Kiwi biotech firm on hold as it waits for new funding

Genesis Research chief executive Stephen Hall. Photo / Amos Chapple

Auckland-based Genesis Research and Development - the first Kiwi biotech company to list on the NZX and ASX - will suspend operations as it waits to hear whether a Japanese firm will invest more cash in a key project.

Nine jobs would be axed in the process, mostly scientists.

Genesis Research chief executive Stephen Hall said the Japanese firm had made an initial investment of $500,000 in the company's subsidiary - Solirna Biosciences - which was established last year to develop gene silencing technology for use in the treatment of cancer.

The Japanese firm would invest another $300,000 to $400,000 if it was satisfied with data provided by Genesis Research on the progress of the project, Hall said. He said if further funding was provided the project would continue - but not in New Zealand.

Genesis Research was also in discussions over a proposed acquisition of a company involved in several therapeutic development projects, which included one that was close to clinical development.

"We're working through preliminary documentation and hope that a more full announcement will be made later in the week," Hall said.

He said the vendors had indicated funds were available for Genesis to make a share placement of around $450,000.

"That's a straight cash entry into Genesis from the vendors of this business we're looking at."

The listed biotech firm was also proposing a shift of its existing assets into an unlisted "shell" company, Hall said.

Shares in that company would then be distributed to existing shareholders, who would also retain their original shares in Genesis Research.

The asset shift was subject to shareholders' approval. "What we're trying to do is maintain the value of the existing assets for shareholders, which we think will be worth significant amounts at some stage in the future."

Hall said funding was always challenging in the world of biotech, which he called a "very high risk" industry.

He said it was disappointing the state-run Foundation for Research Science and Technology (FRST) had declined to provide further funding for the company. Richard Bentley, an FRST group manager, said the organisation had invested $9.5 million in Genesis Research and its subsidiaries.

Jim Watson, who founded Genesis Research in 1994 alongside John Beattie and Melbourne businessman Herman Rockefeller, who was killed this year, said he was disappointed to hear about the company's ceasing of New Zealand operations yesterday.

"I feel companies like Genesis are so important for the future economy of this country," he said.

Watson said gaining funding for the firm's projects had been always been a struggle.

"The first challenge was getting money. The second challenge was getting money and the third challenge was getting money."

GENESIS RESEARCH

* Founded in 1994 by Jim Watson, John Beattie and Herman Rockefeller.
* Listed on the NZX and ASX in 2000, and raised $34.5 million from shares offered at $6 each.