Amrad to sell off its Melbourne HQ

Drug developer Amrad is to sell its 4.7 hectare campus in the prime inner city location of Richmond, in Melbourne.

Managing director Sandra Webb said the decision to sell had been discussed by the Amrad board over the last couple of years, before the sale was finally foreshadowed at the company's AGM in October last year.

Amrad did not see itself as a property investor, she said, and wanted the sale to happen as quickly as possible.

"We believe the site, along the banks of the Yarra River and with excellent transport access, is a prime commercial development site and the board fully supports the shift of our assets to fund our core business -- drug discovery and development," Webb said. A key component of any deals that Amrad will make regarding the fate of its property will be a leaseback of the company's corporate offices and laboratory space for a minimum of two years, to allow the company to relocate without extensive disruption of its R&D activities.

"That's important to us. We really don't want to upset the business, we want to maintain our momentum," explained Webb.

The company also has several tenants currently leasing space on the property, including GE Capital Finance, which has a lease and financial arrangement with "significant life to it," according to Webb. Cerylid Biosciences and biotech industry association AusBiotech also sublet part of the complex. Webb noted that the leases would add to the attractiveness of the property to potential buyers.

Amrad plans to use the money raised from the sale of the building to augment its existing cash reserves, which at the end of last financial year stood at $AUD34 million. According to the full year accounts released at the end of the 2001-2002 financial year, the net value of the property after settlement of outstanding debt was $AUD19.7 million.

Webb said the company had five programs in pre-clinical and clinical development, with a further 20 projects in the pipeline, and the property sale would allow the company to accelerate the development of the projects.

"It gives us the confidence of having more than two to three years' cash," Webb said. "It doesn't mean we'll be spending money like crazy."

Webb, who just returned from attending the JP Morgan Healthcare conference in San Francisco, said that there was a clear indication in the US biotech industry that companies with adequate cash reserves were faring better than poorly financed companies in the current biotechnology downturn.

"The feeling [in the US] is that the window will not open for another 12 months and companies have to ride it out," she said.

Amrad has engaged KPMG National Real Estate Group, Urbis, FPDSavills and Deacons to help sell the Richmond property.