BresaGen results sweetened by new ADR status

Adelaide-based biotechnology company BresaGen Ltd (ASX:BGN) has confirmed a consolidated loss for 2002-03 AUD$13.95 million, which it flagged last month, up from $11.86 million in 2002.

The company, which last month announced plans for a major restructure, in which it will spin off its protein pharmaceutical and cell therapy divisions into separate companies, had cash of $5.86 million at June 30, compared with $16.23 million in 2002.

CFO Linton Burns said there was sufficient cash to take the company through to year's end. "We have already announced plans to ensure our ongoing viability," he said.

BresaGen has engaged specialist US banking group Caymus Partners to raise a total of $20 million in investment funds by 2006 to sustain its operations.

And last week, BresaGen announced that its American Depository Receipts (ADR) program had been granted Level II status, under which it is required to comply with the US Securities and Exchange Commission reporting requirements, including lodging accounts.

BresaGen established a sponsored Level 1 ADR program with the Bank of New York in February 2001. Its ADRs -- each representing 10 of its ordinary shares -- can now be traded over the counter under the symbol BSGNY.

The development is a prelude to the company's ADRs being listed on the Nasdaq, which would increase its visibility to US investors, but Burns said the company would not seek to list until it had bedded down its restructure plans early next year.

In this week's report to the ASX, BresaGen said its poor 2003 result highlighted the impact of the termination of its trials of the its prospective therapy for acute myeloid leukaemia, E21R, at the beginning of the year, and the lack of any milestone income from its collaboration with UK-based British Biotech. Last year the company received $510,000.

In July BresaGen launched a $7 million lawsuit against the Institute for Molecular and Veterinary Science in Adelaide, the inventors of E21R, and others involved in early trials, after it failed to reproduce its claimed cell-killing activity in British Biotech's pre-clinical trials.

BresaGen also suffered a $424,000 decrease in revenue from interest because of the substantial decrease in its cash holdings, from $16.23 million in 2002 to $5.86 million this year.

A writedown of $4.17 million on its cell therapy division's intellectual property portfolio also contributed to the loss. Excluding the writedown, the consolidated loss would have been $9.77 million, only slightly up on its 2002 result.

In the company's ASX announcement, BresaGen president and CEO Dr John Smeaton highlighted several promising indications for the company's future.

He said the company's focus on process development and contract manufacturing was making use of its recently completed manufacturing facility at Thebarton, and its new protEcol business unit generated $1.03 million in revenue in its first year of operation.

He also cited the cell therapy division's revenue increase from $1.36 million to $2.28 million in 2003, which this included $120,000 from the sale and distribution of the company's stem cell lines, and a $966,000 stem cell research grant from the US National Institutes of Health.

On Friday, BresaGen announced it had acquired the IP for a novel drug-delivery system, XeriJect, from US-based pain therapeutics company AlgoRx Pharmaceuticals.

XeriJect, which will be assigned to BresaGen's US subsidiary, Bgen Corporation, was invented by Dr Steve Prestrelski, a world-leading expert in protein formulation and delivery.

It enables a small amount of a highly concentrated therapeutic to be injected into the upper layer of the skin with a very fine hypodermic. The virtually pain-free injection system, used with an appropriately formulated drug, is claimed to ensure drug stability and rapid absorption into the bloodstream.

According to Burns, BresaGen's recent refocussing on the market for generic protein pharmaceuticals will involve two drugs that are about to come out of patent -- one for the treatment of osteoporosis, the other for diabetes.