Revenues expected, failures weren't, says Amrad boss

Amrad released its end of financial year report on Friday, saying that revenues and expenses were in line with forecasts.

Amrad reported a net loss of $14.4 million for 2001-02, more than triple the loss it reported a year ago. Amrad's revenue sank 77 per cent to $13 million and research spending edged higher to $16.6 million, more than 50 per cent on three major clinical projects - emfilermin, AM336 and AM365.

"They certainly are what we expected in terms of the spend on R&D. The surprises this year were in the product failures," said Amrad managing director Sandra Webb.

AM365, a hepatitis B compound, was abandoned by the company after poor trial results in July, and in April collaborators DevCo and GlaxoSmithKline decided they no longer wanted to pursue two early-stage Amrad projects, stroke compound AM36 and components of the SOCS discovery platform.

Webb said Amrad had cash reserves and funds under management of $34.6 million, and expected that this would provide two or three years of cash, with a forecast requirement for this financial year of $10 million.

"In this environment, that's important. We'll be conservative in terms of cash," Webb said.

She said Amrad would now concentrate on its R&D activities, and said that the company was reviewing its R&D strategy. The company had a pipeline of products in its portfolio, she said.

"Amrad is a biotech company that is now clearly focussed, with a committed board and management team," she said. "The essential financial structure and plans are in place and key performance indicators - both clinical and financial - are being pursued. The aim now is to deliver improved profitability and shareholder value through maximising commercial outcomes from its discoveries and developments."

Biotech analyst David Blake said Amrad's challenge was to articulate its stated clear focus. "They've actually got to work twice as hard as any other company to spell out to the sector what they are doing," he explained.

According to Blake, Webb needed to focus on getting out to the investors and generating interest in the company.

"If she gets out there and has a proactive role, she could go a long way in restoring people's faith in Amrad," he said. "It's got to be a lean, mean, disciplined company regardless of who the major shareholders are."

He noted that the current share price of 47 cents was the same as the company's net tangible assets. "On one hand, they're cheap and maybe a good buy; on the other hand that could mean they still have some issues," Blake said.