Genesis Research shares drop after drug setback

By JIM EAGLES

Shares in biotechnology company Genesis Research fell 19c yesterday after the company announced it was abandoning development of its psoriasis treatment drug Pvac.

Chief executive Jim Watson said recently completed trials of Pvac did not produce sufficient benefit to patients to justify more spending.

The trials had found the drug to be safe and well-tolerated, he said.

But one trial showed that Pvac failed to achieve a statistically significant benefit to patients with mild to moderate psoriasis compared with patients receiving a placebo.

Another in which Pvac was provided to patients in advance of standard ultra-violet light therapy also failed to demonstrate any significant additional benefit.

After discussing these results with its development partners Genesis had decided to discontinue development of Pvac for psoriasis.

"While we would have preferred a different outcome, we have thoroughly explored the potential utility of Pvac in this indication and are confident that we have made the right decision," Watson said.

In a letter to shareholders he said he realised this was "disappointing news for shareholders, staff and patients ... particularly at this time of year".

But, he said, taking a therapeutic candidate through clinical trials always carried with it a significant element of risk.

Watson, who founded Genesis in 1994, tried to paint a positive picture by pointing out that "Genesis has been determined never to rely on any single product candidate, no matter how promising." With that in mind he pointed out that patients were signing up well for the company's phase-two trial of Avac as a therapeutic for atopic dermatitis (or eczema) in Auckland.

A parallel phase-two trial for atopic dermatitis using SRP 299, being conducted by Genesis' partner SR Pharmas, was also getting good support in Europe.

"We will be in a position late next year to compare these two candidates to determine which is best to take forward," he said.

"Importantly we end 2003 with strong cash reserves to continue with these drug development candidates as well as those candidates which sit in our preclinical pipeline."

Watson also reminded shareholders that the company's plant biotechnology operation had recently been spun off into its wholly owned subsidiary AgriGenesis BioSciences.

"We are confident that this business will also bring great value to our shareholders."

Nevertheless, the disappointing news saw shares in Genesis close at 101c, well down from the 12-month high of 150c.