relenza to push biota into the black

Relenza to push Biota 'into the black'
Email Print Normal font Large font October 25, 2006 - 11:50AM

Biotechnology company Biota Holdings Ltd expects to post its first net profit this year, with royalties from influenza drug Relenza set to surge.

"We expect to produce a net positive cash flow in 2006/07 driven by rapidly growing royalties from products in the market and increasing service revenues from our collaborations with major global companies," chairman John Grant told Biota's annual general meeting.

The company's chief executive Peter Cook told AAP after the meeting that this would flow through to the bottom line.

"We're expecting a positive net profit," he said.

For the first quarter to September, Biota made a net loss of $800,000, after a loss of $4.5 million in the same period in 2005/06.

Last year Biota narrowed its net loss to $11.3 million, from a loss of $15.1 million in 2004/05.

Mr Cook explained that Relenza licensee GlaxoSmithKline (GSK) was expecting to increase its capacity for the flu drug to 15 million courses in calendar 2006.

If sold this would translate into $25 million in royalties for Biota and that number might as much as triple in coming years.

But Biota has since launched legal action against GSK, claiming the world's biggest drug maker didn't use its best efforts to develop and market the drug, which did not fare well when first introduced.

Last year Relenza, which aims to treat influenza by both prevention and treatment, gave Biota $5.2 million in royalties, compared to just $500,000 in fiscal 2005.

Costs of the legal action totalled $4.4 million last year, but Mr Cook said this figure would rise as Biota approached the hearing date in April 2008.

"The expenses will increase as we approach the trial date and that's because the whole process becomes a lot more intense," said Mr Cook.

"GSK as a company are inherently not transparent and that's the way they conduct their affairs, even with their shareholders and in every other sense.

"Do I like non transparent information? No I don't and when I'm in a contractual relationship with someone I like it even less, but that is their disposition."

Mr Cook is also expecting avian flu to gain more prominence on the international radar as the end of the year approaches.

"The issue about avian flu, though, is in fact a function of northern hemisphere winters - you can almost track it - there will be considerable concern in the northern hemisphere again as we approach Christmas and winter starts to bite," he said.

"This is in exactly the same category as an earthquake wiping out Los Angeles - it is imminent, it is overdue, sooner or later it will happen, the real issue is whether the world is prepared or not or is as prepared as it can be."

http://www.theage.com.au/news/Business/Relenza-to-push-Biota-into-the-black/2006/10/25/1161699386050.html