Genesis Research and Development posts $6.23m loss

By LIAM DANN

Genesis Research and Development says its business remains sustainable despite growing losses and dwindling cash reserves.

The listed biotechnology company yesterday reported a loss of $6.23 million for the half year to June 30 - a 23 per cent increase on the loss of $5.26 million for the same period last year. Revenue was $5.8 million - down from $8.7 million.

The company ended the period with cash reserves of just $28.6 million, down from $42.2 million at June 30 last year.

Head of corporate services Stephen Hall accepted that the situation for the last period looked negative. But the results needed to be looked at in context of the company's long-term strategy, he said.

The cash burn over the last year did not mean Genesis was about to run out of funds.

"We're managing the business to survive for a very long time - like forever. The cash position for a short period is not indicative of the long term."

It was a fact of life for biotech companies that revenue was "lumpy", he said. Genesis earned money by selling commercial licences for its intellectual property.

In the past six months the market had been very tight so "rather than give away the family jewels for next to nothing" Genesis had held back on selling some of its intellectual property, Hall said.

"We've still got a reasonably good cash balance so we're not desperate to do it all today," he said.

Genesis' short term hopes rest with two skin disease treatments - psoriasis drug PVAC and eczema drug AVAC.

The future of PVAC rests on the result of clinical trials in the US, which are due in December. A major trial of AVAC is also about to begin.

"If those trials are successful then the money oozes out of your ears," Hall said.

If they were not successful other candidates were waiting in the wings and there was money to take them to clinical trials, he said.

Genesis was also in the process of spinning off its plant science company and had some strong interest from some major plant investors, he said.

The company - to be called AgriGenesis Biosciences - is expected to be established by the end of September. A chief executive - expatriate New Zealander Dr Peter Lee - was appointed this week.