Gradipore says at AGM it will change

Having been promised the world, impatient shareholders of Sydney-based separations company Gradipore were demanding answers at Thursday's company AGM at the Australian Stock Exchange.

Gradipore, like many of its peers in the volatile biotech business has seen its shares heavily sold off by jittery investors over the last 18 months or so.

And while it is a familiar trend right across the biotech sector, recently appointed Gradipore chief executive Robert Lieb admits that the company has paid the price for not delivering the goods.

"Our aim is to promise less and deliver more," a contrite Lieb announced to his shareholders, assuring them that a disciplined return to business fundamentals would yield results in the forthcoming year.

"My firm focus for the past 4-5 months has been for the preparation of a business focused model."

From their all time high of $3.50 to this year's high of $2.24, Gradipore shares slipped another five cents on Thursday to $1.10, near the company's all-time lows.

A key factor in the decline, analysts believe, is disenchantment with Gradipore's apparent failure to fully consummate major deals despite repeated -- and often glossy and expensive, charged one shareholder -- assurances that they are in the offing.

"Long-term shareholders have been getting out because there is no news there," said Scott Marshall, head of industrial research with Shaw Stockbroking.

Gradipore has for some time been talking up major deals with major pharma of the likes of Aventis, a deal Lieb is adamant remains "on hold" as it irons out details of its recent merger.

The recently announced agreement with Canadian hyperimmune product specialist Cangene is, the company admits, the first major deal it has managed to secure, with likely outcomes difficult to predict just yet.

Lieb cautiously hinted that other agreements were in the pipelines and intimated that Gradipore may revisit the possibility of working with CSL after the failure of previous attempts under earlier management, but it was clear that shareholders had had enough of 'maybe's. Marshall said, "their previous strategy of taking on the world was too ambitious; they need to get some units out there in the market and get a name for themselves."

One of Lieb's chief priorities for Gradipore, he said, was to consolidate the company's research and development activities and fastrack those with commercial possibilities.

Prior to Lieb taking the helm Gradipore was involved in around 60 separate projects. It now has 10.

"You have to have blue sky and dreams," Lieb said, "but you must also have the nuts and bolts to meet practical objectives."

Of immediate concern to Lieb and the board is the halving of Gradipore's fiscal 2002 net loss of $18 million over the coming 12 months and a doubling of sales to $11 million.

Over the last five months Gradiflow staff have been busy developing 35 new products for the company's Gels or life sciences division which Lieb is hoping will post impressive revenues growth, especially from sales to the US where the company recently established a sales force.

Lieb was also bullish about Gradipore's diagnostics business given the expected surge in demand for industrial scale separations technology in such burgeoning areas as genetics and proteomics.

Gradipore's exclusive agreement with Cangene will allow the Canadian company to evaluate the performance of Gradipore's Gradiflow technology in its hyperimmune manufacturing process.

In the first phase, Gradipore will be aiming to prove that Gradiflow can achieve industrial-scale purity and recovery levels on one of Cangene's products, a crucial hurdle for the company and one which if successfully managed should yield high returns.

Pending success of the Cangene trials, the companies may sign further agreements leading to commercialisation and FDA licensing for Gradiflow.

Gradipore will receive up-front and milestone payments, worth a total of about $900,000, throughout the life of the project.

Lieb said that he expected the Cangene deal would enable the Gradipore to cut the FDA approval process to around two years and for a fraction of the cost, giving the company access to the large and potentially very lucrative US diagnostics market.

Gradipore markets what it claims is a uniquely more efficient technique for separating and isolating biological and other matter in the laboratory.

Unlike the commonly practiced techniques for extracting purified proteins from blood plasma such as Cohn's technique or chromatography, Gradipore claims that it can remove virus and non-infectious prion pathogens during the purification process, as well as improving yields, reducing costs and speeding process times.

Gradiflow has garnered attention in Europe as a possible technique guaranteeing the removal of prions which cause mad cow disease (BSE) and its human equivalent, Creutzfeldt-Jacob disease (vCJD).

According to Shaw's Marshall, Gradipore has a great story to tell but still remains a highly speculative stock.

"The company is certainly more focused and more professionally managed with some recent appointments which is pleasing from their point of view," he said.

"Some of the operations continue to produce strong growth, however, the value of Gradipore is whether they sell Gradiflow units into the fractionation business.

"It is an excellent unit and their technology has been shown time and time again to be far superior to anything else out there but they must get the runs on the board".