About seven years since its inception, Vectura Ltd. dipped its feet into public waters on Friday, conducting an initial public offering on London's Alternative Investment Market to raise £20 million (US$36.4 million).

It offered about 35.9 million shares at 56 pence per share, giving the Chippenham, UK-based company a market capitalization of about £60 million.

"They're looking to go into Phase IIb with their two lead products," said a company spokeswoman.

Vectura wants to partner AD 237 for chronic obstructive pulmonary disease (COPD) and VR004 for erectile dysfunction. Both products have demonstrated proof of principle in clinical trials and are ready to move into Phase IIb trials.

The IPO funds should take the company through those trials, with the idea that partners would fund development from there.

Proceeds also will help Vectura finance six other products in its pipeline for conditions such as asthma, migraine, premature ejaculation, female sexual dysfunction and cystic fibrosis. Those products are in the preclinical stage, but the products for female sexual dysfunction and cystic fibrosis are expected to enter the clinic by mid-2005.

"About 75 percent of the [IPO] proceeds will go toward product development, and 10 percent toward business development, and the rest to identify new product candidates," the spokeswoman told BioWorld Today.

Vectura filed for the IPO just less than two weeks ago, hoping to raise between £20 million and £25 million.

It expects trading of existing ordinary shares and 505,678 ordinary shares being placed with certain venture capital firms to commence on AIM July 2 under the "VEC" ticker symbol. Trading in the remaining ordinary shares to be issued will commence July 5.

The company granted its adviser and broker, Nomura International plc, of London, a 30-day overallotment option to purchase up to about 3.6 million shares. Following the IPO, Vectura has about 107.2 million shares outstanding.

Vectura focuses mainly on inhaled drugs to treat lung diseases and other conditions. The company's strategy is to combine its pulmonary formulation and device technologies with existing, off-patent drugs for use in new indications or where delivery via the lungs offers significant benefits over current therapies.

The spokeswoman said it is unclear how long the IPO funds will last Vectura, as the answer depends on how soon the company partners its two lead products. It plans to partner products with pharmaceutical companies prior to Phase III trials, out-licensing all sales and marketing rights.

AD 237, an inhaled form of an anti-muscarinic approved for a non-respiratory indication, is being jointly developed with Arakis Ltd., of Little Chesterford, UK, in COPD. Vectura believes the global market for that indication is about $4 billion. COPD is the fourth-leading cause of death in the U.S. A recent Phase IIa trial demonstrated that the optimized inhaled formulation of the drug offers the potential for a long-acting, once-daily product.

The global market for VR004's indication, erectile dysfunction, is estimated to be about $2.5 billion. VR004 might fill the need for products with a faster onset of action. Clinical studies have shown VR004 has a median onset of action of eight minutes, faster than approved therapies and with fewer side effects.

Vectura was founded in 1997 out of research conducted at the University of Bath.

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