MONTREAL - For biotechnology CEOs, the term “burn rate“ can conjure up an image of a raging inferno. Availability of cash to fuel research and development-intensive programs is a constant challenge.

Algene Biotechnologies Corp., one of Canada's leading genomics companies, now finds itself in that position. Denis Gauvreau, CEO of Algene, told BioWorld International that, with dwindling cash reserves, the company has had to substantially reduce its burn rate to ensure sufficient liquidity to carry on activities until the end of this year.

Although Algene's second-quarter results show the monthly rate fell from C$560,000 (US$369,370) to C$506,000, the company has been forced to implement even deeper budget cuts aimed at lowering its monthly cash expenditures by one-third, to C$360,000. As of June 30, cash and temporary investments totaled C$1 million and the company had $1.7 million in tax credits receivable.

To achieve this plan, Gauvreau said 12 employees have been laid off, leaving the company with a staff of 39. The cuts have been across the board and include several scientists. During the next few months additional restructuring will take place.

Gauvreau said that Algene will concentrate on the establishment of a strategic alliance covering its Alzheimer's disease research, as well as on marketing its technological platforms. The more tightly focused research program follows a strategic review, which the company undertook last month. In addition to the Alzheimer's research, the company has been involved in the genetics of bipolar depression, migraine and Parkinson's disease.

To help implement Algene's commercial strategy, a new CEO will be recruited during the next couple of months. When the position is filled, Gauvreau will devote his time to research and development but retain the title of chairman. Specifically, he will search for new applications designed to enhance the company's long-term business development, Gauvreau said.

Algene is also seeking to raise about C$5 million to support operations until mid-2000. Most of the company's founding shareholders have confirmed their intention to reinvest in this next round of financing.

Algene is the first genomics company to promote the use of founder populations for genetic research in complex human disorders. These populations comprise individuals descended from a limited number of common ancestors in recent centuries. The company believes that, for complex genetic disorders, founder populations represent one of the better models for case sampling in order to monitor the transmission of genes across succeeding generations.

In June, Algene reported it had discovered a new genetic locus likely to harbor a gene related to early-onset Alzheimer's disease. The association of the locus to this form of the disorder is supported by highly compelling statistical evidence from the company's analytical methods. The locus is located on a different chromosome from Presenilins 1 and 2, the two genes related to the early-onset form of this disorder which have been identified to date.

This locus has never before been associated with Alzheimer's disease, and the company believes results obtained in the genetic study of the early-onset variation of Alzheimer's could shed additional light on the development of the late-onset form.

Algene has begun to fine-map this new locus, in addition to ongoing mapping activities related to the study of late-onset Alzheimer's disease. Researchers expect to complete all the fine mapping and statistical analyses in the next couple of months.

Until further funding is secured, Algene has temporarily suspended all research and development activities related to migraine and Parkinson's disease, in order to concentrate its scientific resources on Alzheimer's. *

Boosting Research, Development Budget