BioWorld International Correspondent

LONDON - There are further signs that the UK's initial public offering drought might be nearing an end, as Vectura Ltd. and Evolutec Group plc announced plans to float on London's Alternative Investment Market, looking for £20 million to £25 million (US$32.3 million to US$45.3 million) and £7.5 million, respectively.

They are close on the heels of Microscience Ltd. and Norwood Immunology Ltd., both of which are floating on AIM, following the lead of Ark Therapeutics Group plc, which in March became the first biotechnology company to list on the main London market in three years.

Vectura's flotation would value the company at up to £85 million and provide finances to take two lead products through the end of Phase II work, at which point they would be out-licensed. At the end of a road show's first day, CEO Chris Blackwell told BioWorld International: "You can't tell at this early stage how receptive the market will be. However, we have a lot of interest, with over 50 people to see." He hopes to price the deal in the next two weeks and said there is renewed interest from investors "for the right company with the right business model."

Also, being on the road at the same time as others doesn't bother him.

"We are not seeing it as a competition," he said. "They are totally different companies, and for the right business model I think the funds will be there."

Chippenham, UK-based Vectura announced last month that it had reached proof of principle for its lead products and was preparing for Phase IIb work. The products are AD 237, for chronic obstructive pulmonary disease (COPD), and VR 004, a treatment for erectile dysfunction. Blackwell said the products target large and expanding markets, and that by opting to develop compounds that are registered already, Vectura reduces its risk level.

AD 237 is an inhaled form of an anti-muscarinic approved for a non-respiratory indication. In the Phase IIa trial involving 45 diagnosed COPD patients, a clinically significant increase in lung capacity over placebo was seen. The drug is long-lasting, allowing once-a-day dosing.

VR 004 is an inhaled version of a drug approved to treat ED in a sublingual formulation. The inhaled formulation has a faster onset of action (median time of eight minutes) with fewer side effects than existing ED products.

The positive data from the AD 237 and VR 004 trials also validated the ability of Vectura's PowderHale technology to deliver systemically active drugs through the lungs.

Vectura has raised £12.3 million since its formation in 1997. The major shareholder is Merlin Biosciences Ltd., with 37 percent.

Evolutec's planned fund raising would allow it to progress its lead product, rEV131, a histamine-binding protein, to Phase III trials in ocular applications and to Phase IIb trials in allergic rhinitis. The product has completed Phase IIb trials in three other indications and achieved positive results in preclinical studies in asthma and acute respiratory distress syndrome.

Mark Carnegie Brown, CEO, told BioWorld International "We have got some exciting Phase II data, which links to some excellent preclinical [results]. We have selected some very tight indications as stepping stones to bigger indications, and so we think the time is right for an AIM listing."

The company plans to keep hold of specialist ophthalmic indications in ocular inflammation, post-cataract surgery and dry-eye syndrome and license out larger indications such as allergic rhinitis after Phase IIb.

Since its formation in 1998, Oxford, UK-based Evolutec has raised £6.6 million. The largest shareholder, ISIS Management, intends to make a further investment of £2 million in the IPO. Carnegie Brown said he anticipates getting a good reaction from investors, "given the value for money Evolutec is offering."

Originally derived from tick saliva, rEV131 prevents the activation of the H1 and H4 histamine receptors and is active both in the early and later stages of inflammation. Evolutec claims it is the only product in clinical development that blocks the H4 receptor.

Evolutec was set up to commercialize the work of Pat Nuttall, director of the Centre for Ecology and Hydrology at Oxford University, whose original focus was the transmission of viruses carried by ticks. In total Evolutec has identified more than 100 molecules from the saliva of ticks and other parasitic arthropods.

The company's second product, rEV598, is a serotonin- and histamine-binding protein, currently in preclinical development. Carnegie Brown said the funding would enable the company to work further on defining in which indications to develop the drug. Likely applications are in carcinoid syndrome - a condition associated with the spread of carcinoid tumors from the upper gastrointestinal tract to the liver, heart and lungs - and in chemotherapy- and radiotherapy-related emesis.

A third product, rEV576, is an inhibitor of the complement system expected to have applications in autoimmune and inflammatory diseases. Evolutec is assessing its use in reperfusion injury and rheumatoid arthritis.

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