'Poor performer' biotechs urge shareholders to take the long view

Two biotech companies, Biota Holdings and Progen Industries, have popped up on the Australian Shareholders Association's 2002 list of 'Poor Performers'.

They are among 35 substantially under-performing companies who made the list based on their shareholder rate of return percentages, according to the ASA.

Biota rated negative 75.4 over the past year - second worst on the list behind New Tel - while Progen was negative 39.1. By comparison, the biotech sector overall scored positive 40.9. Biota's rating skidded sharply from its three-year figure of negative 42.2 while Progen's was marginally lower. The sector's overall three-year rating was positive 41.9.

Both companies said they accept the figures as a reflection of market perceptions but argued they had already responded by diversifying or moving existing programs to sounder footings.

The performance ratings are based on a composite of share price movement, dividend and tax credit imputation and take capital changes into account.

ASA executive officer Stuart Wilson said the association was promising a campaign of "intense pressure" on the companies' corporate boards to improve their operating and financial performance.

"We recognise management's role in running the company, but shareholders have direct influence on the board, so the buck stops there," he said. "The overriding message to these companies is - lift your game."

Biota CEO Dr Hugh Niall conceded the company's lead product, flu drug Relenza, had performed poorly but said a distinction should be drawn between the product and the company itself.

In the past year, Biota has advanced its program to develop an improved version of Relenza called FluNet, and is broadening its portfolio to include developments aimed at anti-hepatitis and anti-inflammatory products.

"I believe we are responding well to the market's disappointment with Relenza, both specifically with FluNet and also to the perception the company is too narrowly focused," Niall said,

Progen's vice-president for business development, Dr Peter Devine, acknowledged the company's listing as an under-performer was warranted, "on the bald figures".

But he suggested that biotech shareholders needed further education on the subject of factoring in the long lead time to market caused by clinical trials.

Progen is one of only a handful of Australian biotechs with a product in Phase II clinical trials and it is on track with the process, Devine said.

"People have to look at where a company is in the development pipeline when they assess that company," he said.

Progen's share price, which at one stage was around $10, sank as low as 75 cents last year but has since recovered to about $1.30.