Solagran defends ASX query on cash position

Botanical therapeutics specialist Solagran (ASX:SLA) has defended its financial position, after receiving a 'please explain' from the Australian Stock Exchange.

The ASX was concerned that Solagran had a net negative operating cash flow for the Q4 of the 2004-05 financial year of AUD$346,000, although its cash balance was just $684,000.

But Peter Stedwell, Solagran's executive director and company secretary, said the company could easily explain its position. "We had a 'please explain' [from the ASX] at exactly the same time last year, he said.

"We plan to raise $1.5 million in November -- similar to last year. We raise capital and then undertake our R&D and then raise capital again."

He added that Solagran could have revenue streams by the middle of next year.

Solagran's focus is on the extraction and use of live elements from tree and plant sources, in particular polyprenols, naturally-occurring analogues of dolichol, which is found in humans and is important for cell metabolism and immune system function. Known as Bioeffectives, they are the result of an extensive research program, ongoing at the St Petersburg Forest Technical Academy in Russia for over 70 years. Solagran, which was founded in 1995, claims to have been the first company to commercialise Bioeffectives.

Solagran has completed phase II trials in Russia and has lodged documentation for entry of Bioeffective R into the Russia Pharmacopoeia for treatment of liver disease.

"The capital raising in November could well be our last -- if we are successful in commercialising Bioeffective R in Russia we will have a revenue stream by mid-2006," said Stedwell.

"We had such a positive response in our phase II trials -- we may be released from phase III trials and have the product go straight to commercialisation," said Solagran's general manager Gene Litinsky.

"If we get approval to market the product it will be a major milestone for the company in that we will have the leading treatment for liver disease. This is the first stage in having the product registered in Australia and worldwide."

An Australian trial which will examine the neuro-cognitive, mood and brain EEG effects of Bioeffective R is also due to commence later this month. It will be coordinated by Prof Con Stough of Swinburne University and is to be completed in the last quarter of 2005.

Litinsky said Solagran was also well advanced with the commercialisation of Bioeffective A, a compound with anti-bacterial, anti-viral, anti-inflammatory and antioxidant properties, and Bioeffective B which is currently being tested by the St Kilda football club to aid in post-game recovery.

"Bioeffectives are amazing substances with a wide range of medical applications," said Litinsky.