Reuters Summit-UPDATE 1-Rodent maker GenOway eyes profit, cash

* GenOway aims to become profitable in short term

* To sign two "significant" deals with drugmakers this year

(Adds CEO comments, background)

By Caroline Jacobs and Noelle Mennella

PARIS, June 3 (Reuters) - France's GenOway (ALGEN.PA), which develops genetically modified mice and rats for health research, is aiming to become profitable in the short term and focus on cash flow as it expects to seal two major deals with drugmakers.

GenOway, maker of the world's first cloned rat, sees itself more as an information technology than a biotech company due to its pace of innovation. Some 60 percent of its rodent models for sale is based on a technology implemented less than 2 years ago.

"Our goal ... for this year, next year or the year after, is to become profitable," Chief Executive Alexandre Fraichard told Reuters in an interview as part of the biotech small- and mid-cap summit. He added GenOway, following feed back from fund managers, also aimed to remain cash flow positive.

Last year, GenOway made a net loss of about 1 million euros ($1.42 million), suffering from the euro's strength against the U.S. dollar, on sales of 6.7 million euros.

A growing proportion of GenOway's sales is made in the United States. More than half of its sales this year should stem from the world's largest drugs market compared with 40 percent last year, Fraichard said. In 2006 the share was 18 percent.

Researchers are increasingly using genetically modified mice or rats instead of plain rodents to test drugs -- before they are deemed safe enough to be tested on humans -- as drug discovery focuses on detecting the genetic origins of ailments.

Its customers, including two thirds of the top 20 drugmakers like Johnson & Johnson (JNJ.N) and Bayer BAYG.DE, can ask GenOway to develop rodents specifically for their research or they can chose from a catalogue ready-for-use models.

GenOway expects to sign two "significant" agreements with drugmakers this year. Fraichard defined significant as being worth at least 300,000 euros.

GenOway has found ways to quicken the development of its rodent models to efficiently meet demand. Its recently introduced a technology, StemCellHY, shortens the time it takes to develop a rodent by more than a month from roughly a year.

More time-saving breakthroughs are to be launched this year, Fraichard said.

"We think we can break the one-year barrier, by 2010-2011 we will easily be below one year, possibly not far from 10 months, to make a new model," Fraichard said.