BioWorld International Correspondent

PARIS - BioAlliance Pharma SA launched an IPO on Eurolist Compartment C of the Euronext stock exchange in Paris with the aim of raising €29.5 to €33.8 million and, in the words of its chairman and co-founder, Dominique Costantini, of "transmuting from a drug discovery company into a profitable pharmaceutical company."

She explained that Paris-based BioAlliance was launching the IPO to fund the commercialization of its lead compound, Loramyc, which it has filed for marketing approval in Europe as a first-line local treatment for oropharyngeal candidiasis, an oral fungus commonly found in immunocompromised patients suffering from diseases such as cancer, HIV and diabetes.

BioAlliance, which was founded in 1997, has completed the development of this product in a relatively short time and at exceptionally low cost - only €10 million, Costantini said. That is because the company's strategy largely is focused on reformulating existing compounds for administration through proprietary delivery systems, giving it the opportunity to exploit off-patent products and improve their bioavailability.

The IPO is designed to carry the company through the next two or three years, since it expects to move into profit in late 2008. BioAlliance Pharma is offering more than 2.1 million shares to institutions in France and other European countries and to private investors in France, plus an overallotment option of 317,000 shares.

The indicative price range is set at €12.40 to €14.20 per share, valuing the company at between €75 million and €85 million. The offering opened Nov. 23 and will close Dec. 6. The price is expected to be announced Dec. 7, with trading to begin the next day.

Besides the public offering, 587,011 new shares are being issued in a capital increase reserved for holders of the €7 million of convertible bonds the company issued in May 2004. All its existing shareholders subscribed to those bonds and none is using the IPO to exit, according to BioAlliance Pharma's chief financial officer, Piers Morgan.

Private equity funds currently control 86.7 percent of the company, the largest investors being Auriga Ventures II, of Paris (20.78 percent); ING Belgique, of Brussels (20.8 percent); and FCPR-FCJE, of Paris (13.2 percent).

The co-lead managers and bookrunners of the offering are the Paris office of Bryan, Garnier & Co. and ING, of Amsterdam.

BioAlliance Pharma has raised €18 million in three private financings since it was founded in 1997, the last of which netted it €12 million in August 2004. It had cash reserves of €4.3 million as of Sept. 30.

Loramyc, known as miconazole Lauriad up to now, is a 50-mg formulation of miconazole as a once-a-day, bioadhesive, buccal tablet. Two Phase III trials of the product in the indication of oropharyngeal candidiasis, one in HIV patients and one in patients who had undergone radiotherapy for head or neck cancer, were completed earlier this year.

The company is hoping to obtain approval for Loramyc in France before the end of 2006 and to launch the product there in the first quarter of 2007. It anticipates signing distribution agreements for the other main European countries in the second quarter of 2007.

In addition, BioAlliance has plans for partnering out the development and commercialization of the product in the U.S. and Japan. The FDA has approved an investigational new drug application filed by BioAlliance earlier this year for the conduct of a pivotal Phase III trial in the U.S. in HIV-positive patients suffering from oropharyngeal candidiasis.

BioAlliance now is in negotiations with possible American partners and expects to sign a license agreement in the second quarter of 2006. BioAlliance also intends to partner out the product in Japan in 2008.

Lauriad is one of two drug delivery systems developed by BioAlliance, which is focusing on therapeutics for overcoming drug resistance in cancer, HIV and other severe infections. Besides its Lauriad platform, which ensures early and prolonged release of therapeutic agents at the site of the disease, it has developed a nanoparticle technology called TransDrug, which is designed for intracellular targeting and also ensures prolonged release of the active ingredient.

The second product in BioAlliance's pipeline is another Lauriad formulation of a known compound, acyclovir. A recently completed Phase I clinical trial of acyclovir Lauriad in Europe for the treatment of oral herpes established the product's ability to deliver a high level of concentration to the target zone.

BioAlliance's third most advanced product is doxorubicin Transdrug, which is undergoing a Phase I/II clinical trial in Europe in the indication of primary liver cancer. That compound has been granted orphan drug status in both the U.S. and Europe.

One of the merits of the Transdrug delivery system is that it can be administered through different channels - inter-arterial infusion (the form being tested in the clinical trial), intravenous injection or orally. The preliminary results of the trial are encouraging, said BioAlliance, which expects to have the final results in the second quarter of 2006 and to initiate a Phase II/III trial in the third quarter.

BioAlliance has a third string to its bow, and that is a program aimed at discovering and developing drugs in oncology and HIV. It has a number of drug candidates in the pipeline, including an anti-HIV integrase inhibitor and two anticancer agents. The former is likely to be tested in a Phase I trial starting in the second quarter of 2007.

Earlier in its short history, BioAlliance developed a predictive phenotyping assay that measures resistance to HIV drugs. Called Phenoscript, the product was launched in both Europe and the U.S. 2002 and was marketed in both regions by a wholly owned subsidiary of BioAlliance, VIRalliance. At the beginning of November, however, BioAlliance agreed to sell the business and assets of VIRAlliance, including Phenoscript, to Eurofins Scientific Inc., of Memphis, Tenn., a wholly owned subsidiary of another French company, Eurofins Scientific, of Nantes.