Funding loss threatens 'big'work

By SIMON COLLINS, science reporter

The scientist whose work spawned the listed biotech company Blis Technologies, Professor John Tagg, may have to lay off his laboratory staff within six months after losing key research funding.

Tagg, a professor of microbiology at Otago University, was backed by the Government's Health Research Council for 20 years before Blis was formed in 2000.

A funding shortfall has forced the council to turn down his latest bid for funds to use Blis's anti-bacterial technology to fight meningitis and rheumatic fever.

This leaves him with no future income to support his team of a postdoctoral researcher and three technicians.

"We can continue to operate short term for a little while, but if I don't raise some additional funding within the next six months we are going to start to lay off some personnel. Once I lose that technical expertise, my students will be disadvantaged by not having that expertise on hand ... "

Blis chief executive Kelvin Moffatt said the company's own funds were fully committed to launching its first products to prevent bad breath and sore throats on world markets, and to trialling new products for glue ear and tooth decay.

"From the work John's done in the past, we probably have more targets that we would like to commercialise than we can afford to at the moment," he said.

Tagg's loss of funding was a concern in the long term. "But realistically, some of the things he's looking at now we wouldn't be able to focus on for a long, long time."

The company launched its first products in the New Zealand market in 2002, but still reported losses of $2.4 million in 2002-03 and $2.8 million in the latest year. Its share price is languishing at around 13c, down from a 12-month high of 30c.

Tagg works for the company 20 per cent of his time studying bacterial products called bacteriocin-like inhibitory substances (Blis) to displace or attack "bad" bacteria carrying bugs which cause sore throats, glue ear, tooth decay, rheumatic fever and meningitis.

"I have worked for the whole of my career on a new approach to controlling bacterial infections - not waiting till the infection occurs and then trying to treat it with antibiotics. My philosophy is to stop the bacterial infection occurring," he said.

"It's just disappointing for me to have worked all these years and now see that it's threatened at a time when the really big achievements are still ahead of us."

He said he was "an eternal optimist" and would apply to the council again in its next round, which closes in November.

The leaders of all the research groups funded by the council are lobbying the Government to increase the council's budget, and were backed last week by an Australian consultants' report which found that New Zealand was spending a smaller share of its national income on health research than all but one of six benchmark countries.

The council's chairman, Professor Graeme Fraser, said it would be improper to comment on a specific application for funds. "However, I know Professor Tagg to be a highly respected researcher.

"The fact that his proposal was not funded demonstrates yet again how competitive the HRC funding process really is. We definitely need more funding for health research."

A little Blis

* Blis Technologies is one of the smallest companies on the main board of the NZX, with net assets of just $3.2 million.

* It was formed in 2000 by the late Howard Paterson and Otago University, which retains a 20 per cent stake.

* It uses bacteriocin-like inhibitory substances (BLIS) - substances released by "good" bacteria which kill "bad" disease-carrying bacteria.

Blis Technologies