Product rollout keeps VRI confident despite loss

Natural health products company VRI Biomedical has reason to be upbeat about its future despite posting the largest annual loss in its short history.

The Perth biotech lost $4.8 million on revenues of $579,054 in the last financial year. The result is in line with prospectus predictions made when VRI listed in a $12 million dollar IPO about 20 months ago.

But more satisfyingly to shareholders, the company appears to be meeting anticipated timelines to market for its products.

The first -- the probiotic digestive aid ProBio PCC -- has just been launched in the US market by natural health company Pharmanex, a subsidiary of listed US direct sales giant NuSkin Enterprises.

Delivered in capsule form, the natural product stimulates antimicrobial activity in the body.

VRI this week is due to begin banking $750,000 in payments for the first shipment to Pharmanex which will put it in a near-term, cash-flow neutral position. It is understood to be negotiating with Pharmanex and others over five more market-ready products.

Depending on the success of ProBio PCC and the progress of licensing talks, VRI could earn up to $10 million over the next 18 months, according to some analysts close to the company.

It still has $4 million in cash reserves from its IPO and a $1 million Start grant of which it has drawn down only about $200,000.

The 42-employee company is conforming closely to its strategy of concentrating on natural health products with lower regulatory hurdles and shorter time-to-market than new chemical entity (NCE) pharmaceuticals.

The North American launch of its probiotic capsules may be followed by rollouts in Korea and Taiwan later this year. They could also be launched by next March in Japan, which accounts for 50 per cent of the world market for probiotics.

VRI has a portfolio of 24 potential products covering probiotics, diagnostics and vaccines whose development slots into VRI's business model of establishing clinical trials to validate the science, protecting IP and licensing the results to large pharmaceuticals.