There's life Jim but not as we know it ...

Friday 27th February 2004

Investors' current aversion to any company without solid cashflows and revenues perfectly explains Genesis Research's bombed-out share price.

The company, which issued shares at $6 in September 2000, is burning through cash reserves at a rate of about $10 million a year. Its latest reported loss of $12.7 million leaves the company a cash balance of $23 million.

The shares are now teetering below 80c as the company looks to raise more cash from private investors to fund its plant science division.

So it came as no surprise when chief executive Jim Watson this week decided to embark on a charm offensive to convince investors there is life in the company yet.

With Psoriasis drug PVAC out of the picture because the drug didn't work well enough, the company is pushing a range of new drugs, including eczema treatment AVAC.

This drug and the similar SRP299 are now in Phase 2 clinical trials. It is understood an agreement is in place for a partner to license one of them.

Genesis now has about 80 patents. Treatments for asthma, eczema and psoriasis are in clinical trials and it has research programmes for cancer and "immune-mediated" diseases.

Its plant research division is working on improved trees and forage grasses, while its health therapeutics are targeted at immune disorders and cancer.

When investor sentiment improves, the market will no doubt accord some value to these but significant cashflows are still some years off.

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