Scientists among 29 sacked as Genesis shelves projects

By LIAM DANN

New Zealand's largest listed biotech company, Genesis Research, is axing 29 staff in what will be a huge blow for the scientific community.

Several senior scientists will be cut. Most of the jobs will go from wholly owned subsidiary company AgriGenesis, which will be reduced to almost half its size.

AgriGenesis has ambitious plans to develop plant-based petrol alternatives called bio-fuels.

The bio-fuel project will continue but several others will be put on hold.

It is understood that AgriGenesis has been unable to attract enough outside investment to continue in its present form.

"It is sad to see good staff being released but this reduction in resources is necessary in order to focus our resources on the highest priority projects," Genesis chief executive Jim Watson said.

Watson - who founded Genesis in 1994 - has already said he will step down as chief executive later this year.

He said the restructuring would ensure that Genesis had enough cash to continue for several years.

The board of directors has decided the company's dwindling cash reserves should be focused on the core medical business.

It is understood that the restructuring has not been driven by the change of ownership at Wrightson, which holds a 15.4 per cent stake in Genesis.

There had been speculation that Wrightson's new owner - Craig Norgate's Rural Portfolio Investments (RPI) - might push for cost cuts at Genesis.

However, a company spokesman said RPI had not yet taken a seat on the board and had not had any influence on job cuts.

The Genesis Research medical division, which is developing breakthrough treatments for eczema, will lose five staff. Twenty-four jobs will go at AgriGenesis. A core of just 25 staff, including chief executive Peter Lee, will remain.

New Zealand-born Lee returned from a 27-year corporate career in the US to run AgriGenesis.

Lee said the company was tightening spending after feedback from potential partners.

It will retain all its intellectual property and will continue to seek partnering opportunities.

A company spokesman said the jobs would go from all levels - from senior scientists to IT workers and other support staff.

While the AgriGenesis plant science technology has attracted plenty of interest from the scientific community, its failure to attract cash investors is symptomatic of a global investor backlash against biotech companies - particularly those that do not have a focus on commercial drug development.

During the height of the hype around the biotech sector in 2001, its shares were worth $7.55. They closed yesterday at just 75c.

Watson, who will stay with the company in a scientist's role, said the medical division remained on course in its development of eczema drug AVAC. Results from clinical trials are expected by the end of the year.