Cash burn out, earnings in at Amrad

Amrad chairman Olaf O'Duill doesn't like it when companies use "cash burn" to absolve themselves of their spending, and wants Amrad to think about cash earned, he told the company's annual general meeting yesterday.

O'Duill told the meeting the company's focus was on returning value to its "long-suffering and patient shareholders".

"Your board is dedicated to the task of turning this company of very worthwhile scientific endeavour to one of considerable profitability," he said. "Knowing the science is good, we just have to convert it into commercial opportunity."

As part of this process, the company is looking hard at its extensive property assets in the Melbourne suburb of Richmond, which have a net value to the company of nearly $20 million.

"The property has a substantial value in our books," O'Duill said. "However, it's of little use to us in our scientific endeavours if we can't turn that value into cash.

"What we are doing currently with the advice of property consultants is looking at the options for sale of the property, redevelopment of the property, co-development of the property, whatever is the best option for us to maximise the amount of net cash we get out of whatever transaction we do.

"Our primary focus is research and development in the biotech arena, that's what we're here to do, that's what we're here to develop. Hopefully -- and we're confident -- this will be the means by which real shareholder value will emerge, not just sitting on the property."

O'Duill noted that the process would probably take a couple of years, and would give the company more leeway in terms of bringing products to a successful commercial fruition. But shareholders expressed apprehension at the potential sale of what one termed the "crown jewels" of the company's assets.

O'Duill, who joined the Amrad board earlier this year, also announced that the company had recently engaged external consultants Prof Graham Mitchell and Sir Gustav Nossal, from the Melbourne biotechnology consultancy group Foursight Associates, to review its scientific portfolio.

In addition, Amrad has set up an independent scientific advisory board to be headed by UK scientist Dr J Barrie Ward, who is CEO of Cambridge company KuDOS. The scientific advisory board will also include Dr Curtis Scribner from US company Biomedicines and the Garvan Institute's Prof Charles MacKay.

"Working closely with Amrad's chief scientific officer, Dr Jonathan Coates, the independent board will be involved in the assessment and development of Amrad's scientific strategy and where appropriate, will provide input into the establishment of strategic alliances and partnerships," explained managing director Sandra Webb in her address to shareholders.

After the meeting, O'Duill told Australian Biotechnology News that the advisory board and the Foursight review would provide the board and senior management with an external point of reference.

"We're not just a spending machine -- we're actually seeking to convert what we've got into commercial outcomes to give our shareholders reason to believe that their shares will increase in value, and that they can confidently over the next few years actually expect some return by way of dividend on their money," he said.

"If you put all the ingredients in place, then you should be reasonably confident that ultimately the right commercial outcome will come. But like any business, there is risk, you can actually make mistakes, you can pick the wrong ones, and we've had a couple of disappointments in the last six months."

O'Duill and Webb said Amrad was now actively involved in business development, both within Australia and overseas.

"We're seeking collaborations, we're looking at the biotech market in Australia -- where are the products, the formulations, whatever, that we could potentially invest in that would add to what we're doing in-house?" said O'Duill.

The company currently has five projects in pre-clinical and clinical development. Webb said that the Enfilermin project, which has been partnered to European pharma giant Serono, has shown promise for improving clinical pregnancy rates in phase I clinical trials.

In addition, Webb said that AM36 for severe pain was scheduled to begin Phase I clinical trials next year, if pre-clinical studies provided satisfactory results.

Other products, including AM336 for treatment of chronic pain, as well as AM132 and AM133 for cardiovascular disease, are also progressing well, she said.