** solagran - analyst report **

I located this report on the net about SLA for everyone's information.

The only thing I noticed in this article incorrect, is that SLA have approximately 99 million shares on issue, not 155m.

It appears to be an article from a broker analyst.

In this article, it didn't say anything from the recently reported Bioeffective B (trailed on the St Kilda Football Vlub) and Bioeffective V.

This article can be located here (second report down);

http://www.marketeye.com.au/newsletter/?mid=&cobrand=marketeye&issue=56§ion=feature





Solagran: Flagship Naturally Derived Liver Cure Product Well On The Way To Commercialisation
Article Dated: 23rd July, 2004


There has been only one other company, Sirtex (our first report on SRX was when it traded at 56c), in the 18 years or so of Weekly Specials where we have felt inspired to write a follow up report in less than a year from the first.

Solagran is at present little known and even less understood.

Its hugely significant announcement this week – that its Bioeffective R in clinical trials with animals regenerated damaged livers as well as improving the function of the brain, which could be of use in the treatment of Alzheimer’s Disease, Parkinson’s Disease and Multiple Sclerosis as well as in liver disease treatment led to only a brief flurry of buying interest - as likely to be in part due to the current biotech bubble mentality and not to Bioeffective R’s intrinsic merit.

In Australia more than 150,000 people are infected with Hepatitis C while a further 6,500 have cirrhosis of the liver. In the US, liver disease is one of the top 10 causes of death with at present effectively no real treatment other than liver transplant. (Sirtex dramatically improves the quality of life for liver disease sufferers, it does not purport to be a cure).

Solagran’s Bioeffective R has been the subject of more than 3 million PhD hours in research since its discovery in Russia some 70 years ago.

Solagran expects to have Bioeffective R in commercial development by 2006. It is believed to be abandoning its cosmetic products, already commercial (to become instead a supplier of ingredients to the cosmetics industry), to focus on Bioeffective R.

After its recent $1.5 million capital raising at 10c a share, Solagran has enough cash to complete its clinical Stage II trials in Russia, expected to be by December this year.

(In a market economy, it is difficult to envisage a company being able to develop so vast a pipeline of products over so much time without having gained the umbrella of a major pharmaceutical. Nor could any small company be able to afford consultants and directors of such prestige and qualifications were it not for the close ongoing relationship with the St Petersburg Forest Technical Academy. Directors and consultants fees are very modest).

Solagran’s natural products and active ingredients are safe and highly effective for human and animal pharmaceutical, nutritional, cosmetic/personal care and agricultural applications.

Solagran in its mission statement says: "We believe in balance between mankind and nature and take a proactive approach to environmental conservation and healthy forest management. We utilise a patented waste free extraction technology that takes raw materials discarded by the timber industry and turns them into valuable products.

We do not cut trees to make Bioeffectives. All solvents are recycled and all byproducts have commercial applications".

Please note: At this stage we do not have, and have not previously owned, shares in Solagran.

Solagran Limited - A Snapshot

Solagran Limited listed in the shell of Travelshop in August last year, offering a rare opportunity to invest in a company that already has one of its products in clinical trials. Solagran’s scientists (in Australia and Russia) have developed a pipeline of products called Bioeffectives derived from pine needles and other tree foliage.

The Australian company Solagran owns all the Intellectual Property for its products, and the company’s management has extensive experience in the commercialisation of biotech.

The clinical Phase II trials program for Bioeffective R involves 120 active participants in 4 centres in the Russian Federation, each of which have been approved to conduct such clinical trials. The trials should be completed by December 2004.

Earlier this week Solagran announced further scientific trials conducted with Bioeffective R at the Institute of Evolutionary Physiology in St Petersburg have confirmed its extremely low toxicity and powerful liver regenerative properties.

The trials demonstrated that Bioeffective R is not only effective in regenerating damaged liver tissue, but its use can also extend the life and enhance the function of a healthy liver.

Professor Khovanskikh and his team reached a number of important conclusions: Bioeffective R has no negative effect on key enzyme activity in the brain (monoamine oxidase or MAO and acetylcholinesterase or AchE). By the 30th day of administration, Bioeffective R caused a statistically significant increase in MAO. It had no negative effect on MAO activity in the kidneys and did not affect the functional condition of the kidneys. It again demonstrated powerful hepatoprotective activity and show a complete lack of toxicity.

There is potential for Bioeffective R to be used as an MAO activator in treating illnesses where a decrease in MAO activity is pathogenic (such as Alzheimer’s Disease, Parkinsons Disease and Multiple Sclerosis).

Solagran plans to focus on bringing Bioeffective R to commercial application by financial year 2006.

Development of the Bioeffectives

In the late 1920s in Russia the potential for conifers to be used as the source of an entire family of natural pharmaceuticals captured the attention of Prof Fyodor Solodky of the St Petersburg Forest Technical Academy. He was impressed by the ability of pines to extract chlorophyll in conditions where there was insufficient light, and to thrive in temperatures from plus 40 degrees to minus 40 degrees. He sought to harness this life giving chlorophyll without destroying its properties.

In the early 1930s Solodky was joined by Dr Asney Agranat who dedicated her life to working with Solodky (Solagran Ltd derives its name from the names of the two inventors). They worked out of the St Petersburg Forest Technical Academy, founded in 1803 by order of Tsar Alexander 1 and the world’s largest higher education facility focussed on Forestry and Forest Management. The source of Solagran’s Bioeffectives is the 28,000 hectare forest plantation attached to the Academy.

Prof Solodky and Dr Agranat found that green conifer needles are extremely rich in sterols, enzymes, hormones, di and tri terpenes, fatty and resin acids, vitamins B1, B2, E, K and others. They also contain more carotene by weight than carrots and six times the ascorbic acid found in oranges and lemons.

During World War II in the 900 days of the Siege of Leningrad (St Petersburg) by the German army, the population of the city lived on a daily ration of 125 grams of bread made from sawdust enriched with food grade cellulose, and a bioactive green-needle extract. The cellulose was developed at the Forest Technical Academy by Prof V Sharkov, while the extract was produced by Solodky, Agranat and their team. The people’s daily food ration also included one glass of water infused with the same bioeffective extract.

The survival of the city of St Petersburg and hundreds of thousands of its citizens, was due largely to the work of these scientists.

Solodky and Agranat isolated a substance called Coniferous Chlorophyll Carotene paste which later became the first galenical preparation in Solagran’s product family (Bioeffective A). The dark green paste was used to treat burns, wounds and frostbite throughout the war and to accelerate skin regeneration following surgery.

The isolation of Bioeffectives, which are galenicals, (or natural mixtures of plant based compounds,) involves a patented extraction technology. The process uses a very soft extraction procedure that enables the live elements of trees to be extracted without destroying their biologically active properties. In 2003, Solagran patented a new technology that is even softer than before and which the Directors believe will significantly increase its technological advantage over any potential competitors.

The research team in St Petersburg has now developed a whole family of natural pharmaceuticals and food additives using patented technology that can be applied to virtually any species of tree.

The Solagran Family of Galenicals

(Stage 1 processing must be done near raw source material produces Bioeffectives A, N, V, L, X, K and P. Stage II processing produces Bioeffectives B, S, F and R)..

The Flagship Product, Bioeffective R

Bioeffective R is a polyprenol. It acts as a coenzyme in the synthesis of polysaccharides and protein-carbohydrates and is a powerful immuno-modulator. It also rejuvenates the skin and acts as a potent anti ulcerant.

The use of Bioeffective R as a treatment for Hepatitis and Cirrhosis of the liver is currently undergoing Clinical trials in Russia conducted in accordance with international protocols.

The Pipeline of Products

Bioeffective A (the Coniferous Chlorophyll Carotene Paste used in St Petersburg during WWII) exhibits expressed antiviral, antibacterial and antifungal activity together with strong burn and wound healing properties.

Bioeffective S is a concentrate of di- and tri-trepenoids with anti viral, anti bacterial, anti fungal and anti inflammatory properties. It is effective against flu viruses and works as a natural antibiotic.

Bioeffective N is a metal based derivative of chlorophyll and was first used as a treatment for childhood leucopoenia. Its powerful blood regenerative properties meant it was also approved as a treatment for anaemia and leukemia and to strengthen the blood against the side effects of radiotherapy and chemotherapy.

Members of the Bioeffectives research team used Bioeffective N and Bioeffective L to protect themselves from the effects of radiation exposure and to decontaminate skin, hair and clothing when working with survivors and rescue workers following the Chernobhyl disaster in 1986.

Each individual property of a particular Bioeffective can be amplified by adding another Bioeffective. For example, Bioeffectives A and S can be used together in toothpaste and chewing gum to prevent gum disease and tooth decay and to protect against flu and upper respiratory disorders. Toothpaste containing Bioeffective A has been available in Russia for some time.

The Technology in Australia

In 1991 Dr Vagif Soultanov moved to Australia to work with the CSIRO as part of an international scientific exchange program.

He formed Solagran in 1995 in conjunction with a group of Australian businessmen and Russian scientists from the Academy. Their goal was to commercialise the technology and fund the ongoing R&D effort. In 1998 ownership of all Intellectual Property pertaining to technology and applications of Bioeffectives were transferred from the St Petersburg Forest Technical Academy to Solagran.

The development of Solagran’s technologies has been made possible by Dr Soultanov’s strong ongoing relationship with the St Petersburg Forest Technical Academy and its key scientists. This has enabled the Solagran research and management team led by the founder Dr Vagif Soultanov to advance Bioeffectives to a meaningful product stage without the assistance of funding from international pharmaceutical companies.

Patent Protection

Solagran on September 18 2003 announced it has been granted priority by the Russian Agency for Patents and Trademarks for its application for a new and comprehensive technology patent. It now has a 12 month window in which to file an international patent application. During this period no other application from potential competitors, inside or outside Russia can be considered.

Solagran’s two previous technology patents covered the extraction of Bioeffectives from pine, fir and spruce trees. The new technology patent expands the company’s IP protection to include extraction from non conifers including Ginkgo Biloba and Cunninghamia Lancelota and several additional conifer species.

Solagran’s new technology enables the company to produce high value Bioeffectives in commercial quantities at very high levels of purity at lower unit production costs.

Solagran Financials

Last Traded price 11.5 cents
Shares Issued 115.9 m
20 cent Contributing Shares 50.0 m (paid 1 cent)
Options exercisable at 80 cents 22.5 m by November 30, 2004
Market Cap $13.3 m
Year ended June 30, Values in Millions$

INCOME
2004 Int
2003
2002

Op Revenue
0.0
0.0
0.2

Net profit
(0.6)
(0.2)
(2.1)



BALANCE SHEET
2004 Int
2003
2002

Current Assets
1.6
2.3
0.4

Non Current Assets..
7.7
7.5
-

Current Liabilities
0.1
0.7
0.5

Non Current Liabilities
-
-
-

Net Assets & Shareholders' Funds
9.2
9.1
(0.1)

Intangibles
7.7
7.5
-

Net Tangible Assets
1.5
1.6
(0.1)

Gearing (Net of Cash) %
Nil
Nil
Nil

NTA per share (cents) either
1.5
1.6
-

Shares Issued (Millions)
102.2
99.8
116.0




Cash Flows:
2004 3rd quarter
2004 Int
2003
2002

Cash on hand (at open)
0.2
0.7
0.4
1.3

Operating Activities
(0.1)
(0.7)
(0.7)
(1.4)

Investing
(0.1)
-
(0.2)
0.5

Financing Activities
0.3
0.2
1.2
-

Cash on hand at Year end
0.3
0.2
0.7
0.4


1/ On May 19 2004 the Company announced that $1.2 m was received and a further $0.4 m was receivable under the share and options offer in a 1 for 5 renounceable entitlement at 10c each. Solagran believes it now has sufficient funds to complete clinical trials.

Directors:

Dr Vagif Soultanov, Chairman. He is the founder of Solagran and was the leader of the Bioeffectives research team in St Petersburg in the 1980s. In 1990 he came to Australia to work with the CSIRO as part of an inter-governmental scientific exchange program. He holds doctoral qualifications in organic chemistry and biochemistry and is also a medical practitioner. He has published over 60 scientific papers in Russia and internationally and holds a number of patents.
Peter Stedwell, Executive Director and Company Secretary. Peter was finance manager and company secretary of ER Squibb & Sons (now Bristol-Myers Squibb).
Denis Kilroy, Non Executive Director and Strategic Advisor. He has been a strategy consultant for more than 20 years and is the founder and Managing Director of The KBA Consulting Group. Prior to that he held senior positions with PA and LEK, and in the early 1990s became the first Australian to be elected partner with Marakon Associates, the US based consulting firm that pioneered Value Based Management in the USA, Europe and Australia.
Charles Pellegrino, an accountant and financial adviser, the founder and director of the Stanford Group of Companies. He has been involved with Solagran since 1995.
Management and Advisory Team:

In Australia

Tony Karantonis, CEO. Tony holds a Bachelor and Masters Degree in Engineering and has held several senior executive roles in large consumer, manufacturing and professional service organisations and also directed practices in management consulting within the "big four" firms.
Gene Litinsky, General Manager. Was formerly with Sony Pictures Entertainment in Los Angeles, Exxon and Exxon Neftegaz Inc in Texas and with Score Medical Group as International Operations Manager. He holds a BA in Psychology and a BA in Russian language from the University of Colorado and an MBA from the Anderson School at UCLA
Bob Wootton, a Natural Healthcare business and marketing specialist
Scientific Advisory Team in Russia:

Prof Vladimir Oneguine, DSc, Chancellor, St Petersburg Forest Technical Academy. Prof Oneguine is also a director for the International Centre for Forestry and Forest Industries. He is an Academician (highest scientific honour) of the St Petersburg Engineering Academy, Academician of the Russian Academy of Natural Sciences and a member of the International Academy of Higher Education.
Prof Victor Roschin, DSc, Head, Department of Wood Chemistry, Physical and Colloid Chemistry, St Petersburg Forest Technical Academy. He is the leader of Solagran’s research and development efforts. He and his team are responsible for developing much of Solagran’s Intellectual Property. He holds over 20 patents and has published over 150 scientific papers.
Alexandre Raspopine, Vice Chancellor of Research & Development, St Petersburg Forest Technical Academy
Prof Vladimir Yagodine, DSc, Technical Advisor, Head of Department of Forest Chemistry and Biologically Active Substances at the St Petersburg Forest Technical Academy and a board member of the European Forestry Institute.
Major Shareholders:

Solamind Pty Ltd 46.81 pct (a company owned by Russian and Australian businessmen)
The Top 20 shareholders hold 79.29 pct of the company.
Major contributing Share Holders:

Solamind Pty Ltd has 22.50 pct
The Top 20 hold 88.32 pct of Contributing shares