BresaGen to shed nine jobs in wake of failed partnership

Adelaide-based biotechnology company BresaGen (ASX: BGN) has announced nine redundancies and a hiring freeze in the wake of the failed E21R collaboration with British Biotech.

Last week BresaGen announced that the marriage was over after independent tests could not confirm previous assessments of the GM-CSF antagonist's commercial prospects.

The drug, which is currently under review with the commercial rights having reverted to BresaGen, was one of the main components of the local company's protein pharmaceutical division.

In a market announcement today, the company said the reassessment of E21R was expected to precipitate some one-off write-downs in the June 30 2002 accounts. It said the write-downs could include intangible assets and inventories, with the anticipated total effect on the financials likely to be about $3 million.

"The demise of the collaboration with British Biotech has been very disappointing," CEO and president Dr John Smeaton said. "However, we are confident that BresaGen has a sound financial base and exciting prospects for the commercialisation of stem cell therapies."

Smeaton said the company had already put in place several cost-cutting measures to protect funding levels for the next 18 months. This included nine Australian staff redundancies spanning senior management to "shop floor", a hiring freeze in the immediate term and a 10 per cent salary cut for senior management and directors.

He said that while construction on the new FDA-compliant facility would proceed, the purchase of new plant and equipment would be delayed where appropriate.

"With these cost savings, we anticipate that we have enough funding for at least 18 months," Smeaton said. "We are in a very strong cash position and are making significant progress in the other parts of the business."

He said that once the reassessment phase was complete, the company would consider a capital raising.