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Executive Interviews: John McKinley

Conducted By Michael J. Harris, Managing Editor

Interview with John McKinley, Chairman and CEO, Benitec, Ltd.

What are the immediate objectives of Benitec?

We aim to become, or remain, a leader in the field of RNAi therapeutic development with a foundation based on our proprietary ddRNAi technology. We intend to license out that technology for external research opportunitesand enter into collaborative alliances that fortify out financial position and afford greater company value.

Additionally, we intend to continue development of internal research efforts in order to develop in-house RNAi drugs for HIV, HCV and additional applications. Toward that end, we mean to establish a solid presence in the U.S. by transforming the company from an Australian-based entity into a NASDAQ-listed American business.

You are involved in litigation with several companies over your ddRNAi technology and the industry is similarly undergoing a wave of court actions. What is your view on why the RNAi sector is so embroiled in IP lawsuits?

I can't comment on the actions of others, but Benitec is committed to protecting its proprietary IP portfolio, and we believe the validity of our ownership of that technology has been clearly established since the settlement and partnering agreement with the CSIRO in December 2003. Based on that ownership, it is our goal to issue patent grants and enter into license deals that extend the value and function of ddRNAi technology into applications that address solutions for an expansive number of diseases.

Do you expect the outstanding lawsuits to affect your R&D schedule or otherwise affect your ability to participate in other deals?

I don't anticipate any negative impact on our business. We filed the lawsuits and our position is not in question. We will continue to seek collaborative and partnering alliances and grant licenses for ddRNAi.

When do you expect to be in clinical trials?

We expect to initially enter clinical trials for HIV in late 2005 and for hepatitis C virus in the first half of 2006. This is on par with our early clinical trial projections and affirms we are still on schedule, if not a little ahead.

What is your evaluation of the European RNAi market?

RNAi is not a strong market outside the U.S. at this time, although it is possible that it could strengthen in the future, as established European companies partner into the market. However, I would think if anyone wanted to become or remain a big player in RNAi right now, the U.S. is the place to be operating.

Is that why Benitec is planning to relocate to the U.S.?

Absolutely. By the end of the year, we intend to be a U.S.-headquartered company and essentially phase out our Australian operations, as we intend to capitalize on the robust RNAi environment in America and to increase our value for shareholders. We determined in our long-range strategy that in order to be in the best possible position to take advantage of financial, research and business development opportunities in this field, we needed to be where the market was centered - and that is undoubtedly the U.S.

Once we wind down our operations in Australia, the market outside the U.S. will be weakened further, leaving perhaps a company such as—atugen AG of Berlin, Germany comes to mind—as the strongest in a weak market. I am not declaring the European or the market outside the U.S. dead, rather it is just nowhere near the capacity of the American market, and we have decided to increase our value and effectiveness by relocating there.

What are your concerns for Benitec and the general RNAi market?

I have a confident and optimistic outlook for our future, as well as for the health of the overall RNAi industry. We are implementing an aggressive strategy, but it is one that was well-calculated and our success in meeting our goals to this point indicates we are heading in the right direction.

We are obviously committed to the technology and recognize its potential to produce blockbuster therapeutics; however, RNAi has not been tested in clinical trials yet and until then, no one can declare its ultimate validity.

There has been promising research work conducted and an enormous amount of patent activity relative to RNAi that one can assess as indicators of widespread support for the technology and its capability to realize that potential. So, any natural concerns that I may have regarding the unknown are more than offset by indicators of progress in this industry.