Tax Rebates ‘Icing on the Cake’ for Biotechs Doing Phase 1 Trials Down Under

By Deborah Borfitz 

June 19, 2024 | Australia and New Zealand both have “fast and pragmatic” regulatory and ethics timelines for clinical trials, making them key destinations for industry sponsors. That they both offer biotechs a unique (and now well-known) research and development (R&D) tax rebate on their clinical trial spend is like “icing on the cake” for those already pulling out all stops to improve the speed and quality of their early-phase studies, according to Barry Murphy, chief commercial officer for Novotech, a global contract research organization (CRO). 

The Australian program was established in 2011 and “encourages companies of all sizes to conduct R&D activities in Australia, essentially boosting Australia’s global competitiveness and economy,” he says. New Zealand has a similar incentive program that went into effect in 2019 and includes a tax loss credit available to some biotech companies. Novotech can recommend specialist tax accounting firms that work routinely with international sponsors to help them navigate the R&D tax programs in the region, simplifying the rebate process.  

Novotech partners with biotech companies on the development of therapeutics, and the early-phase work notably includes healthy volunteer programs in the two countries, says Murphy. The CRO has an internal team devoted to ensuring that all relevant clinical trial activities—from start-up and recruitment to treatment, follow up, and close out—”occur just as swiftly as submissions and are executed in a way producing the highest quality data.”  Therein lies true cost savings, he notes. 

The multiple positive attributes of the two nearby countries are implied by growth in the number of studies being conducted in Australia. “Over 18,000 clinical trials recruiting participants in Australia were registered between 2006 and 2020, 40% of those in the period of 2016 to 2020,” reports Murphy. The country “compares favorably” with other OECD member countries when it comes to the number of trials per capita, outpacing France, Germany and the United States.  

Speed and Quality

“Australia is internationally recognized for its high-quality clinical research and healthcare infrastructure, world-class research capabilities and highly skilled researchers—all critical prerequisites for early phase clinical trials,” Murphy notes. Its attractiveness as a destination is tied primarily to the speed and quality of trial execution since not all sponsors avail themselves of the rebate opportunity.  

But the financial support can be particularly meaningful for phase 1 programs, more of which launch than later-phase studies since “not all assets will progress” beyond the first-in-human testing stage, says Murphy. They might also fail in the clinic, or the sponsor may be unable to secure the necessary funding to progress clinical development. Moreover, it may not make sense for sponsors to recruit for their later phase trials in the Australia/New Zealand region, depending on the patent population, standard of care, and other factors critical to their clinical strategy and study timelines.  

Australia can also look especially attractive to small, pre-revenue biotechs based in the U.S., at least if the overall objective of their phase 1 program is to “establish safety in a fast, efficient, ethical, and cost-effective manner and move swiftly into phase 2,” Murphy says. In the U.S., writing an Investigational New Drug application is “no small feat” and the institutional review board (IRB) timelines, particularly for some of the large tertiary institutions, can be slow and “contract negotiation often painful.” 

Conversely, in Australia and New Zealand the documentation required for submission is “quite lean … the key documents being your investigator brochure and protocol,” Murphy says. Australia’s Human Research Ethics Committees (HREC) and New Zealand’s Health and Disability Ethics Committees (HDEC)—the region’s IRB equivalents—are fast and reliable, and both countries have a standardized national clinical trial research agreement that eliminates contracting headaches. 

“Australia offers a simplified regulatory framework and approval process called a Clinical Trial Notification [CTN] scheme where both the scientific and ethical review of clinical trials falls to the [HREC],” adds Murphy. The time savings can be considerable relative to preparing submission package documents in the U.S., and the review time can also be accomplished in five to eight weeks when using a private HREC such as Bellberry. 

“New Zealand has identical document requirements and speed of review,” he says, although sponsors need to separately submit to HDEC and the country’s regulatory authority Medsafe.  

According to a 2022 GlobalData report, Novotech is the largest and most experienced CRO operating in Australia and conducts more healthy volunteer trials. “We are committed to supporting sponsors through both preclinical and clinical stages of drug development,” says Murphy, with processes specifically optimized for rapid and efficient execution of phase 1 clinical trials.