R&D Start freeze could shelve cancer project

A Western Australian research project into the use of carotenoids as a treatment for prostate cancer has been shelved because of the halt to the Federal government's R&D Start program.

AquaCarotene (ASX: AQL) made the unusual announcement to the market late last week, warning that a lack of funding could spell the end of the project.

Company CEO Donald Smith could not be contacted today, but a statement from the company blamed the situation on bureaucratic red tape.

"The project was intended to be an additional source of income to the company, which now may not be realised or may not be realised in the near future," the statement said.

"It is unfortunate that such a project which has received encouragement from research scientists, commercial interests, and some government departments is at risk of being lost due to the 'red tape'."

AquaCarotene describes itself as Australia's only independent producer of natural betaCarotene, a naturally occurring substance found in red, orange and green fruit and vegetables and which transfers light energy to chemical energy.

The company derives its betaCarotene from the micro-algae Dunaliella salina, with the project under threat intended to investigate modification of the algae to enhance growth and extraction of the carotenoids lycopene, astaxanthin and canthaxanthin.

If successful, the project would then have expanded to research the effectiveness of lycopene in the prevention and treatment of prostate cancer.

But AquaCarotene said it was among 115 companies asked to withdraw its application for Start funds as a result of the $40 million blowout in the scheme.

The company's board is now reviewing its options to keep the project alive and is examining its applicability for AusIndustry's Biotechnology Innovation Fund or Commercialising Early Technologies program.

AquaCarotene said the latest hurdle was the second faced by the proposed research project, which was to be operated by the company's wholly owned subsidiary Natural BetaCarotene Australia.

The first problem arose when the Australian Taxation Office ruled against a plan for the project to be established as a $7 million Managed Investment Scheme that would have incorporated organisations including the Garvan Institute of Medical Research, BioScience Australia and the University of Western Australia.

The company then decided to apply for a Start grant, but was stymied when the program was put on ice, possibly until the beginning of next year.

In its statement, AquaCarotene advised that the costs incurred in trying to get the project off the ground so far had been written off as part of the financial statements to June 30, 2001.

"If the company cannot obtain funding for this project, these costs may not be recovered," it warned.

AusIndustry was not available for comment today.