Forrest-backed Allied aiming for drug lead

IN the risky, costly business of drug development, it's hard to find a bigger foot in the door than that of Allied Healthcare.

Lee Rodne

IN the risky, costly business of drug development, it's hard to find a bigger foot in the door than that of Allied Healthcare.

Not only is Andrew "Twiggy" Forrest the group's largest shareholder, but its "game-changing" drug is being honed by Gardasil developer Ian Frazer.

"We feel very strongly that we have something special," says managing director Lee Rodne, on a visit to brokers and investors in Sydney.

Allied emerged last month after Forrest's privately held Allied Medical made a reverse takeover of BioMD to gain a listing for access to funding.

Forrest has been diluted to about 16 per cent from the 46 per cent he held in 2005, when Rodne packed his bags and moved from icy Minnesota to sunny Perth to lead Fortescue's private push into healthcare.

Other major holders include the Clough family, biotech Avexa and Rodne.

Inaugural Fortescue chief financial officer Christopher Catlow and founding director Graeme Rowley, chairman and non-executive director of Allied respectively, also have skin in the game.

With Allied's market value at just $45 million, the presence of the Fortescue crew provides the contacts and experience acquired in building an iron ore tiddler into Australia's third biggest player in the field, worth $20 billion, Rodne says.

"We wouldn't be here today without Andrew's backing and support, so we're very excited to have a guy like Andrew as a major shareholder."

Forrest is stepping down as chief of Fortescue to focus on philanthropic pursuits.

"Andrew has always made it clear to me that he's passionate about what we're doing," Rodne says.

Allied distributes medical devices and equipment to more than 800 hospitals, with revenue this year rising 65 per cent to $7m. Its cashflow has gone into early testing of Frazer's "supercharged", or DNA, vaccines being developed by his company, Coridon, of which Allied has the right to take 51 per cent.

Allied's first product from BioMD's regenerative tissue technology, CardioCel, is to come to market next year, but Coridon could be a "game changer" as the DNA vaccine market grows to $2bn by 2014.

Frazer and his team are developing a unique patented DNA optimisation technology intended to prevent and treat viruses that can lead to cancer, with a herpes vaccine a key focus.

A number of groups are working on a vaccine for herpes, one of the most common and uncurable sexually transmitted viruses and a contributor to cervical cancer, but Rodne has understandable faith in Frazer. Gardasil, given to girls to prevent HPV-induced cervical cancer, is the first cancer prevention vaccine, and has earned him the Australian of the Year award.

"We think it's his next breakthrough and Ian feels very strongly about this being his next potential product on the marketplace," Rodne says.