BioWorld International Correspondent

SYDNEY, Australia - Benitec Ltd. can pursue applications in its core area of a new form of gene-silencing technology, after settling a patent dispute with two Australian government organizations.

The announcement by Benitec, of Brisbane, concerning DNA-directed RNA interference (ddRNAi) is part of a recent surge of stock market activity in biotechnology, which has included a number of small initial public offering proposals.

Benitec Chairman and CEO John McKinley said his company eventually will work on commercial applications, but initially it intends to sell licenses for using the technology in research and development. Any commercial discovery resulting from the technology will require an additional license, he said.

At about the same time as the announcement of the patent dispute settlement, Benitec also announced that it raised A$10.9 million (US$8 million) through share placements with Australian and European institutional investors.

McKinley said the company is now "well funded" and intends to acquire operations in the U.S. to help with research and development, as well as the expected clinical trials and marketing.

The technology at issue in the recently settled dispute, ddRNAi, is a method of inducing RNA interference, a natural cellular mechanism. RNAi destroys messenger RNA (mRNA), the molecule that relays instructions from the gene to the cell's protein-making machinery, effectively silencing the targeted gene. The RNAi process involves inserting a DNA construct into the cell to produce a double-stranded RNA segment, one side of which is identical to the target mRNA sequence. The RNA segment then destroys the mRNA.

Benitec said that the ddRNAi approach has several advantages over alternative gene-silencing technologies under development, such as antisense RNA and small interfering RNA. Those advantages include lower cost and ease of preparation, more versatile delivery options, the ability to silence genes in whole organisms and the ability to control the expression and timing of gene silencing.

Research on the technology had been done at Benitec, the Queensland State Government's Department of Primary Industries (DPI) and the Plants and Animals Division of the Commonwealth Scientific and Industrial Research Organisation (CSIRO).

The settlement agreement provides that all three organizations will continue to use the new technology, with Benitec looking at human commercial applications, the CSIRO looking at plant and animal applications and the DPI having access to discoveries by the other two organizations. Benitec and CSIRO also will share a small portion of revenues gained in their respective fields with each other.

Benitec's announcement is one of a number of fund-raising announcements by biotech companies on the Australian Stock Exchange in recent weeks. Biodem Ltd., of Melbourne, which has a portfolio of biotech products, announced an IPO to raise A$10 million. Another Melbourne company, Cogstate Ltd., which has a range of products dealing with human cognitive functions, is seeking to raise A$7 million through an IPO.

Last week's announcement by Benitec pushed the stock price up A8 cents to A$1.39 but by Friday's close the stock price had settled at A$1.24. In June the stock was priced at A60 cents.