Genesis stays positive despite AVAC blow

The failure of childhood eczema drug AVAC is disappointing but will not be material to the financial outlook of biotech company Genesis Research, chief executive Stephen Hall says.

He was reacting to his company's announcement yesterday that the development of AVAC would be stopped after trials showed there was no substantial difference between patients treated with the drug and those treated with a placebo.

Hall, chief executive for less than a week, said Genesis was now focusing on developing a treatment for asthma and atopic dermatitis.

Research into AVAC and predecessor PVAC, which failed clinical trials last year, would not be wasted.

"What it has left behind is a great remnant of models and understanding in these disease fields and that's what we're taking forward."

The trial studied 128 children aged from five to 16 who suffered from childhood eczema. All except four completed the six-month period of clinical assessment.

The trial started in September 2003, full enrolment was achieved by the end of June 2004 and the last patient assessment was conducted this month.

The company is looking for commercial partners which will enable trials of Zyrogen - the next drug in its product pipeline.

Zyrogen is a newly discovered and patented molecule which has shown promise for the treatment of auto-immune diseases such as lupus and osteoporosis.

Hall said there were also other prospects in a "hot-list" of compounds which the company had identified.

Genesis still had about $11 million in cash reserves and had been managing those resources on the assumption that AVAC might fail.

Despite that, all biotech companies needed cash injections from time to time.

In the short to medium term, the company was happy to seek out commercial partners.

Hall said there were no plans to publicly raise capital in the near future.

Shares in Genesis slipped 4c - or 8 per cent - to 44c yesterday, having ranged between 42c and $1.20 during the past 12 months.

At the peak of the biotech boom in 2000, they traded for more than $7.

Hall said the company had looked at ways to address the share price but was not prepared to chase short-term revenue gains at the expense of its long-term business plan.

"In the end, it is the long-term proven clinical success that will rebuild the share value."

Last month, Genesis' British partner, SR Pharma, said trials of another childhood eczema drug, SRP299, were unsuccessful.

Genesis and SR Pharma shared joint rights to SRP299, which was developed in Britain, and AVAC, which was developed in New Zealand.

Biotech blues

Genesis Research was New Zealand's first listed biotech company.

AVAC was its second major drug to fail clinical trials in the past 12 months.

Genesis shares once traded at more than $7 each.

The share price fell 4c to 44c yesterday.