Amrad aims to regain its footing

If you'd asked him a year ago whether he could see himself as CEO of Amrad, Dr Peter Smith would have said not likely.

But now the former UK biotechnology analyst and founder of British biotech company Onyvax has taken the helm of the Melbourne-based company and is poised to turn the boat around.

After the events of the past 18 months or so, Amrad finally seems to be regaining an even footing. With a couple of good deals on board, the company has slowly gained ground since last year's boardroom stoush and project woes. And with AUD$60 million in the bank, the company is in a comfortable position.

At last week's AGM, Amrad's board of directors took the opportunity to announce some changes to the leadership of the company and unveiled the strategy that the board hopes will lead the company back to its position at the forefront of Australia's biotechnology industry.

"We're confident that we have the essence of the business model right," says newly appointed chairman Bob Moses, who acted as the interim CEO between the departure of Sandra Webb in July and the appointment of Smith.

The new strategy is designed to bring clarity and focus to the company, which has suffered in the past from a large and unwieldy portfolio.

"When I first glanced at Amrad, I saw an incredible -- as in not credible -- number of programs," Smith says.

But prior to being appointed CEO, Smith consulted with the board as it formulated the new strategy. The unique opportunity has allowed him to hit the ground running, he says.

Smith's background as an analyst also has its advantages for the company, as it rebuilds its reputation with the capital markets and investors.

"We need to get out there and tell Australia about what we have going," he says.

The company will also look at benchmarking itself against similar companies overseas, as a way of articulating its value.

"We haven't given analysts enough clarity to value the company with any precision," Moses says.

Smith and Moses also plan to make some changes to Amrad's culture.

"We recognise that the culture within the company was a little bit skewed in the direction of an academic approach, to the detriment of the commercial context," Moses says. "It's not a negative statement but it's necessary for the company."

"We have to get that commercial way of thinking about research," says Smith, who is planning to move the management team closer to the laboratories in an effort to get more communication and cross-fertilisation between the two.

Business model

The new business model sees the company splitting into two parts, a core business focusing on Amrad's mainstay of cytokine-based biologicals and a new entity to capture the company's IP in the area of antivirals.

"It's clear that the strength of the company is in the cytokine and cell signalling area," says Moses.

The company has already made two strong deals around two molecules: Emfilermin (rhLIF), which Serono is developing for infertility applications; and the IL-13 receptor (IL-13r), the subject of a $116 million agreement with Merck earlier this year.

Next on the list are VEGF-B and the GM-CSF receptor, which Moses describes as world-class projects, and the SOCS program, which is still in the early stages of evaluation on its potential for therapeutic applications.

Amrad has rights to the VEGF-B gene, protein, and antibodies against the protein, which it shares with the Ludwig Institute for Cancer Research. There are a number of possibilities for the program, with the angiogenesis-promoting VEGF-B gene and protein having some applications in cardiovascular disease, and antibodies against the protein being potentially useful for cancer and inflammation applications.

Smith says it is likely that anti-VEGF-B will be similar to anti-VEGF-A (Genentech's Avastin), with activity against some cancers, but not others.

"If we can show anti-VEGF-B is active in one cancer, then it will be very attractive," says Smith. "It's a very exciting program, and we should have data in relatively short order."

The GM-CSF receptor program is also steaming ahead with evidence suggesting that inhibitors to the receptor may have some application in arthritis and other inflammatory diseases such as asthma. Amrad is working with Cambridge Antibody Technologies to develop humanised anti-GM-CSFr antibodies, and hopes to select potential lead candidates soon.

"These are world class targets, they would look comfortable on any biotech's portfolio," says Smith. "We really have got the foundations of a powerful cytokine business."

The second part of Amrad's strategy is the spin-off of the antivirals business, temporarily called "Virad." The projects, although promising, are still early-stage, says Moses and the company lacks the critical mass in areas like medicinal chemistry to successfully develop products.

So the plan is to partner with appropriate companies to provide the capabilities required. More than 20 companies have already been identified as potential partners, and discussions are in progress with several of them. Still to be decided is whether the new company will be a spin-off or a joint venture, however Smith says the company is already functioning as a separate entity.

"By establishing a separate company, it's a statement that we are there and ready to do deals," he says. Amrad hopes to complete a deal within the next 6-12 months.

Two opportunities are ready to go -- the company has developed a screen for inhibitors to the HIV integrase, with lead candidate selection from the hits generated the next step in the process. And in the Hepatitis virus program, screens have been developed for novel drug targets with lead candidates for hepatitis B are being evaluated in animal models.

But that's not all when it comes to the new business model, says Moses.

"The other bit of the story that's potentially exciting is building relationships with one, two or three of the big players in pharmaceuticals around early stage research," he says.

Working from the premise that big pharma needs to tap into early stage research in order to feed its pipelines, but have limited capacity to evaluate opportunities, Moses is hoping that Amrad can work with pharmaceutical companies to identify valuable intellectual property and develop early stage research from a variety of Australian sources, including public sector research organisations and even other biotechnology companies.

The idea, he explains, is that Amrad and the pharmaceutical companies would share both the risk and the rewards. The company has already had conversations with a couple of pharmaceutical players about the potential for partnerships.

"The message here is that when these major companies talk to Amrad, and talk about this kind of relationship it validates our abilities," Moses says.

As for the orphan programs, including pain compound AM336 and stroke treatment AM36, the company plans to extract the maximum value from them, using minimum resources. AM336 will be out-licensed at the earliest opportunity, says Smith, and once preclinical data is available for AM36, a decision will be made on the right path to take.