150 million, issued 25 million shares to new investors to raise $50 million.
QRX was formed in 2002 by UniQuest Pty Ltd, UQ's main commercialisation company, to develop innovative research in the areas of pain therapy, neurodegenerative disease and venomics. The company's patented portfolio of drug candidates were developed from research at the University, lead by Professor Maree Smith from the School of Pharmacy; Professor Martin Lavin from the Queensland Medical Research Institute; Dr Paul Masci from the School of Medicine; and Professor John de Jersey from the Faculty of Biological and Chemical Sciences.
UniQuest secured $10 million in venture capital backing for the company from Innovation Capital (Australian, US), Nanyang Ventures (Australia), SpringRidge Ventures (US) and Uniseed (Australia). It is believed that this was the largest first round investment into any Australian start-up company.
This investment funded the development of the company and its most advanced drug candidate the 'dual opioid' painkiller, Moxy. With its unique combination of morphine and oxycodone, QRX hopes that the drug will be more effective with fewer side effects than competing drugs. QRX completed Phase II trials of Moxy in the USA and secured FDA approval to start Phase III clinical trials. The QRX Board decided to float the company in 2007 to raise the funds necessary to undertake these trials and a sustained-release version of this product, Q8011CR, which is ready to enter Phase I clinical trials.
QRX is looking to complete the Phase III studies of Moxy in 2008 and 2009 with the first sales of the drug in 2010. If both Moxy and the sustained release version are approved for release and show the predicted reduced side-effects, sales have been estimated by J.P. Morgan Securities Australia Limited to be in the order of US$300-500 million annually. In addition, J.P. Morgans envisages the QRX shares will be worth 10 times their current price.
At this stage, QRX is planning to distribute its products in the United States of America and out-licence to other pharmaceutical companies the right to distribute their products in other countries.
Case study commentary
UniQuest, formed QRX around a 'package' of drug candidates in various stages of development. With a relatively advanced candidate (Moxy) and a group of committed researchers, this made the start-up company extremely attractive to venture capital investors. These same factors made the company attractive to investors when it listed on the Australian Securities Exchange.
This case study is an example of the long term value which can be gained by universities and researchers by taking the start-up route.
Lessons learned
Key points to be taken from this case study include:
- UniQuest was able to package together valuable IP which UQ researchers had disclosed;
- The formation of QRX was only possible because the researchers had worked with UniQuest to protect their IP and were willing to become part of a start-up company;
- QRX has progressed relatively quickly along the commercialisation pathway, however, it will be at least eight years from when the company was formed to the company marketing a product and realising a higher share price.
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