Circadian soars on buyback plan

In a move that caused a 35 cent jump in the company's stock price, Melbourne firm Circadian announced yesterday that it would buy back up to 10 per cent of the company's outstanding shares.

Managing director Leon Serry said the board considered the buy-back to be an appropriate application of a portion of Circadian's cash reserves and in the best interest of all shareholders.

"The point is, the market value of our listed shares and cash comes out at $AUD2.10," said Serry. At the close of trading on Monday 7 April, the shares were trading at around $1.10, representing a 46 per cent discount on the market value of $AUD84.6 million, including $16.4 million in cash.

"We've felt a bit penalised by the market, as there is no value attributed to Circadian's portfolio of research projects and unlisted holdings," said Serry.

The buy-back will cost the company approximately $4 million, and the shares it buys back will be cancelled, increasing the value of the remaining shares outstanding.

Circadian's assets include substantial shareholdings in five listed biotechnology companies, including Metabolic Pharmaceuticals (34 per cent shareholding), Axon Instruments (15 per cent), Optiscan Imaging (8 per cent), Antisense Therapeutics (32 per cent) and Amrad Corp (22 per cent).

Not counted in its market valuation are the investments made by Circadian into two unlisted companies, Syngene and CancerProbe, and its portfolio of research projects and intellectual property.

Circadian has in the past listed projects after spending six to seven years developing them with the respective scientific institutions, including assistance with the patent process and direction of the research, as well as managing the commercialisation process.

"We have enough funds to last approximately 12 years at our present burn rate," said Serry.