in the bulletin/ the speculator
The Speculator has given it a green light again.
This week's biotechnology prospect has its scientific eye on curing cancer and auto-immune diseases. David Haselhurst reports.
Biotechnology company Benitec (ASX code: BLT) has been a money winner for this column on several occasions, but in recent times it has had a hard trot, due mainly to litigation over intellectual property rights. It seems those distractions have been settled, capital has been injected and shareholders may look forward to positive news when chairman Ray Whitten reports to the annual meeting in Sydney on November 30.
Benitec has accumulated a suite of patents and patent applications involving gene-silencing technology. The IP rights are being progressively licensed to multiple entities for various applications to develop a revenue stream for Benitec. In 2004-05, licence revenue reached $923,000. That’s still tiny, but more than 10 times greater than received in the previous year.
The company was formed in 1997 with the backing of private investors to form a partnership with Queensland’s Department of Primary Industry and various academics. In 2002, it floated in an attempt to raise $6m. It was a crook time for biotech floats and only $2.7m eventuated but the company listed and battled on.
Gene-silencing, or “RNA interference” (RNAi), is a naturally occurring cellular mechanism that can shut down specific genes in plants, animals and humans. Rudimentary mastery of this technology was first demonstrated in the early ’90s to produce plants with improved immunity, higher yields and other benefits. In 1998, Benitec patented its breakthrough gene-silencing technology on a mammalian cell culture, followed in 2002 with a world-first patent application for live animals (mice). Today, Benitec is focused on developing therapies to suppress rogue genes linked to cancer and auto-immune disorders.
Benitec has won several challenges to its patents and has had several realignments with affiliates. In the past year, the company has consolidated its operations into the US following acquisition of California-based Avocel for $US5m settled in Benitec shares issued at a notional value of $1 each. Avocel’s former chief operating officer, bioscientist Sara Cunningham, has become CEO of Benitec. Since her appointment in February, all outstanding litigation has been settled and various new income-earning licences have been granted.
In May, Benitec raised $9.73m in a 2-for-3 non-renounceable rights issue at 16¢ (together with one free option for every two new shares exercisable at 32¢ in 2008). Although shareholders subscribed for only 36% of the offer, it was underwritten and Whitten (chairman of the Newcastle Stock Exchange) tipped in $1m. Another big underwriter was Richard Pratt’s Thorney Investment, which paid in $2.1m. I’d reckon if Pratt is willing to pay 16¢, the shares are a fair bet at 13.5¢.
Benitec shares sold down to a recent low of 11.5¢, down from a 12-month high of 58¢. At its most recent price, the company carries a market capitalisation of $22m and at September 30 held $2.5m in net cash.
The slightly firmer trend follows a deal announced last month with NASDAQ-listed Sigma Alrich, capitalised at $US4.5bn, of St Louis, Missouri. The US company has taken a 10.6% equity in Benitec through a placement of 18 million shares at 17¢ to inject $3.06m cash, plus a $US2m fee plus ongoing royalties for a licence over Benitec’s technology for non-human applications.
Whitten will no doubt tell shareholders about the company’s launch of a human clinical trial due in the first quarter of 2006 on stem-cell therapy for AIDS lymphoma. That will be followed in late 2006 by trials of a therapy for hepatitis C.
BLT Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
