PARIS - Genset reported a 73.6 percent jump in its third-quarter net loss to EUR9.9 million (US$8.7 million) this year from EUR5.7 million in 1999. Revenues were 12.7 percent down, at EUR6.2 million, due essentially to a 42.7 percent drop in research and development income (to EUR2.9 million).
The Paris-based genomics company attributes this deterioration to its "shift in strategy away from entering into limited gene target discovery deals on behalf of pharmaceutical companies to a focus on developing products for its own benefit." Its other source of revenue, sales of oligonucleotides, is growing rapidly, soaring by 58.2 percent to EUR3.4 million in the third quarter, when it accounted for nearly 55 percent of total revenues.
The company's strategy shift was described by the new CEO, Andri Pernet, who took over from founder chairman Pascal Brandys in August: "We are restructuring our business by finishing our existing alliances and have begun our efforts to capture for ourselves a much greater portion of the value generated through drug development. We expect to bring our own potential products, such as Famoxin, forward to the point where we can enter into partnerships of a much greater value to Genset than the deals of the past."
Famoxin is an anti-obesity drug that is in preclinical development, and Pernet told BioWorld International that Genset planned to take it into clinical development in late 2001, once the company has scaled up its production facilities to enable it to produce sufficient quantities of the drug to GMP standards. He said Genset would take it through Phase I/II trials itself, but look for a partner to share the heavier Phase III. Development should reach that stage by late 2002 or early 2003, and Pernet expects Genset to have signed up a partner well in advance. He also said the company would select a second drug lead from its portfolio of over 2,000 secreted proteins for taking into preclinical development within nine months.
While confirming that Genset would not be concluding any further research collaborations, he disclosed that it was negotiating a different kind of deal with a "large biotechnology company," which will be able to utilize Genset's integrated technology platform for the development of drugs in therapeutic fields that are not targeted by Genset. He anticipates that an agreement will be signed in the first quarter of 2001.
Pernet also revealed that this "transition to a new business model" had resulted in the departure of a large number of "non-scientific senior management." Marc Vasseur, who resigned as chief biology officer this summer to pursue other projects, decided in the end not even to remain a director of Genset. Most of the staff that left "were replaced by internal promotions of skilled personnel with significant experience of Genset," Pernet said, adding: "We have also begun to hire new senior officers with extensive and appropriate experience in the pharmaceutical industry, who will be critical in guiding our transition toward drug development and licensing."
In the first nine months of 2000, Genset's net loss increased by 42.4 percent to EUR23.5 million from EUR16.5 million in the corresponding period of last year. The company's cash burn amounted to EUR7.4 million in the third quarter, but its cash and short-term investments stood at EUR79.9 million as of Sept. 30, compared with EUR21.1 million at the end of 1999.