Benitec closes doors in U.S.
MELBOURNE, Australia—August 25, 2006—Within weeks of announcing the closure of its U.S.-based operations, RNAi-specialist Benitec announced a share purchase plan to raise "urgently needed capital" to allow the company the re-establish itself in Australia. As company chairman Peter Francis explained, the move allows shareholders to take advantage a "lower cost model" designed to reduce risks. Interestingly, whereas the plan was supposed to close on August 26, the company extended the offer to September 8.
The company also appointed Sue Macleman as its new CEO. Macleman brings extensive experience in product development and commercialization to the company, having held various positions at Agenix, BMS, Amgen and Schering-Plough.
MELBOURNE, Australia—A short two months after announcing that it was restructuring its U.S.-based operations and laying off half its U.S. staff, RNAi specialist Benitec announced it would completely close its Mountain View, Calif. operations. In doing so, the company hopes to cut its monthly operating expenditures by $250,000 by retrenching its IP and drug development operations back to Australia, where the company was founded.
In a prepared statement, company Chairman Peter Francis states: "The directors have implemented these changes to reduce the company's cash burn in the current environment. Our focus now is the preservation of the company's intellectual property and the placement of our in-house clinical program on hold. We will continue our efforts to raise capital and transact on RNAi opportunities in the best interests of our shareholders."
Dr. Kenneth Krul, a market analyst for Kalorama Information, seemed less upbeat about the move. "As for any benefits the company will reap by closing its U.S. operations, there are the cost savings but it is not a certainty that these will help Benitec complete their mission," he says. "It would seem to me that the company is in some heavy financial seas, and that product development might further be curtailed if the financing isn't there."
The retrenchment will also see the departure of the U.S. operation's CEO Sara Cunningham and CFO Mike Catelani, who had only taken their posts in early 2005. According to Francis, the two will be involved in the transition and repatriation efforts to ensure the process runs smoothly.
The move comes at a time when the entire RNAi marketspace is rapidly evolving. At the same time that discovery companies and reagent suppliers are swinging deal after deal or collaborating with almost anyone who comes along—for example, the recent collaboration between Abbott and Dharmacon and the expanded therapeutics deal between Merck and Alnylam—the industry is also facing waves of litigation, as companies try to shake out complex IP issues.
Indicative of this period of flux, Krul described the nucleic acids therapeutics market as "a market in suspension waiting for the application of an accelerating force" in a recent market report.
"We know that there are plenty of opportunities for nucleic acid therapeutics," he says. "The problem is that we don't know the core information, like what the targets are and how to get to them without disrupting other functions. While the action of nucleic acid therapeutics is quite specific for targets, the targets themselves may be involved in more than one function.
"The application that is most likely to succeed first and biggest is in viral therapeutics—such as Benitec's potential HIV therapeutic," he continues. "But even that has yet to be seen as a solid application since we're all waiting for a major application to emerge."