Molloy to leave Biota, remain in US

Biota Holdings' (ASX:BTA) US-based CEO Peter Molloy has decided not to renew his contract in January 2006 following the company's decision to consolidate its operations back into its Melbourne facility.

The company has begun its search for an Australian-based CEO.

"It was my decision to stay in the US," Molloy told Australian Biotechnology News. "It was the board's decision to have an Australian-based CEO. It was a consensus that we should not renew the contract in January," said Molloy.

Molloy said he and his wife had 'green cards' which enabled them to work in the US. Relocating to Australia would mean he would "lose those and forgo all opportunities to continue to live in the US" and have to sell his house there, he said, "whereas in 18 months or two years time, we will qualify for US citizenship," he said. "Once we have that dual [Australian/US] citizenship, it gives us a lot more flexibility."

Molloy will continue to head Biota for the next five or six months, during which, he said, he hoped to see a resolution of the litigation currently underway against GlaxoSmithKline (GSK) for its alleged failure to support Biota's influenza drug Relenza.

"From the company's point of view, it's potentially worth more than $400 million. From my point of view, I've lived and breathed it for the last 18 months and would dearly love to see it concluded during my tenure," he said.

"But if it doesn't happen, Biota's got the resources to continue to manage it separately. And I will continue to provide any input that they need even after I'm gone."

ABN Amro Morgan senior research analyst Scott Power said there was "logic" behind Molloy's decision not to renew his contract, given that he is based in the US and Biota is focusing its activity in Australia. "What the market is probably looking for -- and certainly what we're looking for -- from Biota going forward, is resolution of the legal case and some sort of clarification on what their strategy is to grow their business," said Power.

While Molloy doesn't have another job lined up, he is starting to look in the US for another CEO position and will most likely remain in the biotechnology industry. "There's no shortage of CEO opportunities in the US," he said.

"I may be looking for a US company. I may be looking for another Australian company that is interested in a US-based CEO -- because we've really enjoyed the connection back with Australia. It's given us the opportunity to come out to Australia on a regular basis, to visit family," he said.

Biota's financial results

Biota also posted its financial results with an operating loss of $14.8 million for 2004-05, nearly double its loss of the previous year ($8.1 million). The figure includes costs associated with the consolidation of its US operations into Australia, as well as $3.7 million in expenses associated with the litigation against GSK.

Total expenses over the year increased to $19.9 million (2003-04: $16.2 million) and included product development expenses of $3.6 million, more than double the figure for the previous year ($1.4 million), due to accelerated clinical development for the company's respiratory syncytial virus (RSV) and common cold (HRV) drug candidate programs.

The company completed a share purchase plan in October 2004, raising about $20 million of new capital.

"Putting in place a new strategic plan, and closing down the US operations -- which had drawn so much of our funding previously -- and accelerating our local clinical programs was a very important turn-around for the company," said Molloy.

"It's going to drive the company forward over the next 12 months and potentially give us three drugs in human clinical trials. That's a huge change for Biota, because it means we've moved from a research-based company to a clinical-stage company. And that was really my goal."

Biota saw a fall in its operating revenues, from $7 million in 2003-04 to $3.6 million in 2004-05. But Molloy said the fall was "not substantial".

"It was really driven partly by the mild flu season in the US and the impact on the diagnostics revenues, which last year had been at a particularly high level," he said.

While not included in the 2004-05 financial year's results, in August 2005, the German government placed an order for 1.7 million packs of Relenza. "We've seen there's life in Relenza, with the German order, which certainly changed my view about Relenza," said Molloy. "It's no longer completely commercially dead and may be a source of future revenues for Biota."

At June 30, 2005, Biota had cash of $24.8 million.

Biota's shares were trading at AUD$0.765 at press time, down from an opening price of $0.80.