Setting out to raise A$17 million in an Australian initial public offering, Vaccinoma Inc. expects to advance its melanoma cancer vaccine into Phase III trials.

Operating as a virtual company since late last year, the San Diego-based firm plans to bring on eight employees upon completing the IPO. It also will complete a licensing agreement with New York University for the technology behind its lead product, said Vaccinoma's CEO Paul Hopper. The company also has offices in Sydney, Australia, where its subsidiary is located.

"It's a relatively small IPO," Hopper told BioWorld Today, explaining why Vaccinoma is not seeking a public listing in the U.S. "It would be too small to do an IPO in the U.S."

The company intends to raise between A$17 million (US$12.9 million) and A$25 million through the sale of 17 million shares of A$1 apiece and a possible 8 million additional shares to cover overallotments. Pegasus Corporate Advisors in Australia is the lead manager, with London-based Sudbrook Associates heading the European selling syndicate.

The minimum amount raised of A$17 million would take the melanoma vaccine through a 12-month manufacturing period and into Phase III by the fourth quarter of 2007. The maximum amount, if the overallotment option is exercised in full, also would move a second product, the company's breast cancer vaccine, into Phase I trials.

The IPO is expected to close in June, giving Vaccinoma a market capitalization of A$43 million. The company's shares will be listed on the Australian Stock Exchange under the symbol "VAC."

Australia has the highest rate of malignant melanoma in the world, Hopper said. About 80 percent of the 1,200 skin cancer deaths that occur each year in the country are caused by melanoma. In the U.S. each year, there are about 60,000 new cases of the disease and nearly 8,000 deaths. Globally, the market for melanoma treatments is estimated at about $1.5 billion a year.

"It's fair to say there's a huge amount of interest in melanoma," Hopper said, "because scientists believe it's one of the most immunogenic of the cancers."

Current treatments include surgery, and observation with combinations of radiation, chemotherapy and injections of interferon, but they can be toxic and are limited in effectiveness.

Vaccinoma's vaccine uses a combination of purified antigens from three melanoma cell lines that stimulate the body's immune system to fight tumors.

"We believe it has a greater opportunity of alerting or drawing attention to the immune system," Hopper said. "It's partially purified, and it's a generic vaccine. It's not a personal vaccine like many of the autologous vaccines."

While a number of melanoma vaccines have reached Phase III development, some have proved disappointing, such as Carlsbad, Calif.-based CancerVax Corp.'s Canvaxin. The company stopped development of the drug and downsized its work force by more than half after an independent data and safety monitoring board said last fall that the drug would not meet its clinical endpoints of showing a significant survival benefit over placebo in Stage III melanoma patients. The company previously had pulled out of a Phase III trial in Stage IV melanoma patients for the same reason, and it signed an agreement in January to merge with Micromet AG, of Munich, Germany. (See BioWorld Today, April 7, 2005; Oct. 5, 2005; and Jan. 10, 2006.)

Another company working in the melanoma space is Antigenics Inc., of New York, which reported preliminary findings of a non-registration study last October showing that median survival of Stage IV melanoma patients was improved by more than 61 percent when they were treated with Oncophage, compared to those who received a physician's choice of treatment regimen. Survival was extended to 20.9 months vs. 12.8 months. (See BioWorld Today, Oct. 12, 2005.)

But Antigenics's stock lost 41.9 percent of its value in March when Oncophage failed to hit statistical significance in a Phase III trial for kidney cancer. The study enrolled 728 patients at high risk for recurrence of their cancer after surgery. Final results of the melanoma trial have not yet been released. (See BioWorld Today, March 27, 2006.)

Hopper has high hopes for Vaccinoma's vaccine, considering "it's been in over 600 people to date and it has a very good safety profile," he said. Phase II data have produced statistically significant evidence that the vaccine is safe and effective.

The company is talking with the FDA to determine the design of the Phase III trial, but Hopper expects the program to include up to 1,000 patients in the U.S. and Australia.

If it does well and gains approval, it could address a $700 million to $800 million market in the U.S., and a similar one for the rest of the world, Hopper said.

Since Vaccinoma's inception last year, it has existed on $11 million in funding for the vaccine from the FDA, the National Institutes of Health, the National Cancer Institute and others. It has received a similar investment in terms of subsidized trials and laboratory services.

Initially, proceeds from the IPO will go toward manufacturing the melanoma vaccine. "We have about four companies that have quoted us and are ready to go," Hopper said.

The funds will take Vaccinoma to the middle of 2009, and the company will work to find a commercialization partner in the meantime.

One Phase III trial may be enough for registration of the vaccine, Hopper said, "if we get the same data coming out of the Phase III that we got out of the Phase II."

Vaccinoma intends to seek orphan drug status for the product.