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Genesis Says Its Future Is Uncertain in Face of Limited Funding, Partnership Options

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New Zealand-based RNAi drug developer Genesis Research and Development warned investors last week that it may not be able to secure the funding necessary to continue its operations, raising questions about how long the company can stay afloat.

"The global economic changes in 2008 have had a significant impact on biotechnology financing," Genesis Chairman Joachim von Roy wrote in the company's annual report, which was made available last week. "This is particularly so in New Zealand … [and] a recent review of prospects for raising capital to fund Genesis for the next year has concluded that this is not likely to be successful."

Adding to Genesis' woes has been its inability to secure the more than NZ$2 million ($1.2 million) it is owed by Pure Power Global after it sold the renewable-energy firm its majority stake in a biofuels company, he noted (see RNAi News, 2/12/2009).

In addition, the New Zealand government-funded investment organization Foundation for Research Science and Technology "has not yet agreed to provide funding for [the company's] gene-silencing project," von Roy stated.

Genesis faces "an extremely difficult situation that will demand challenging decisions," Genesis CEO Stephen Hall added in the report. "At this stage, it is not possible to predict the outcome," but the company expects to provide additional information "as soon as possible."

Genesis' financial troubles originally surfaced in February after it issued a letter asking existing shareholders to consider making additional investments in the company as it faced a cash balance "substantially lower than planned."

In that letter, Hall indicated that the beleaguered RNAi shop was in discussions with various biotechnology and pharmaceutical firms about money-generating "commercial relationships," specifically related to Genesis' oncology program and a novel early-stage single-stranded RNAi technology.

The lead target in Genesis' preclinical cancer program is the M1 subunit of ribonucleotide reductase, an enzyme that catalyzes the formation of the deoxyribonucleotide precursors required for DNA synthesis. Another RNAi drug shop, Calando Pharmaceuticals, is currently testing an siRNA-based drug against the M2 subunit of the enzyme in a phase I study (see RNAi News, 6/5/2008).

Genesis' so-called ssRNAi technology, meanwhile, is designed to overcome the delivery hurdle that has proven to be a major limiting factor in the development of RNAi-based therapeutics. The molecules are designed to be delivered without a vehicle as chemically modified, nucleobase-masked, single-stranded RNAs that “form an active double-stranded molecule only when the masking groups are removed inside cells," according to the company.

Despite "significant international interest" in these efforts, industry deals "are unlikely to be consummated quickly," von Roy wrote in the annual report. As such, Genesis' board is "evaluating all options to ensure that the value within [the company] is realized, even if we have insufficient funds to continue the current level of operations."

Exactly what these options are remains unclear; Genesis officials were unavailable for comment by press time.

Earlier this year Hall told RNAi News that the company was “considering a rights issue for all shareholders” and is “talking to several potential large new investors.”

But in the annual report last week, Hall wrote that there has been "little buying interest" in the company's shares, which have been steadily losing value amid low trading volume.

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