Protemix in liquidation

Failed biopharmaceutical company Protemix is on the block after it collapsed into liquidation owing creditors $2.145 million.

The move follows last month's rejection, by a small group among the firm's 39 shareholders, of a rescue package from former travel industry magnate Andrew Bagnall.

Protemix director Bill Birnie says Bagnall offered to buy the company, negotiate a settlement with its creditors and invest $5 million to fund a further trial of its key compound, Laszerin.

Current shareholders would be invited on a pro rata basis to reinvest when the trial was completed.

But the proposal needed approval from 90 per cent of shareholders, which it failed to achieve, and Bagnall subsequently withdrew his offer.

Mr Birnie said at that point the company had no choice but to "move along the formal route".

"The offer was exceptionally good  it was a fantastic deal  but the [shareholder approval] process was dragging on."

He estimated Protemix had burned through about $41 million, including a $13 million government grant, since it was established in 1998 by a Professor Garth Cooper, John Baker, lawyer Tony Molloy QC and businessman Neville Jordan.

Laszerin, the brainchild of Cooper, was developed to treat heart failure in patients with diabetes. But clinical trials were "confusing at best", Birnie said.

"It was all about the way the results were measured."

This made it difficult for the company to attract funding for the next trial phase "though we had a very good financial arrangement with three very strong parties should our trial have succeeded".

Mr Molloy said Protemix needed a further $50 million to develop Laszerin to the point of registration in the US  money, he said, that should come from the government.

"New Zealand has just pissed away a US$1 billion-a-year industry because of the lack of political vision. It's such a tragedy." The company's collapse, he said, "is the saddest, most terrible thing".

Mr Molloy, who invested about $3 million, said if he had a spare $10 million to $15 million he would buy the intellectual property "tomorrow" and hope to convince Prime Minister John Key of the need for further government funding.

Birnie said he believed two or three "factions" would be interested in buying Protemix from liquidator Laurie Chilcott.

But both he and Molloy warned that maintaining the patents and paying the requisite fees will be expensive  about $1 million a year, Molloy estimated.

He said the company should be put into statutory management, under government control, to ensure the patents are maintained.

Eventually it could be floated on the stock exchange.

Mr Chilcott said he won't attempt to value the patents and other intellectual property assets. Instead he will call for expressions of interest.

"So far nobody's banging on my door saying they are interested in buying. There's not a lot of speculative cash around for chasing moonbeams."

Birnie, meanwhile, rubbished suggestions from some shareholders that Protemix failed to be sufficiently accountable for its spending.

"That's just bullshit," he said. "They have had a full accounting for the application of funds. We all had very high hopes for Protemix and people are always disappointed when they lose money."

The company was founded "early in the development of New Zealand's capital markets" and investors were repeatedly told not to invest money they couldn't afford to lose, he said.

"We told them it was high risk. They're expensive beasts, these biopharmaceutical companies, especially when they become international."

- © Fairfax NZ News