Genesis Research Maintains Cash Reserves of $36.3m

Genesis Research Maintains Cash Reserves of $36.3 Million to Fund Ongoing Research Programmes

Genesis Research and Development Corporation Limited [NZSE & ASX: GEN] today announced that it finished the 2002 year with cash reserves of $36.3 million, sufficient to fund its current and planned research and trial programmes for the foreseeable future.

For the twelve months to 31st December 2002 the Company reported a net deficit of $10.7 million (2001: $9.6 million) on operating revenues of $16.3 million (2001: $19.9 million), of which $10.7 million was derived from research collaborations and grants. It invested $15.1 million in research expenditure (2001: $20.5 million), including clinical trial costs of $3.3 million.

Concerted efforts by management to control costs resulted in total expenditure reducing from $29.5 million to $26.9 million. This enabled the Company to maintain its strong ongoing research and development programme while reducing its net cash outflow to $10.1 million (2001: $12,8 million). As at December 31, 2002, the Company had $36.3 million in cash, or $1.39 per share (2001: $47.9 million, or $1.84 per share).

The Company ended the year with 154 staff (2001: 159), of whom 135 are scientists. As at 31 December it held 60 issued patents (2001: 35).

“As an early stage biotech company, Genesis does not expect to produce consistent operating surpluses, says Chairman, David Irving. “Our objectives are to ensure that Genesis is able to weather the current difficult market conditions while continuing to pursue a strong commercialisation programme including products in clinical trials.”

“The deficit represents the Company’s net investment in R&D, creating opportunities for future revenue streams. To support its ongoing research and development activities Genesis continues to earn significant revenues from grants, carrying out research services and through licensing its technology to other parties. This eases the cash burn rate and makes Genesis unusually financially self sufficient in comparison with other globally oriented research-based biotechnology companies.”

Highlights for 2002

January
Initiated a joint venture discovery programme on the genetics of Botrytis cinerea with LandCare Research New Zealand Ltd

February
Signed a three-year research and development agreement with Immunex on selected proprietary molecules.

May
Phase I safety study of AVACTM for the treatment of atopic dermatitis (eczema) in adults showed AVAC was safe and well tolerated.

June
Initiated an additional Phase II U.S. clinical study, in partnership with Corixa, to evaluate the potential effectiveness of PVAC treatment for patients with mild to moderate plaque psoriasis. Commenced a new study to evaluate the potential effectiveness of PVAC treatment in conjunction with Ultra Violet-B (UVB) light for patients with mild to moderate plaque psoriasis.

July
Transferred from a Foreign Exempt listing on the Australian Stock Exchange to a full listing. Received a $6.0 million four-year grant from the Foundation for Research, Science and Technology to identify new plant hormones.

August
Initiated a Phase I safety study for AVAC treatment of atopic dermatitis for children 5 - 16.

October
Completed enrolment of patients in PVAC / UVB trial for psoriasis. November
Commenced, with SR Pharma, a Phase II, randomised, placebo-controlled, trial of SRP 299 (a killed Mycobacterium vaccae suspension) for the treatment of moderate-to-severe atopic dermatitis in children 5 – 16.

December
New plant growth facilities completed.

Pipeline

Numerous product candidates are moving through a series of experiments to compare and evaluate their biological properties against other product candidates:

A BioStore solution is currently being commercially tested by potential collaborators for development as a red cell storage agent.

Zyrogen (previously called FGFR5), an immune modulator, is being targeted in both B cell autoimmune disorders and bone development.

Epigen, a novel skin growth factor is being screened for clinical involvement in skin growth and some cancers.

YB-1 is being evaluated as a therapeutic target.

A range of novel antigens and immune modulators are being rigorously analysed for use in vaccines, including a tuberculosis vaccine, and for use in treatment of a range of immune disorders.

A range of plant gene products is in development through strong collaborations with ArborGen and Wrightson.

The Company’s Annual Meeting will be held in Auckland on 11th April 2003.

About Genesis
Founded in 1994, Genesis is a New Zealand-based biotechnology company committed to the building of a broad genomic platform for the development of innovative products in health and plant biotechnology. Genesis partners with industry leaders to develop products which have global market potential through the mining of its extensive microbe, plant and mammalian EST databases.

The Health Division has three programmes in human clinical development for the treatment of psoriasis, atopic dermatitis (eczema) and asthma, with additional programmes for cancer and other indications in pre-clinical development. The patented BioStore solutions for storage of tissues and living cells are also in pre-clinical development. Collaborations are maintained with Amgen Inc (NASDAQ: AMGN), Corixa Corporation (NASDAQ: CRXA), SR Pharma (LSE: SPA), and Jurox Pty Ltd.

The Plant division has research collaborations with ArborGen, Wrightson (NZSE: WRI), HortResearch, AgResearch, and Landcare. Genesis is also undertaking significant unpartnered research programmes in novel plant hormones. The company has an extensive health and plant patent portfolio.

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