Benitec plans for global growth

Brisbane-based RNAi specialist Benitec (ASX:BLT) has set up two subsidiary companies in the US, in a first step toward expanding its operations both here and overseas.

And M&A activity is also on the cards, as the company seeks to increase licensing activities and move into therapeutic development of its proprietary ddRNAi technology.

One of the two companies, also known as Benitec, will be responsible for US business activities, while the other, RNAi Therapeutics, will act as a base for the development of RNAi-based therapeutics.

Benitec CEO John McKinley said the company needed to have a substantial presence in the US in order to build its credibility, as well as to better its access to US financing, grants and partners.

"The main development [of RNAi] is happening in the US. To be a player in RNAi, you need to be in the US -- that's where the game is," he told Australian Biotechnology News.

Initially, RNAi Therapeutics will focus its attention on identifying appropriate targets for therapeutic development in the areas of HIV, hepatitis B and C and cancer. McKinley said that the company expected to identify particular gene targets in these diseases in the next 3-6 months, with at least two to become development projects.

But the company does not plan to shut down R&D activities in Australia -- rather it hopes to expand here as well.

"There are very senior institutes and corporations in Australia dealing with targets that would use our technology," McKinley said. The company already collaborates with the Garvan Institute in Sydney to investigate the role of particular genes involved in type 2 diabetes.

Benitec is also planning to boost its scientific advisory board with new members, as well as hire key staff with licensing and pharmaceutical experience, and scientific expertise.

Patent resolution

McKinley said the company had needed to resolve its patent position before it moved into therapeutic development. Last December, Benitec signed a landmark agreement with the CSIRO and the Queensland Department of Primary Industries, divvying up the applications between the three entities, and establishing a basis for sharing revenues. "The deal with CSIRO was a natural alliance waiting to be done," McKinley said.

The agreement gives Benitec access to what McKinley terms an unrivalled patent estate -- and the company has taken out patent insurance to protect its most valuable assets. The company plans to start a major licensing push among companies that are using the ddRNAi technology without a licence.

"[The patent insurance] gives us a means of progressing our licensing strategy -- it puts strength behind us to do deals," he said.

The CSIRO deal also opened the way for Benitec to raise AUD$10.9 million in a placement at the end of last year. Another 11 million share options are due to be exercised by the end of 2004, providing the company with as much as another $11 million. Along with the expected licensing revenues due the company through its partnership with Promega, the company is in an enviable position with a healthy balance sheet McKinley said.

"We have a huge year ahead of us -- it's going to be a very exciting year," McKinley said. "We have a lot to achieve in the next nine months -- it will be quite a different company by the end of it."