NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: DRUG ROYALTY CORPORATION INC.
TSE SYMBOL: DRI
OCTOBER 1, 1998
Drug Royalty Corporation Inc. - IPO Route No Longer
Accessible To Early-and Mid-Phase Biotech Companies
QUEBEC CITY, QUEBEC--Most of Canada's biotech companies will find
that public offerings are not a realistic option as they strive to
finance drug development over the next five years. The
observation was made earlier today by Ian Lennox, President and
CEO of Drug Royalty Corporation at the fifth annual BioContact
Qu‚bec symposium in Quebec City.
Mr. Lennox stated that over the past four years between US $4-5
billion in public and private equity capital has poured into
biotechnology and pharmaceutical developments worldwide. Over 180
initial public offerings (IPOs) were completed, most of which
occurred in North America.
"Despite this unprecedented influx of equity and the optimism
accompanying it, the outcome for the public and private investors
in biotechnology firms has been largely disappointing" he stated.
"Investor expectations have not been met. The result is that
financial market confidence in the ability of early- and mid-phase
biotechnology firms to generate acceptable returns in a reasonable
time period has evaporated."
For the Canadian industry, this means a return to fundamentals for
the majority of biotech companies. Public equity investors are no
longer willing to support an idea alone. They want assurances of
reasonable returns in the near term and huge potential long-term
value creation, a prospect that does not exist for most companies
in the Canadian industry.
"Of the 100 or so private biotech companies in Canada, 90% would
be classified as early- to mid-phase" he pointed out. "These
companies can no longer look to public equity markets for support
because they are seen to be too small and at too early a stage of
clinical development."
The financing strategies of such companies must be multiple in
nature and include venture capitalists, "angels", global marketing
partners, and clinical research organizations. In addition to
capital, these investors can also provide expertise, technology,
and other support that helps reduce the cost and cut the time
needed to move products into later phase development where firms
like Drug Royalty will play a major role in accelerating products
toward commercialization.
"The situation and solutions for biotech firms in Canada mirrors
the situation worldwide" Mr. Lennox stated. "In many respects
it's a return to basics. Equity investors have adopted a
show-me-the-money attitude, and are confining their interest in
biotech pharma to later phase opportunities where the chances for
success and returns are much higher."
Drug Royalty provides shareholders with a means of participating
in the global life sciences industry by creating and acquiring
royalty interests in pharmaceuticals, biotechnology products,
diagnostics and devices. Drug Royalty is implementing its
strategy through:
- creating new royalty contracts by providing funds to life
science companies in return for royalties;
- acquiring existing royalty streams from public institutions,
inventors or companies; and,
- acquiring intellectual property rights which can be licensed for
royalties.
Drug Royalty's common shares trade on The Toronto Stock Exchange
under the symbol DRI. This release and other information about
Drug Royalty Corporation Inc. can be found on their website at
www.drugroyalty.com, or directly from:
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FOR FURTHER INFORMATION PLEASE CONTACT:
Drug Royalty Corporation Inc.
Ian Lennox
President & CEO
(416) 863-1865 ext.234
(416) 863-5161 (FAX)
ianl@drugroyalty.com
or
Drug Royalty Corporation Inc.
Jim Webster
Executive Vice-President
416) 863-1865 ext.225
(416) 863-5161 (FAX)
jimw@drugroyalty.com
INDUSTRY: MTC
SUBJECT: NWS
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