BioWorld International Correspondent
LONDON - Evolutec Group plc raised £9.5 million (US$17.7 million) in a secondary fund raising that was more than two times oversubscribed, just seven months after its initial public offering was pegged back from a hoped-for £7.5 million to £5.1 million.
"This is a real result," Nick Badman, chief financial officer, told BioWorld International. "When we floated the market was beginning to shut down. We were talking to investors in June and July when they had seen a ton of biotechs and were beginning to think about their holidays.
"We are now more of a known entity, and this time we could say we are on track with the two main products," Badman said.
The Oxford, UK-based company placed 7.1 million shares at £1.40 per share, a 21.6 percent discount. "There was enthusiasm, but you have to look at the discount in the context of [Evolutec being] a reasonably early stage biotech. Investors expect a discount because you are a high-risk proposition," Badman said.
The fund raising will allow for a significant increase in the burn rate, as Evolutec accelerates development of its lead compound, rEV131, in rhinitis, post-cataract surgery and dry-eye syndrome. "This gives us more than 12 month's money and we can step up development," Badman said.
The funding already was in place for Phase II proof-of concept trials in allergic rhinitis and post-cataract surgery, and those will report before the end of 2005. In addition, Evolutec will conduct a further Phase II trial in dry eye and step up investment in the GMP manufacturing development for rEV131.
Evolutec's compounds originally were isolated from the saliva of ticks, which avoid detection while feeding on the blood of their hosts by injecting molecules that suppress normal immune reactions. The company claims that rEV131 is the only product now in clinical trials that binds to the recently discovered H4 receptor, which is implicated in many forms of inflammatory disease. Evolutec views the trials it is running as stepping stones to testing rEV131 in respiratory diseases, including asthma.
Money also will go toward the preclinical development of rEV598, a serotonin and histamine binding protein, which is being evaluated in carcinoid syndrome, a condition associated with the spread of tumors from the upper gastrointestinal tract to the liver, heart and lungs, and chemotherapy-induced emesis; and to rEV576, a complement inhibitor, which is expected to have applications in autoimmune and inflammatory diseases.
"We will now put more resources behind them to get to the clinic in 12 to 18 months. There is a lot of work to be done on these molecules in terms of working out the best indications," Badman said.