Benitec tells AGM of better times ahead

"Seeing you all here means the company has survived," the chairman of RNAi specialist Benitec (ASX:BLT) Ray Whitten, told shareholders at today's AGM in Sydney.

It has been a difficult year for Benitec, and Whitten and Benitec CEO Sara Cunningham were not afraid to say so. But they reassured shareholders that with expensive litigation now behind it, the company was on track to improve its bottom line.

"What is most important is that shareholders have stuck with us," said Cunningham, who took the CEO role at Benitec in February, replacing John McKinley. McKinley remained on the board until November 15, before resigning because of overseas obligations. Cunningham was the co-founder of Avocel, which was acquired by Benitec in May 2004.

Both Whitten and Cunningham referred to 2005 as a major transitional period for the company, as it moved from out-licensing to clinical programs for HIV/AIDS lymphoma and hepatitis C.

"We have refocused the operations in California, recapitalised and resolved the outstanding legal issues that the company had," said Cunningham. "We are now starting to see an upward trend. We slid along with the biotech sector this year and we are now beginning to see a great deal of volume -- even in an ASX downturn."

In October, Benitec dismissed its patent infringement action against Nucleonics in the US Distinct Court on its own motion. In August, Benitec and Promega settled their contract dispute which was filed in July 2004, alleging that Promega had failed to pay its minimum US$50,000 in royalties required by the deal it made with Benitec for rights to the ddRNAi technology.

Other positive news included two agreements with chemical giant Sigma-Aldrich. Under the agreements, Sigma has paid Benitec US$4.5 million, including a $2 million equity stake for Sigma in Benitec.

"This is a huge validation of the company for the US investor market. Sigma-Aldrich could have just taken a license but recognised us as a sound company," Cunningham said.

Benitec shares began the year trading at $0.47 and slowly dropped to a low of $0.125 in May. The shares are currently trading at $0.17. "The four pillars of biotech are science, management, IP and cash -- we are good in [the first] three," she said.

Cunningham said the company was happy to put the legal action behind it. "With the legal disputes resolved we can now focus our attention and money on drug development."

She also noted "that for a company with 16 people, 10 scientists -- the rest mainly legal people, myself and the CFO -- we didn't slip on the timeline."

Speaking confidently about Benitec's scientific foundations, Cunningham described for shareholders a promising outlook for 2006, including planned clinical trials for its HIV/AIDS lymphoma program at City of Hope Medical Centre, Los Angeles due to commence in Q1. The company will also file an IND application in Q4 for its hepatitis C program.

Cunningham reassured shareholders that acquisition by big pharma was unlikely at this stage in the life of the company. Benitec, she said, was currently more focused on later-stage partnering and adding value to its share price.

She admitted that conservatively the company could be cash positive in eight or nine years. "We hope to see a good return in the next couple of years," she said. "When biotech pays off, it pays off."