SYDNEY, Australia - The Australian biotech market is recovering fast from the crash of high-tech stocks earlier this year, as a privately compiled market index shows that prices for biotech stocks are well above pre-crash levels.

In addition, and more significantly for the Australian market, an investment group has launched a fund that will raise A$20 million to A$40 million (US$12 million to $24 million) in venture capital specifically to invest in biotech companies. It is the first fund of its kind in Australia.

The announcement of the Biotech Capital Ltd. fund, organized by professional investment group Challenger International and to be run along the lines of an American mutual fund, with units being offered to private investors, received considerable coverage in the Australian media.

Until recently venture capital in Australia was scarce and venture capital funds designed for small, private investors were unknown, although there were funds that attracted money from institutional investors, and they did not specialize in any one area.

Not only is Biotech Capital the first venture capital fund to announce that it will specialize in the biotech sector - when specialized funds are still rare - it is raising what is considered to be large amount of money for the Australian market.

James Chirnside, a spokesman for Biotech Capital, said the fund had not "lined up" any biotech projects suitable for venture capital investment, as any projects the fund had arranged to support would have to be specified in considerable detail in the prospectus.

Instead, the fund would start looking for investments once the float was completed, and minimum amount required for the fund to go ahead (A$20 million) had been raised. But from preliminary inquiries he did not believe there would be any difficulty in investing the money in promising projects.

Areas of particular interest to the fund are genomics, proteomics and bioinformatics, with all VC proposals to be assessed by a scientific board, Chirnside said.

While Biotech Capital raises VC funds, the listed Australian biotech stocks are recovering surprisingly well from their hammering during the so called "tech wreck" crash earlier this year.

A biotech index compiled by the accounting/consultant firm Deloitte shows that biotech stocks are now well past the peak achieved just before the crash and so are recovering better than the Nasdaq biotech index.

Deloitte partner Glen Sanford, who compiles the index, said that the main reason for the good recovery of his biotech index was the performance of CSL Ltd., which accounts for 45 percent of the index. Australian investors have bid up the stock price of the biotech-pharmaceutical group since it announced the purchase of a blood fractionation business in Europe.

Without the contribution of CSL, the recovery of Australian biotech stocks was in line with trends in the rest of the world, he said.

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