Genesis Research and Development Corporation Ltd. (NZX/ASX: GEN) ended the twelve-month period to 31 December 2003 with a cash balance of $23.0 million (2002: $36.3 million). This position is in line with budget and will be supported by ongoing revenue streams that will be extended as the company secures new revenues through licensing products in the pipeline. It is expected that the cash will then be sufficient to fund current and planned research and development programmes.

Revenue from collaborations, licence fees and interest for the twelve months to 31 December 2003 was $10.0 million (2002: $15.5 million). The decline was due to the completion of certain research collaborations and a reduction in licence fees as a result of completed programmes. However, tight management of costs and some staff reductions resulted in a decrease in overall expenditure to $22.7 million (2002: $26.2 million). The resulting net deficit for the period of $12.7 million (2002 deficit: $10.7 million) reflects a continuing commitment to investment in wholly owned research and development programmes not funded by income from collaborations, and the initiation of Phase II trials in atopic dermatitis.

In December 2003 the Plant Division was transferred to a new wholly owned subsidiary, AgriGenesis Biosciences Limited. A capital raising process is commencing shortly, in conjunction with ABN AMRO Craigs. AgriGenesis is seeking trade investors which have a strategic interest in its plant programme. AgriGenesis has clearly defined target markets and is applying its resources to commercial objectives aligned with the needs of identified potential customers.

Reviewing performance, Genesis Chief Executive, Jim Watson, said, “The decision to discontinue trials of PVAC™, while disappointing, was commercially sound. We still retain immense knowledge of psoriasis, which remains a major commercial opportunity. We remain committed to work in the area of inflammatory and allergic disorders, where we have recognised strength, knowledge and expertise.”

“We believe that the real challenge for Genesis is to reduce the time from discovery to target validation, and to significantly increase the number of candidates that move on to clinical trials, thereby strengthening our product candidate portfolio and opening up new licensing opportunities.”

“We have thoroughly reviewed our entire research programme and believe that the remaining development projects provide a well-balanced portfolio with good future potential. Resources have been reallocated in line with new priorities. A Phase II trial of AVAC™ for the treatment of atopic dermatitis was initiated in 2003 and is progressing well.”

Genesis now has 80 issued patents. The US Patent and Trademark Office has allowed claims for 38 of these, and the rest are from a number of other countries, including eleven from New Zealand. There are 42 applications pending in the US, and more than 260 pending in other countries.

Genesis had 118 staff at 31 December 2003. Expenditure in 2004 is expected to be lower than the period just completed.

Founded in 1994, Genesis is a New Zealand-based biotechnology company. It has built a broad genomic platform and has multiple product candidates in development both as health therapeutics and plant biotechnology products for agricultural markets. The Genesis therapeutics are targeted at immune disorders and cancer and are backed with an extensive patent portfolio. Genesis has a potential product in a Phase II Clinical Trial for the treatment of atopic dermatitis (eczema) with additional programmes for cancer in clinical development. Collaborations are maintained with Amgen Inc. (Nasdaq :AMGN), Corixa Corporation  (Nasdaq:CRXA), SR Pharma plc (LSE:SPA), Jurox Pty Ltd, and AgResearch. AgriGenesis Biosciences Ltd is a wholly owned subsidiary of Genesis that is focused on using key plant cell signalling genes – novel hormones and transcription factors – to control commercial traits including growth rates and wood fibre quality in trees, nutritional content of forage grasses, flowering control, salt and cold tolerance. It has developed comprehensive plant EST databases including the world’s largest EST database for commercial forestry species. It has research collaborations with ArborGen LLC, Wrightson (NZX: WRI), HortResearch, and Landcare Research.