Genesis reserves running out fast

Stephen Hall. File photo / NZ Herald

The past week was a tough one for embattled biotech outfit Genesis Research & Development, but its chief executive reckons the company has been through worse before and still has a future.

Last Tuesday the Auckland-based firm announced it was severing ties with backer UBNZ after bribery charges were laid against its principal, May Wang, and associate Jack Chen by Hong Kong's Independent Commission Against Corruption.

Genesis chief executive Stephen Hall said the company had already received $450,000, plus a $250,000 convertible loan, from UBNZ, which owns a 16.3 per cent stake in the biotech company. UBNZ representative Graham Chin resigned from his seat on Genesis' board on Friday.

Hall said that as far as he knew UBNZ would retain its shareholding in Genesis, which became New Zealand's first publicly owned biotech company when it listed on the NZX and ASX in 2000.

"You don't sever with a shareholder - it's a free world and anyone can buy shares in Genesis," Hall said. "All that's happened is some charges have been laid and they haven't even been found guilty yet."

He would not reveal how much extra cash Genesis had been in talks with UBNZ about receiving, but said it was a "significant" amount. The company - which suspended operations and axed the jobs of around nine staff last year because of a lack of funds - had just $138,000 in cash at the end of September.

Hall said the company was running on a "very, very low cash burn basis". But the dwindling reserves would not last forever.

"Clearly things need to change so what we're busy working on is trying to find new investors, new projects and something that will make sense to existing shareholders."

The company holds 7 per cent of software developer Real Time Genomics. And in 2009 it established, with Japanese funding, a subsidiary called Solirna Biosciences, which aimed to develop gene silencing technology for the treatment of cancer.

Hall said Genesis would like to invest more capital into Solirna if it became available. Genesis had spent over $220 million on biotech projects over the years, with little success.

The company was a market darling in the early 2000s, when its share price soared to almost $8. On Friday its shares closed steady at 5.6c. Major setbacks - such as the failure of its flagship psoriasis drug PVAC to get approval for sale from the US Federal Drug Administration - saw the company fall on hard times.

Hall said Genesis was now looking for opportunities in lower-risk areas such as the development of food derivatives. He said that other than its interest in Solirna, Genesis did not have a future in biotechnology.