Genesis still burning cash

01:43, Jan 31 2009

Genesis Research and Development Corporation Ltd is continuing its cash-burn and today posted a loss for the six months to June 30.

The net loss for the period of $2.3 million compared with $3m for the six months to June 2007.

Genesis chief executive Stephen Hall said the loss was "substantially below budget", but he also noted the company had not received its scheduled August payment of $2m for shares it sold in subsidiary BioJoule Ltd.

He said the payment "has been deferred until December in conjunction with all the other parties to the transaction, consistent with the Pure Power Global (PPG) funding programme and current market conditions".

PPG, a Singapore-based renewable energy company which picked up Biojoule's willow-energy project for less than $4 million last year, has started marketing cuttings of the trees to farmers and foresters.

It has 37 hectares of willows in nursery plantations at various stages of development, and has said the willows could be used to produce ethanol and useful chemicals from 2013.


Genesis' revenue for the half-year was up 6 per cent to $727,000, also compared with June 2007, due to cost savings and accrual of the Government's new research and development tax credit of $400,000.

At June 30, it had net tangible assets per share of 25c, compared with 27c last year, and a cash balance of $3.4 million compared with $5.8 million in December 2007.

"Good progress has been achieved," said Mr Hall.

A "novel" gene silencing project which started early in 2008 was making good progress with support from Australia and the USA.

Mr Hall said the company was now seeking taxpayer funding for the project through the Foundation for Research Science and Technology.

"We believe that it has the potential to provide significant benefit to not only Genesis but also to New Zealand as a whole," he said.

The New Zealand technology - to "switch-off" genes - was seen as an improvement on the technique for which Americans Andrew Fire and Craig Mello won the 2006 Nobel prize for medicine.

Through experiments with worms, the two showed that a double strand of ribonucleic acid, or RNA, the genetic messenger of the cell, can "silence" targeted genes in a process known as RNA interference (RNAi).

RNAi has grown quickly into a hot area of research for pharmaceutical and biotechnology companies, who see it as a promising new way of stopping gene expression in diseases such as cancer, slowing tumour growth.

Mr Hall said his technology "has the potential to compete with, and even achieve better results than the antisense and RNAi technologies being developed by major global pharmaceutical and biotechnology companies".

The initial application of the New Zealand gene silencing technology would be to develop a tool for pharmaceutical research, by creating reagents - chemicals that promote a reaction or enable the detection of a substance.

Later it could use this expertise to develop treatments for humans.

Mr Hall said human antibodies produced for his Zyrogen programme by MorphoSys in Germany are being tested in a disease "model" in Europe, with results expected shortly.

"There is a strong possibility that royalty and licensing revenue from previously out-licensed projects will increase significantly within the next 12 months," he said.

Mr Hall said consolidating the Genesis laboratory and offices on one floor of its current building would save money.