Amrad posts end-of-year profit

In a dramatic turnaround from last year's $14.4 million loss, Amrad (ASX:AML) has posted an inaugural after-tax profit of AUD$7.4 million for the 2002-2003 financial year, which includes $1.2 million operating profit in addition to the one-off profit realised from the sale of Amrad's Richmond property.

"We're pretty excited by the profit at the operating level, it's something that biotechnology companies don't get often," said Amrad chairman Olaf O'Duill. "We've had an interesting and successful year."

O'Duill noted that a year ago, there was a great deal of scepticism about the quality of science and direction of the company, but three recent and lucrative deals with major players in the industry showed renewed faith in the company.

The recent deals include the in-licensing of essential technology from US monoclonal antibody company Medarex, in addition to the extension of the Serono partnership and granting of worldwide rights for development and commercialisation of enfilermin for reproductive health, and the Merck respiratory disease drug development deal, which has already paid US$5 million of a possible US$112 million.

Amrad now has around $60 million in cash reserves to put toward its flagship projects and other opportunities that might come its way. According to O'Duill, the company is actively looking at opportunities within the Australian marketplace that would be compatible with the direction of the company.

Such opportunities could include deals with companies with complementary technology or science, or even acquisition of intellectual property or collaboration with companies with new technology of interest, he said.

"We're very much in look-and-see mode. There are no deals on the table at the moment, but we're out there and keen," said O'Duill.

While O'Duill was realistic about the possibility that Amrad would not post an operating profit every year in the short term, he said the medium to long-term aim of the company was to become self-sustaining.

According to interim CEO Bob Moses, Amrad's current priority is to refine the company's business model, improving utilisation of assets and enhancing cash flow.

"We're determined to tighten up the business model and bring focus [to the company]," Moses said. "We now have the resources to look more long term and laterally."

At the close of trading, Amrad's share price had risen 4 per cent to $0.77.

Amrad's year

July 17, 2002: Abandons AM365 chronic hepatitis B compound; stock sinks to $0.59.

August 16, 2002: Reports 2001-02 net loss of $14.4 -- more than triple the loss it reported in the previous financial year. Research spending at $16.6 million, more than 50 per cent on three major clinical projects -- emfilermin, AM336 and AM365.

September 13, 2003: Using Amrad-licensed cell immortalisation patent, UK firm ReNeuron Holdings says it has cracked a production problem which has delayed development of the technology and plans to start human trials in 2004.

October 17, 2002: Chairman Olaf O'Duill tells AGM the company will focus on returning value to its "long-suffering and patient shareholders". Company launches review by consultants Foursight, appoints scientific advisory board.

January 17, 2003: Announces plans to sell its 4.7 hectare campus in the prime inner city location of Richmond, in Melbourne.

February 21, 2003: Rationalises R&D portfolio with a renewed focus on five projects in the development and pre-clinical stage. Announces $7.4 million in half-year revenues and a 38 per cent reduction in operating costs compared to the same period last year, primarily due to more focused research expenditure and reduction in staff numbers.

May 9, 2003: Grants exclusive license to Swiss/US company Serono to develop and commercialise emfilermin for use in reproductive health indications, under an option in the original partnership between the two companies.

May 15, 2003: Signs licensing partnership with US monoclonal antibody company Medarex for the R&D of fully humanised monoclonal antibodies against Amrad's asthma target interleukin-13 receptor alpha.

May 25, 2003: Sells Richmond property to RMAC, a joint venture between Macquarie Bank and R Corporation, in a deal that allows Amrad to lease back its laboratory space, and provides a cash consideration of $AUD47.5 million.

June 8, 2003: Announces deal worth potential US$112m with Merck, Sharp and Dohme to develop therapeutic drugs for asthma, respiratory diseases and cancer.

July 2, 2003: Forecasts profit for 2003.

July 8, 2003: Managing director Sandra Webb resigns "to pursue other interests", according to the company.