From IVF pioneer to Afterpay investor: John McBain's incredible journey

Matthew Kidman

Centennial Asset Management

Small-cap specialist Dr John McBain likes to joke that he's still in Australia because he lost his return ticket to Scotland in the 1970s.

In this episode of Success and More Interesting Stuff, John describes how his career in obstetrics and gynaecology took off on his arrival in Melbourne in 1976 and took him in directions no one could have predicted.

From early entrepreneurial success delivering newspapers as a Glasgow schoolboy, this canny Scot surmounted his humble beginnings to become a pioneer in the development of IVF.

From this he profited enough to turn his hand to full-time investing when others might choose to retire. Instead he chooses to engage with entrepreneurs innovating in sectors as diverse as biotechnology, digital agriculture and fintech.

A string of brilliant stock selections, including a major foray into Afterpay before it listed, has made John a prominent figure in Australia's small company environment.


Edited transcript

Matthew Kidman

Welcome back to Success and More Interesting Stuff. As a rule, doctors are not supposed to make good investors. Dr John McBain is an exception.

After a celebrated career in medicine, Associate Professor McBain has applied his canny Scottish intuition to the share market, with impressive results. His share market fame soared in early 2021, when he became known as a backer of buy-now, pay-later juggernaut Afterpay, even before it listed.

McBain was born into humble surroundings in Glasgow, Scotland. A family pioneer, he headed off to university to study medicine.

This was the beginning of a fabulous journey that took him halfway around the world to Melbourne.

Only four years later, he was an integral part of the medical team that delivered Candice Reed, the first IVF baby born in Australia. From that moment, Australia led the charge in IVF, with McBain at the helm.

His name was put up in lights in 2001, when his battle with a Catholic Church to allow all women access to IVF went all the way to the High Court, ending in victory.

Not to sit idle, McBain used his time as a doctor wisely as founder of Virtus IVF. Virtus went on to become the largest commercial IVF group in Australia, listing on the ASX in 2013.

By the time the company went public, McBain had stepped away from management and took the opportunity to cash in his shares. He took his fortune and set about taking on the share market.

Early success came with the organic infant formula group Bellamy's and auto lender Money3. This was soon followed by his foray into Afterpay. He rode the ups and downs of the wildly successful venture, pocketing a major windfall before the company was bid for in 2021.

Today, McBain carries the clout of a small institutional investor, with a broad spread of listed and unlisted companies, ranging from nasal spray group Rhinomed to prawn farming giant Seafarms. He is happy to back his instincts and take sizeable bets. Welcome, John. Not a bad career for a poor kid from Glasgow.

John McBain

Well, I'm only sorry my parents couldn't have heard it because my father would've thought it was a very fine bit of wordsmithing. And my mother would've believed every word.

Matthew Kidman

I'm sure parents aren't meant to believe things, especially when they've got naughty kids. So maybe that's a good intro to your upbringing in Scotland.

Glasgow was the hometown; Glasgow's known for being a tough town. How was your environment growing up there?

John McBain

I couldn't have grown up in a better place, Matthew. I was a much-loved last child in a reasonably large family.

My father was a foreman blacksmith. My mother was a stay at home mother. I had sisters who had left school at 14 and they were bringing money into the house too.

And everything was fine until my father lost his job because he was a blacksmith and that was a failed trade. And my sisters had left home to marry at that time.

So our circumstances suddenly became quite reduced. I have been looking after myself since I was 14 and I started the paper round because I saw that no one else was doing it. And by the time I finished high school, I was employing five other boys to do that.

I've always had that entrepreneurial streak, I guess. I spent six years emptying dust bins for 20 weeks a year when I was at university studying medicine, and selling suits on Saturday at one of the department stores. And I had two weeks holiday and 30 weeks university.

I couldn't have done that nowadays, because the medical course is far much harder now, because there's so much more to know. I have two children who've become medical doctors and I am stunned at the depth and breadth of what they're required to know.

Matthew Kidman

Was it normal for kids of that age to be expected to get a job? You went out and did your newspaper round, but you quickly established quite a little operation there — was that normal?

John McBain

I was the only person who had done that. I saw people going to the bus stop in the morning without a paper. So I set up a couple of boys selling newspapers at bus stops.

And I must say that the people at the Glasgow Daily Record and Glasgow Daily Express took a real bet on me by giving me a delivery of newspapers to my home every morning.

Matthew Kidman

And so you'd be up early? You'd get your henchman in, set them up for the day.

John McBain

I'd be up at 5am. Yeah.

Matthew Kidman

Nice warm mornings in Glasgow.

John McBain

Oh, I was running everywhere to deliver things, so I didn't notice.

Matthew Kidman

Yeah, definitely wet. And what were you like at school, given you were so busy doing extracurricular activities?

John McBain

I didn't do quite as well as I might have done. I was very good at sports. I was captain of the football team and then head of the rowing team and athletics. And then I became school captain, and one thing led to another.

And although I didn't excel in my results, I was chosen to be one of a number of boys from Great Britain who went to Expo 67 to be young ambassadors.

And I then mixed with boys who just took it for granted that they'd be going to Oxford, to Cambridge to study medicine or law.

And I quickly saw that I wasn't really all that less able than them. And so rather than studying pharmacy, which I had been the height of my ambition, I changed my application to medicine.

And I think probably on the word of the local minister and my parish at Glasgow, I got a spot and I've never looked back.

Matthew Kidman

References were as important as marks in those days.

John McBain

Well, they weren't generally. The marks were all right. They weren't stellar. I was playing in a rock band in the evenings too.

I had a girlfriend who needed quite a lot of attention also. My father used to say that he spent more time studying the racing form than I appeared to for my schoolwork.

Matthew Kidman

And what did you play in the rock band?

John McBain

A bass guitar and initially lead vocals, because I was the only one that knew the words, then backup vocals.

Matthew Kidman

And any success?

John McBain

No, no, not really. In our first gig, we managed to clear the Govan Town Hall of 300 people within 40 minutes, once they heard us play.

Matthew Kidman

That's a good sign. So you stayed in your hometown to study medicine at Glasgow. What was your cohort like? Was that a difficult period, given that you had to upsize your ambition to get in?

John McBain

Well, not really. Everyone had their own story. There were those who were sons and daughters of doctors or professional people. And there were those with a similar background to myself who had managed to get into the medical course.

All that was forgotten. We were all just pals. And indeed I'll be celebrating, I think, the 48th year since our graduation in Perthshire in May next year with the many pals who are still alive and active.

Matthew Kidman

Let's move on from there. It's interesting that you finish medicine, you start working in the UK, but it wasn't long before you were in Australia. Can you give us a run through your first job?

And I think I'm right in saying 1976 was when you took off for Australia. What happened in those intervening years?

John McBain

I did my early training in the Western Infirmary in Glasgow. I was asked if I would like to train in obstetrics and gynaecology by a doctor who had remembered me as a student when I won the prize in obstetrics and gynaecology.

I really worked harder that year, because my first daughter was born that year. I really hit the books and wanted to know everything about it. And then I did the same in paediatrics when she was born.

So self-interest, and he offered me a job. I took the job. I liked it. They seemed to like me. There was a visiting doctor from Australia who took a shine to me.

My professor, who had been the inventor of medical ultrasound, told me that I should clear out of Glasgow for a couple of years. My plan was to come to Australia, do some work in infertility and then return to a promoted university job in Glasgow. But I lost my return ticket.

Matthew Kidman

So before we look closely at Australia and your experience here, going back to your family, you explained the structure of your family, who did what, the businesses that you got involved in.

Was there any talk of the stock market in the family or among friends or the extended family? Was that something that was in the conversation or was it something foreign to you?

John McBain

The only investing was from my father with the local bookie.

Matthew Kidman

And did he get a good return?

John McBain

A very poor return.

Matthew Kidman

And did that teach you anything?

John McBain

Oh, I've never been a gambler, other than in the micro-caps which you and I invest in, Matthew.

Matthew Kidman

Very good. Okay, now in 1976, you make that journey around the world and land in Australia. And you said you lost a return ticket, but it seems like it was fast-tracked. It wasn't very long before we're talking IVF babies. What happened and how did that team form?

John McBain

Once more, my guardian angel or lucky star was in attendance. I lobbed into Melbourne, where no one was interested in vitro fertilisation because everyone knew it would never work.

So I was starting my doctorate there under the supervision of a man who was measuring hormones in urine, which had led to getting a large World Health Organisation grant for hormones in urine for women's breast cancer.

He had initially been the man who was going to do the IVF stimulation so that we could get multiple eggs, but he was too busy. And he said, "Well, here — you do it." And I did it.

And I developed all the ways of safely stimulating the ovaries in infertile women to get multiple eggs for the purpose of in vitro fertilisation.

Matthew Kidman

Candice Reed was the eventual baby in 1980 — third IVF baby in the world, I think. Was there a lot of pushback from the community and the medical community?

John McBain

There was no pushback at first, because it didn't work. And so there was nothing to be alarmed about, but once it started working, then the unholy alliance of the Catholic Church and the feminist push started to make things uncomfortable for us.

The women thought we were manipulating women's bodies, using them as living laboratories, and the Catholic Church, well, they already had this idea that the only way a child could be born was through intercourse.

And every act of intercourse had to bring about the chance of the birth of a child, and that's why they were against contraception. So they were never going to, and they still don't, officially sanction life being created by sperm entering an egg in a glass dish.

Matthew Kidman

Did that resistance make it difficult to get funding, to keep going with IVF, and turning it into what is a major industry today?

John McBain

Well, we had no funding. We donated our own surgical fees into the program, and it wasn't until it was successful that we started charging the patients anything. We did it on the smell of a rag, Matthew.

Matthew Kidman

And when Candice came along, it must have been a momentous occasion.

John McBain

It certainly was, but although we were the second team to do it, with Steptoe and Edwards being first, they only had two pregnancies over the intervening two years, and we had one pregnancy in the same period of time.

And doing the arithmetic now, it's clear it was just such a low chance. There was one woman, Candice's mother, who became pregnant in the year 1979 of 50 women we had treated, and that's a 2% chance.

And that was the same with Steptoe and Edwards, when we got to analyse their figures. So it was just random that they got the pregnancy first.

Matthew Kidman

And you mentioned you donated that your fees to fund the project. What was the drive behind that? Was there just general goodwill or was it something that had to be achieved because you believed in it?

John McBain

It was something that we at the Royal Women's Hospital were determined would work. The leadership of the team was with Ian Johnson, my colleague and friend Andrew Spears, and then Michael Gronow, and then Chris Bailey after that.

As we worked and did surgical egg retrievals, we would be able to get funds through charging the patient a rebatable fee through Medicare or its predecessor, and the money that we got, we just put into the kitty to employ the laboratory assistants.

The senior scientist was employed by the university, so that wasn't a problem, but to employ the assistants, to purchase culture fluid, incubators, and all that sort of stuff. It was never meant to be a money-making process. It was just something we thought ought to be done.

Matthew Kidman

And from that point onwards, Australia became known as a leader in IVF post 1980, right through the next decade or so. Did that come because it was self-funding and there was a lot of effort and energy put into it, or did the success fuel more success?

John McBain

Success came to us slowly, Matthew, and it wasn't until 1983 that every time we treated a woman that her chance of pregnancy was somewhere close to 10%. And that was only because we were putting back up to four embryos at the one time, meaning randomly, she had a chance of a single birth.

Remember, the commonest outcome was no pregnancy from the transfer of these four embryos, but by 1984, we had the world's first quadruple pregnancy.

I saw that as a technology failure, and that's why we moved very rapidly over the years, and my team led the way in this, of reducing the number of embryos that we transferred and freezing the extra ones. And that is now the mainstay of clinical IVF.

Matthew Kidman

And the percentage of success today is higher. Why is that?

John McBain

Because we now know what we're doing. We, as you correctly say, led the world, but we stopped leading the world when it became a criminal offence — with up to four years imprisonment — to do embryo experimentation.

So we had to import techniques, culture fluid, types of incubator, from jurisdictions where it wasn't an offence to do that work, and our legislators and the others who oversaw us could see no irony in that.

Matthew Kidman

And where did you source those embryos from? Where wasn't it illegal?

John McBain

In the United States. The current scientific director of Virtus Health, Professor David Gardner, left Melbourne and went to Denver, Colorado, where he developed the culture conditions which were necessary to allow the healthy growth of a normal embryo.

Matthew Kidman

And the battle, it seems, didn't seem to stop, because eventually you had the battle with the Catholic Church about who could access IVF.

Going to that point before about their beliefs, the battle between state and federal legislation went all the way to the High Court.

And I know my daughter, who's studying law, told me last year that she read this case with McBain in it. And I said, "I think I know that doctor."

So you became famous in legal circles by taking the Catholic Church right to Canberra. And the High Court — it must have been great to get an outcome on that front.

John McBain

I'll explain how it went. Before there was a law in Victoria — the Victorians insist on calling it their pioneering legislation — it hadn't been an offence for single or gay women to have donor insemination.

They saw a psychiatrist first of all. And we did it all very much in-house, and it worked well.

It was only in 1983 in the Victorian Parliament in the Upper House at 2am that trying to get the bill through, which had been foisted upon us, the Country Party insisted they would only support the bill if the couple having the treatment were legally married.

That went on until 1995, before they changed the legislation. I had set up a clinic in Albury, in New South Wales, really to help country people because it seemed wrong to me that someone was driving five hours to see me for half an hour then driving five hours back.

John McBain

So I set up a clinic in Albury on the reproductively sane side of the River Murray, where the Victorian legislation didn't apply.

It became clear to me that the single women, the gay couples, the de factos, wanted a baby, and they had the same high dreams and aspirations as those who were married.

I took it upon myself to sue the Victorian Government, the Minister for Health and various other people in the Federal Court in 2000, and won.

That caused a moral panic. And the government invoked a law called the Interpretation of Acts Act, which discerns some words in the minister's second reading speech, which said "this only applied to infertile couples".

Over that time also, the Catholic Bishop's Conference had sought a prohibition on my practice through Daryl Williams, who was the Attorney General in Western Australia.

They obtained writs of mandamus and certiorari, which allowed them to bring me to the High Court, where my legal team spent three days at the Hyatt, having travelled up in the sharp end of the plane. Fortunately I won seven-nil with costs.

Matthew Kidman

And it became a famous case, which is fantastic. And it relied on the federal legislation of no discrimination about who has the right to have a child. Is that basically it?

John McBain

Well, you can't discriminate against someone on the basis of race, religion, all sorts of things. And everyone knew this and everyone knew that the Victorian law had been brought forth flying in the face of that, but no one did anything about it. I did, and I won.

Matthew Kidman

Terrific. During that time, you formed Melbourne IVF, which later become Virtus, and it became a commercial operation. How did you do that while working at the women's hospital?

John McBain

The only reason we formed a commercial enterprise is because the women's hospital didn't have any more space to accommodate the growing number of cases that needed to be looked after. And also, our practices were growing and parking was becoming a problem.

And so we fell in with the Freemasons, who were building a new medical centre, and they had a theme of women's health. I think they were trying to do something to counteract their fusty image.

The new medical centre was going to have its priority in women's health. We were a natural fit for that, but we had to, each of us, put in about $20,000 to establish the laboratory there.

There was no IVF rebate. We didn't do this to make money. We did it so we could continue our IVF practice as part of our general practices.

I was delivering medicine and obstetrics. I was doing operative gynaecology. I was lecturing at the university. I was doing my research and I was doing IVF. It was a real mixed business.

Matthew Kidman

A group of you put in $20,000. That later became the basis of the share holding. And the formation of a company occurred when? When you went into those new facilities? Was it when you put in the $20,000 or was it later on?

John McBain

No, it was in 1989. We formed Melbourne IVF, we all put in our money, and in the first year, I think our profit was about $3,000.

Matthew Kidman

And how many of you were there? How many shareholders in that group?

John McBain

There were seven of us with equal holdings.

Matthew Kidman

And who ran the business as became bigger? As you went through the '90s into the 2000s, it obviously became bigger and became quite a commercial enterprise. Did you play a role in that?

John McBain

Yes. There was a board of seven. The founding chairman, Ian Johnson, had become the chair of the Reproductive Technology Accreditation Committee of the Fertility Society in Australia.

And we felt he shouldn't hold the chairmanship of Melbourne IVF and have that chairmanship also. Also, he was getting towards the age that I am now, so I suggested that he might go and I might take over from him. And I did. I was the executive chairman.

Matthew Kidman

So it was a coup?

John McBain

It was a gentle coup. He was a gentle man and he saw the writing on the wall. It was possibly a bit like Gareth Evans saying to Bob Hawke, "The dogs are pissing on your swag, mate."

Matthew Kidman

I'm sure he didn't use that language, but I get the drift. So you built the business, you were executive chairman for an extended period, and eventually the company turned into Virtus, and listed on the ASX in 2013. What was your role then? Had you left or were you still part of it?

John McBain

I had a very minor role in all of that. Lyndon Hale had taken over from me as executive chairman. I had other fish to fry and he did it very well.

He negotiated with Quadrant Private Equity, and I must say Quadrant Private Equity were the best possible partner looking after medical people. They listened to us, and everything that we said, gave their due consideration.

Indeed, Marcus Darville talked us into upping the amount that we wanted for the sale of the company, because we were giving it away for far less. And he knew once we discovered what other clinics were being sold for, there would be unhappiness.

So the Quadrant Private Equity people from the very start made sure that the relations with the doctors and the private equity were as good as they could possibly be. And I think that's a model for the way to privatise medicine.

Matthew Kidman

So they let the doctors take care of the medical side and the operations, but they had their fingerprints on the financial side and how it should be funded and what valuation should be attributed.

John McBain

That's right. They brought in many improvements, which we as doctors and part-time businessmen would never have thought of.

Matthew Kidman

And 2013, the company lists as the first IVF. It was soon followed by Monash. As we know now, you no longer were part of the management team. And you obviously had your share holding, which was worth quite a bit.

John McBain

I'd been on the national advisory board. I didn't leave in any huff at all. And only reason I sold my shares was that I was still had my leadership role at the women's hospital. And I was advising the women's hospital in reproductive matters.

And the board of management thought that I had a conflict of interest as a shareholder in Virtus Health. And as their advisor, I told Virtus what I was doing and I sold a line of my shares. I did particularly well because the price fell a number of years later, although it is now properly in the ascent once more.

Matthew Kidman

And so you're still a believer in the company?

John McBain

Oh yes, this is a very, very good company with top doctors and medical equipment and scientific know how. It's also a company which has great peer review within it.

There are many, you might call them small business, single-handed enterprises, of people who have usually left some of the larger clinics with some reason for the dissatisfaction or another.

I feel they're a bit isolated in terms of their inability to keep up the standards required, both continuing medical education and ethical considerations.

Matthew Kidman

Let's get to the exciting bit now. You leave Virtus, you sell your shares for the reason that you outlined, you've got a reasonable pool of capital. Was it then you thought, "Well, my new career is going to be on the share market" or was it just something that evolved?

John McBain

No, I've been in the share market since 1996. Initially with Were's, the typical boring portfolio that you would get from responsible Were's advisors. I fell out of love with them when they wouldn't let me invest in Patrick's.

When I saw what Patrick's were trying to do and the inevitability of their success against the wharfies, I wanted to put a motza into that and they wouldn't let me do it. So I left them and found a kindred spirit in Hugh Walter Robertson.

Matthew Kidman

He has moved from a few brokers, but now sits at Bell Potter in Melbourne.

John McBain

He's been everywhere. He was at Faulkners at the time and then went to Bells and then went to Wilson HTM and then Investors First. And he's now safely back in the welcoming arms of the brothers Bell.

Matthew Kidman

So let's concentrate on that. You'd had some experience, but all of a sudden you had a bit more time on your hands and a bit more capital, I gather, post Virtus. And there were a number of investments then.

Bellamy's came through Hugh, I know that they were floating it; there was Money3, which I understand you are a big shareholder. What attracted you to those early investments?

John McBain

It's fair to say, Matthew, that my investment strategy at first was standing at the end of the conveyor belt, where all the deals came through from Bell Potter, and just picking them up one after the other and investing in them.

That actually was very passive strategy, but a very rewarding one. I got a nice parcel of Bellamy's. I felt I was the cleverest guy in the room when I sold my, I think, 40 cent shares at $4.

I had no idea, and I don't think anyone did, what the Chinese diaspora would do to buy safe, powdered milk and send it back home. And that's why it had that extraordinary share price at one time of $20.

I didn't regret it. I think good advice, which I can't remember who gave it to me is, you've got to leave something on the table for the next person and you can't look back.

Matthew Kidman

I think that's like an investment Panadol — it just makes you feel a bit better, but it doesn't stop the pain. Better to have the win than not. There's no doubt about that.

John McBain

I like Money3, because I like things which will lend to people that other institutions won't.

My background in Glasgow, we had someone who would come round every Friday night to collect two and sixpence from my mother, which would then go into some sort of fund.

And once there was enough money to justify a purchase, we'd go into Goldbergs warehouse in the Candleriggs and get a new set of clothes and shoes and so on.

So that was a very important thing for me, growing up. And that's one of the things which remains a cornerstone of my philosophy that people deserve to be given credit.

Matthew Kidman

And you remain a shareholder in Money3 today? It has rerated enormously over the last five or six years.

John McBain

It's one of my larger share holdings. I like very much what they're doing. I like the increasing quality of their book.

Matthew Kidman

Let's go on to Afterpay. There was a book written earlier this year called Buy Now, Pay Later, by Jonathan Shapiro and James Eyers.

They talk about Hugh Robertson in the days before Afterpay listed back in 2015. He needed to raise $8 million and showed the company around and came up a bit short.

The book suggests you put forward $500,000. But when he needed more, you ended up putting in another $200,000 to help him get to the $8 million. Is the story correct?

John McBain

Yes. The story is correct. I was one of the first, in the first presentation that Anthony Eisen and Nick Molnar made. And I was so impressed with these men and with their vision.

I remember saying to Nick at the end of the presentation, "You guys will change the face of retail in Australia." It just seemed so clear to me how this would work.

At that time they had two clients, but I had such faith in what seemed to me the character of these men and their intelligence and vision and ambition, that I was very happy to pony up for that amount.

Matthew Kidman

And it was very early days when Hugh raised that money for them. And a lot of people were briefed and had presentations and just walked away from it. But you saw something different.

Why do you think it would change the face of way retail would operate in this country?

John McBain

Nick expressed it beautifully, and I've never heard anyone repeat this quote. He said, "This will stop people having to go and visit their clothes every week." And that's exactly what the system of labour was.

Matthew Kidman

Interesting. A very smart salesman, Nick.

John McBain

And it was just a no-brainer. I mean, he saw that so clearly, and I was lucky to see it from him. But once they got this offer from Square, I wrote them each an email congratulating them on it. And they were very kind in their remarks to me of my early support.

Matthew Kidman

When the company did float a year later, you participated in the float again?

John McBain

Yes, I did. And thank goodness for Saint Escrow. She is the patron saint of patient investors, because my 20 cent shares were now worth $1.40. Then they were worth $3.70, and that money would've been burning a hole in my pocket, Matthew. And so thank goodness I was unable to access these funds.

Matthew Kidman

And it was a terrific ride over the next four or five years until now we've got the takeover bid. And that will go through with the goodness of time and the process, but it did have a rollercoaster ride.

We saw out of the back of the coronavirus selloff last year, Afterpay stock, I think, went back down to $8. It subsequently skyrocketed and went up 15 fold.

So it has been a rollercoaster of a ride. How have you dealt with that as an investor? Because as time's gone on, the investment has become a much bigger part of the overall portfolio and big in dollar terms.

John McBain

Yes, it has. And I've sold down along the way when we needed deposits for children's houses or gifts for one thing or another, or pledges we had made to the university or to the hospital or to the children's school for the various things we support, to people overseas in the extended family, for the purchase of farms for my agriculturally based children.

So everything has, in the main, been funded from that early lucky investment in Afterpay. Yes, I could have held onto it and the stake would've been worth $400 million by now, but so much of the really good things that my family was able to do for the family itself and others and our philanthropic targets would not have happened.

Matthew Kidman

Terrific. So you used it almost like a bank — whenever you needed the money for something, go to the Afterpay bank.

John McBain

The bank of Afterpay. Yes. Yes. Alex Waislitz and I are moving into adjoining penthouses in a place in St Kilda. He said, "You'll be calling that the Afterpay apartment, McBain, won't you?" And I said, "No, I wouldn't be so crass, Alex!"

Matthew Kidman

Very good. So that takes us on to your investing today. I understand you've got a reasonably large portfolio, both listed and unlisted.

And from those early days that you talked about, have you got an approach now, or do you just follow your instinct? Do you have a portfolio structure? How do you go about your investing? Because it's much larger than it used to be.

John McBain

Although it's much narrower than it used to be. I used to have bits of everything — rats and mice all over the place.

I've sort of developed favourites. I've developed stocks in which I have faith in the model and in the management.

And I've also learned from people like Waislitz that patience is not a bad thing to have, and that the stock exchange is a mechanism which takes money from the impatient and rewards the patient.

Matthew Kidman

And so today, how many different investments would you hold, both listed and unlisted, in the form of companies?

John McBain

Only about 15 listed and a similar number unlisted.

Matthew Kidman

And do the unlisted worry you — the lack of liquidity — or does that go back to that patience, and there's good opportunity there?

John McBain

There has to be patience. Here's an example. Afterpay was one month. A month later, Agersens was the collar on the cattle to give virtual fencing to control cattle.

I took a big holding in that. I went onto the board of Agersens in time. And I sold out of that after five years, probably at about a 30, 40% profit — good but modest compared with Afterpay.

And a month after that, there was another agricultural one called AgLife, which is still not listed and which has got a good model and in time will work. And I remain a shareholder in AgLife and I support it at each of its raisings, because I admire the management and I think the technology is sound.

Matthew Kidman

Are you partial to any type of company? You've mentioned Money3, a finance company, we've talked about Afterpay, which is technology and finance. You grew up in Virtus, which was a medical technology company. Is there anything that piques your interest and you are partial to?

John McBain

Well, I like to invest in unlisted where I can see around the corner or into the next paddock of what it will bring.

I'm a director of an unlisted company called Vitrafy, which is a new way of freezing tissue. I know that this company will be able to solve the problem of the attrition rate in stem cells.

And that's one of the problems that stem cells have — the inconsistency, their batch effect — because of, I'm sure, freezing and thawing.

Also the CAR T manipulation of white blood cells to go all around the body, fighting cancer in every crevice, nook and cranny, which will become the fundamental part of cancer therapy for all sorts of tumours, including solid ones, for many years to come.

Cells need to be cultured, they need to be expanded, and then they need to be frozen, and they need to be frozen in the way that Vitrafy can do it.

I also believe Vitrafy will be able to freeze a whole ovary from a woman. I was part of that team which developed a way of taking ovarian fragments, freezing them, and putting them back into a woman after lifesaving but fertility-destroying chemotherapy, and then having live babies from that.

Currently we have to do it in 2 millimetre cubes. This technology will allow us to freeze a whole ovary; take an ovary from a 32-year-old woman and freeze it, and reimplant it when she's 45, so that she can expand her reproductive life or go through the next 20 years without the need for hormone replacement therapy.

Matthew Kidman

And the ability to commercialise such technology, how, patient would you be? Is it a decade-long journey? Is it five years? Is it 20 years?

John McBain

Five years for the ovary, because there are ethical considerations to overcome. And there's a court of public opinion, because what I've just said is not really accepted nor acceptable practice in medicine currently.

Matthew Kidman

But you think it will over time.

John McBain

Yeah, I think it will. I'm also a major shareholder in Simavita, which is the adult nappy, which we de-listed and have taken to become a Swiss company.

And we are in negotiations with Henkel, who are a German partner with the major nappy makers, or diapers, as they insist in calling them in Europe and in the United States.

It's a smart nappy, which tells you when it needs to be changed, and tells you when the elderly person needs to be turned and will tell you their temperature, their pulse, oxymetry, their oxygen, and when they last moved.

What's currently important is how wet is the nappy? When does it need to be changed?

Matthew Kidman

Okay.

John McBain

The nappy needs to be changed. That's good. But sometimes the nappy doesn't need to be changed. And you need to know that because the person may be becoming dehydrated.

Matthew Kidman

Smart nappies — sounds very sensible when you put it like that. Just changing to the listed market. You mentioned that you would hold circa 15 stocks at any given time.

One of those holdings is Rhinomed, which is the nasal spray technology that you've got a quite large share holding in, in terms of percentage of the company.

Can you give us a insight into Rhinomed and why you think it's got a prosperous future?

John McBain

Well, it was a Victor Kiam moment, when I used the product Mute. You remember Victor Kiam with — was it Wilkinson Sword or something like that? (It was Remington.) He liked the company so much, he bought it.

I didn't quite buy the company, but I've got 18% of Rhinomed now. And I just so admire Michael Johnson, being managing director. That man is a genius in the things that he's come up with.

First of all, to the nasal stent. It's not a spray, it's a stent, Mute, which flares the nostril, which increases the flow of air for the nose-breathing person overnight.

If you increase the radius, the flow of air by physical law increases, raised to the power of four, and that stops people snoring. It certainly stops me snoring, and my wife can tell when I've got the stent in, or if I've forgotten to put it in overnight.

So many other people say a similar story. So that's the first thing. And I'm a supporter of that. It hasn't set the heather on fire. I think that's mostly because men don't really worry if they snore or not.

It's true that it's not for everyone. It's only, quote, "where there is mild nasal obstruction". There are aspects of other breathing problems which can be attended to as well. It's also going to be a very good delivery system for decongestants and for cannabis.

But where the beauty of this company is that Michael Johnson looked at this stent, looked at COVID and said, "I'm going to make a swab which just sits in the nose exactly where COVID-19 makes its entry into the ACE receptors on the nares, just underneath the turbinates." It's exactly where it sits. And it is self-administered.

There's a consistency in its application, because there's only one way you can use it, rather than someone might inefficiently or even wrongly self-swab themselves with the current swab.

Its pick-up is 1.6 times the amount of material that the conventional COVID swab does. Its evolution of that material into product, to be either expanded by polymerase chain reaction or to use as increased material for antigen test, is significantly superior.

Some will say, "Well, yes, but COVID will soon be over. It won't matter any more."

I believe this swab will become the platform for the diagnosis of respiratory conditions forever really, and I say that because when once COVID has gone, influenza will be back with us.

Now, influenza is epidemic, it's seasonal, and it will come back every couple of years. There are no drugs for influenza which work and that's because people have to wait until they have symptoms of influenza.

This swab will pick up through mass high-frequency testing, the very earliest signs of influenza on antigen testing.

And you remember Relenza and other anti-influenza drugs made about 10, 15 years ago, then abandoned? They were abandoned because they didn't work in established treatment, in the established condition.

If you have a swab which picks up the very earliest sign of the presence of the virus, then I believe these drugs will have a renaissance in terms of their use.

Matthew Kidman

So you've proven to be entrepreneurial in a financial sense and, over your career, entrepreneurial in an ideas sense — you love to explore ideas.

Is that the main reason you like small companies, micro companies, because there is lots of variety and different ideas being explored and opportunities being attempted to be taken?

John McBain

Well, I think so. It's not the wild west. The ones I get to see are probably only 10% of the ones that will walk in through the door of my advisors and even the ones that I get to see, I don't take all of them.

I usually, for politeness sake, take a little of each of them, and then will see what happens to that holding one way or another.

I'm a bit of a mug for taking a holding and holding onto it. I hate when I see people climbing over each other to get an allocation of a stock and then flipping it upon listing for a couple of cents here and there. That's not my way to invest.

Matthew Kidman

Well, John, it's been delightful speaking to you. Good luck with all your investing. It sounds like you've got many years of this career to go and hopefully we'll catch up in the near term.

John McBain

Maybe we will sit on a plane together, going up to look at prawns in the Northern Territory once more, Matthew.

Matthew Kidman

I'd enjoy that. It was good fun the first time. And I'm sure it would be the second time.

John McBain

All right. Nice to see you, Matthew.

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Matthew Kidman
Principal and Portfolio Manager
Centennial Asset Management

Matthew is the Principal and Portfolio Manager at Centennial Asset Management. Prior to this, Matthew was the CIO at Wilson Asset Management between 1998 and 2011, achieving 18% p.a. over the period.

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