Their man in Seattle

Wednesday 1st May 2002

Genesis' US director Doug Williams is relaxed about the future. In Auckland recently he spoke to Vincent Heeringa.

The low share price of New Zealand biotech company Genesis doesn't faze Doug Williams. He's seen it all before, he says. As well as being director of Genesis R&D, he is on the Board of Directors of biotech company Immunex, which is being purchased by Amgen for $16 billion. He is also on the executive committee of biotech giant Amgen.

Let's say the worst case scenario happens and the company's most advanced drug PVAC [a psoriasis treatment widely interpreted to have failed a crucial FDA drug trial] fails phase II testing. Then what?

Genesis has done a good job of putting its eggs in plenty of baskets. We have drugs in development in clinical development for asthma and atopic dermatitis, and a number of plant research programmes. In collaboration with Immunex there are also a number of immune modulator projects in the early stage - drug candidates for treating inflammatory diseases. If they are successful, Genesis will get licence revenues for this. There are some newer collaborations underway with Immunex that are more like joint ventures, rather than licensing deals. PVAC is just one of many projects.

The other thing to remember is that drug development is rarely a straightforward process. Take Enbrel, a drug Immunex developed that was an unequivocal failure in the first therapeutic trials in a blood infection known as sepsis. But it turns out that it was effective at treating something else, rheumatoid arthritis. This year it will be worth $US1 billion to us. Or take Viagra. That failed at what it was originally intended to treat, but one very smart researcher noted its effect on, er, other parts of the anatomy, and you know the story.

Despite this, the market has trounced your share price. Are you worried about future viability?

The whole sector is down the toilet at the moment. It's cyclical. The PVAC reaction has simply magnified the effect. Anyway, small companies obsess about the share price. I'm constantly telling small biotechs to forget their share price and just focus on doing good science. The key to driving up the share price is developing good drug candidates.

But with a market cap of just $80 million and falling, you must worry about the lack of capital to actually do that drug development?

Actually, when I described Genesis' status to a colleague recently he said, "You're rich!" because we have enough cash to keep going for two years [the company has about $50 million in cash].

I work with a company in Seattle that is very similar to Genesis. It's now at half its IPO value. That is more typical of small biotechs.

So, there are no plans for raising more capital or finding new investors?

Well, there's always going to be a need for more capital. And who knows, if Genesis is successful, one outcome could be that it is bought. Immunex has just been bought by Amgen. But right now there are no plans to change the ownership.

Is distance from the US a problem for Genesis?

It's important to have US-based people, which is why we've just appointed two business development managers, one with a health background, the other with an agriculture background. Their job is to secure more collaborations by going to see potential partners and showing what we're good at. They'll also be looking for new sources of revenue through licensing products with US partners.

We have this romantic idea that New Zealand could become the research base for US partners and companies. Is this possible for Genesis, or will we see an inevitable shift to the US?

No, it's way more than just romantic. It would not be good to move the research operation at Genesis to the US because it costs so much more to do research there. The kind of information I need to do my job as a scientist can be stored on a CD-ROM and arrive by Fed-Ex the next day. So it makes a lot of sense to keep research here. Plus, New Zealand has an excellent education system that is producing a lot of talented workers.

Would Immunex want to establish a presence here or find some new partners here?

Maybe. Queensland is aggressively seeking partners to create a biotech industry. The state government is putting about $US100 million into developing an industry. That's good for New Zealand, because, and I know you'll hate me for saying this, we see you both as "down under". Both countries have good research and science. But both need to address the infrastructure around commercialising this knowledge, such as taxation on option schemes and relaxing the stranglehold on intellectual property by the universities. But these are simple things that can be copied from the US, where there has been 20 years' experience.

Vincent Heeringa
vincent@unlimited.net.nz

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