Biotech pioneer BresaGen resurrected as service company

The dark clouds over venerable Adelaide biopharma BresaGen (ASX:BGN) have parted, revealing a little blue sky. But the resurrected company's business plan is focused on terra firma -- it is going back to its roots as a service company.

Bresagen holds a doubly historic place in Australia's biotechnology industry. Spun out of Adelaide University in 1982, it was Australia's first gene-based biotech, and the first in the lengthening list of biotech companies emerging from the nation's universities.

When Queensland biopharma CBio threw the foundering company a lifeline late last year by taking a 48 per cent stake, it did Australia's biotech industry a favour.

CBio's CEO, Wolf Hanisch, it was a forced decision that made sound commercial sense. His company had contracted BresaGen to scale up manufacture of its candidate multiple sclerosis drug, the heat-shock protein Cpn10, for clinical trials. If BresaGen went under, it would have cost precious time and extra money to find a new manufacturer overseas.

"It was our insurance policy," Hanisch said. "They had the infrastructure we had planned to put in place in our own company, and the expert personnel.

"We had budgeted to build up our own production capacity, so we came out of it with a net saving, and put an asset on our books as well."

As likely clients for BresaGen's proprietary ProtEcol scale-up service, many other Australian biotech and biopharma companies with protein and peptide therapeutics in development would have welcomed CBio's decision.

Client list

BresaGen's client list already includes companies like Metabolic Pharmaceuticals, Bionomics, GroPep, Imugene, the Howard Florey Institute, the University of Sydney, Novo Nordisk, and American Cyanamid.

The restructured company will have two business units:

• An API Supply Unit, manufacturing and supplying the company's own active pharmaceutical ingredients (APIs). The catalogue currently include human growth hormone (hGH), the leukaemia drug G-CSF, and the anti-viral protein interferon alpha.
• ProtEcol Services, which will develop manufacturing processes for biotechnology companies, and supply materials for preclinical and clinical trials.

BresaGen is already selling hGH to the Middle East, and is expanding into China, India and other markets, and is developing interferon alpha to treat chronic hepatitis C, and G-CSF for leukaemia.

The company has signed nine new contracts with an average value of AUD$260,000, since it came out of administration on October 11 last year. ProtEcol revenues to the end of the 2004-05 financial year are estimated at $1 million, and projected to rise to $2.7 million in 2005-06 to, and to $3.5 million in 2006-07.

Hanisch said BresaGen had "got through the heartache" and will continue as a service and supply company.

"We think its going to be one of the major suppliers to the biotech industry," he said. "It has the biggest concentration of expertise in scale-up technology, with about 35 people -- about half of them in the production side.

"We're planning on putting in extra capital to increase production capacity, so it will become a one-stop shop for process development for novel drugs, as well as a producer of materials for clinical use.

"Most of the time we'll be churning our proteins to sell. We hope to have interferon and G-CSF in production by the first quarter of 2006."

Asked if CBio would maintain its current equity in the company, Hanisch said, "We bought our stake purely to protect our own products, and we'll maintain control through our two board members, until the company can stand on its own two feet again.

"We won't exit completely, but over time we expect to be diluted out, or sell down to reasonable levels -- 48 per cent is not a reasonable figure."