SYDNEY, Australia - Faced with a lackluster share price, Melbourne-based Amrad Corp. Ltd. said it will shed its remaining pharmaceutical operations and concentrate on developing its research portfolio.
As part of the reorganization, the managing director, John Grace, will leave the company, resigning from the board but continuing as chief executive while Amrad searches for a suitable new leader for its slimmed-down operations.
Amrad Chairman Ralph Ward-Ambler said that analysts and consultants have been saying that Amrad is too confusing and hard to value, having both pharmaceutical operations and a research portfolio. So the company has decided to focus on its research portfolio, which includes three projects in or ready to start Phase II trials, plus a number of other projects in preclinical development and advanced research.
That means Amrad will sell off its operations in sales and marketing, laboratory reagents, rapid diagnostics and early diagnostics, and in the process, contract from a company of 300 employees turning over more than A$150 million (US$78.6 million) to a company of 60 employees by the end of this year. The company said in July it would sell its U.S.-based diagnostics business.
Ward-Ambler said that the reorganization was in part due to the fact that "fashions change." When Amrad completed its initial round of private venture capital raisings in the early 1990s, "before anybody had even heard of biotech," companies looking for funding had to have a balance sheet and cash flow from established operations.
The company had sought advice from U.S. firms on its research portfolio and those groups have been impressed by the potential of the projects it had on hand. After the sell-off the company will have enough cash to continue to develop those projects.
The three molecules in clinical trials are AM424 for the treatment of neuromuscular disorders (now in Phase II trials), AM336 for the treatment of chronic severe pain (in Phase I/II trials) and AM365 for hepatitis B infection.
This latest change in direction for the company comes after Amrad announced a five-year strategic plan in May of last year, a plan that involved selling some non-core assets including a bio-screening operation, and a rationalization of its research portfolio to concentrate on the more advanced and promising projects.
The company raised A$70 million (US$36 million) in 1997 with its shares priced at the time at $1.95, but its shares have been sitting under A$1 for most of this year. The shares ended last week at A$0.85, with little reaction to the reorganization plan.