Genesis Research and Development, a New Zealand-based RNAi drug developer, released last week its financial results for 2005, and said that it is on track for initiating a phase I clinical trial as early as the first quarter of next year.
For 2005, Genesis said total revenues fell to NZ$2.6 million ($1.7 million) from $2.9 million, reflecting the completion of certain research collaborations and a reduction in interest income as a result of lower cash funds.
The company's operating costs in the year dropped to $6.4 million from about $12 million as research and development spending slowed to $3.4 million from roughly $7 million. The drop in expenses is a result of recent headcount reductions at Genesis, primarily in its agricultural biotechnology unit AgriGenesis, and the termination of several R&D programs as the company shifted its health sciences focus onto RNAi.
The ArborGen Dispute
ArborGen is a joint venture focused on creating genetic improvements in trees. According to Genesis, it was a member of the venture but in early 2005 was advised that members of ArborGen had taken steps to expel it from the project.
"ArborGen had commenced [legal] proceedings against Genesis seeking various orders, including clarification of ownership of intellectual property, and unspecified damages," Genesis said.
Genesis added that it refuted ArborGen's claims, and that settlement proceedings resulted in an agreement to settle all claims. Under the settlement proposal, Genesis will transfer to ArborGen all rights and ownership it has to certain ag-bio technology and patents. Additionally, Genesis will not operate in the forestry field and has agreed to limit its royalty rights on certain patented technology.
In exchange, Genesis stands to receive a $5.5 million payment upon the completion of transfer of certain patents, technology, information, documentation, and other materials to ArborGen. Genesis also may receive an additional $1.5 million from ArborGen if certain ownership restructuring events occur at ArborGen before March 2007.
Both parties have agreed to drop all claims against each other.
Non-recurring costs in 2005 included expenses from now-terminated research programs and legal costs associated with a legal dispute with ag-bio venture ArborGen (see sidebar), and totaled approximately $900,000.
Genesis' net loss for 2005 was $4.7 million, down from $9 million in 2004. As of Dec. 31, 2005, the company had about $3.3 million in cash.
"The net recurring cash burn of [$3 million], excluding one-time costs, was significantly below budget and was a major reduction from the 2004 cash burn of [$8 million], reflecting the company's reorientation," Stephen Hall, CEO of Genesis, said in a statement.
Founded in 1994 to develop biological treatments for immunological disorders, Genesis began to restructure itself in 2002 after three of its drug candidates failed in clinical trials. By late 2003, the company had begun looking at whether it could apply to human therapeutics the RNAi technology it developed by AgriGenesis.
Genesis' restructuring resulted in significant headcount reductions at AgriGenesis, which went from about 65 employees to about 8 currently, and the company is now almost entirely focused on RNAi drug development, aside from a handful of minor projects including a biofuel program being conducted by its ag-bio unit with funding from the New Zealand government.
"The ongoing RNAi therapeutics program has been validated by an external review and is making good progress," Hall added. "Plans for clinical development are advancing with the intention of commencing a first trial within 12 months if milestones continue to be met."
Hall told RNAi News this week that any phase I trial the company launched would "most likely" be conducted in Australia or New Zealand.
"But we're certainly looking beyond that to getting into the US, and we've got regulatory consultants in the US advising us and we've had discussions with" the US Food and Drug Administration, he said. "So if the initial trial is run down here, probably the follow-up trials would be run in the US," ideally with a larger partner that could bring R&D, as well as commercialization, expertise.
Hall declined to comment on what indication Genesis' first drug candidate might target, noting that the company is exploring a number of different possibilities and that in vivo studies are ongoing.
Last August, Genesis CSO Greg Murison told RNAi News that the company's most developed RNAi candidate was an siRNA targeting immunoglobulin E that was being tested in mice for asthma and atopic dermatitis. Anand Kumble, Genesis' head of product development, at the time noted that Genesis was investigating a number of direct-to-lung delivery approaches and topical delivery technologies for the two indications.
Hall said that Genesis' IgE program is making progress, but that "there [are] a number of other [programs] that we haven't disclosed, which are well in the running. I won't say which is a hit or what the [clinical study] candidate is likely to be. We … only want to talk about things when we're quite positive that that's the direction [we're] going," he added.
As it moves forward to a potential phase I trial, Genesis appears to be on good footing from a financial point of view. With its reorganization complete, and with $5.5 million due in the next three months from ArborGen, Hall said that Genesis will have about three years of cash on hand.
"But [this guidance] will change as we either enter a clinical trial or undertake any licensing or collaboration deals," he noted.
Doug Macron ([email protected])