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Genesis Research plans "reverse takeover"

Thursday 12th January 2012

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Genesis Research and Development plans to merge with Mariposa Health, an unlisted Australia medical researcher that would own 80 percent of the enlarged company and provide development projects for treatment of lung disease and the Golden staph bacteria.

Under a proposal that has to be approved by Genesis shareholders, the company would issue 200 million new shares to Mariposa, lifting total shares on issue to about 250 million. Based on the last trading price for Genesis of 3.4 cents, the company would have a market value of $8.5 million.

Genesis would continue as a listed company and look to raise more capital to finance its development programmes, said chief executive Stephen Hall. The size of the share issue to Mariposa, at four-to-one, reflected the relative size of the two companies, he said.

“We hope and expect it will be very positive for shareholders,” Hall said. “We’ve been looking at a number of proposals. This gives us a new direction forward.”

The transaction would take a couple of months to get approvals finalised and a date hasn’t yet been set for a shareholder vote, Hall said.

Genesis has struggled as a listed company since going public in 2000, with a market capitalisation of $180 million, when it was the first such biotechnology company on the New Zealand stock exchange. The stock traded as high as $7.55 in February 2001 before shedding almost half its value in the following months after the results of trials of a Psoriasis treatment missed investor expectations.

In 2010 the company suspended operations in New Zealand with the loss of nine jobs when funded dried up.

UBNZ Asset Holdings, the company associated with the failed bid for the Crafar Farms, emerged last year with a 16 percent holding.

The biotech company turned to UBNZ for funding after it started burning through cash in May 2010 when a joint venture, Solirna Biosciences, stalled as its Japanese partner opted not to put up more funds. Solirna’s gene silencing research aimed to deliver disease-curing payloads into human cells. It was turned down for additional funding from the Foundation for Research, Science and Technology.

(BusinessDesk)

15:52:18

BusinessDesk.co.nz

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