Planning to expand its Galway, Ireland-based manufacturing facilities, Bioniche Life Sciences Inc. secured a $13 million loan through the Bank of Ireland.
The Belleville, Ontario-based company will gain access to the funds through its Irish pharmaceuticals business unit, Bioniche Pharma Group Ltd., which signed the loan agreement for up to €8.2 million. The bank also made another €2.5 million available to the company for currency hedging and interest rate swaps in connection with the loan.
"We've had that facility for some time and we have renovated it twice since we bought it, but the business is growing fairly quickly," said Graeme McRae, president and CEO of Bioniche Life Sciences. "We're actually expanding it by building another building next door. That will increase our capacity about 300 percent. We're getting more and more products approved all the time and some of them are pretty high volume."
Since 2000, Bioniche's revenue has grown from C$5 million (US$3.6 million) to about C$27 million last year, necessitating the company's need for expanded manufacturing facilities.
Bioniche has received approval for six abbreviated new drug applications for sterile injectable preparations in the past year. Those approvals were for products such as milrinone lactate for patients with acute low-output heart failure, amiodarone for treatment of recurring ventricular fibrillation and hemodynamically unstable ventricular tachycardia, and dimethyl sulfoxide for symptomatic relief of interstitial cystitis.
The company also has a product called Suplasyn that has done quite well in the Canadian and European markets for osteoarthritis, McRae said. That product is manufactured at the Galway facility. Suplasyn is a sterile dosium hyaluronate solution injected into synovial joints, such as the knee, to replace or augment synovial fluid. It is not marketed in the U.S., and McRae does not expect Bioniche to file for U.S. approval for a couple of years.
The expanded manufacturing facility will provide space for extra vial filling and syringe filling. Construction should be completed by mid-2005.
"There is a shortage of injectable manufacturing capacity in the developed world and these facilities are very difficult to build, very difficult to staff," he told BioWorld Today.
Bioniche is fortunate, he said, to have a staff of 130 employees at the facility with great skill sets, and an Irish government willing to support the company's efforts.
On top of the loan funds, Bioniche negotiated a grant aid package from an Irish development corporation called Udaras na Gaeltachta totaling €1.9 million. Udaras also purchased €700,000 in preferred shares of Bioniche Teoranta, Bioniche Pharma's operating subsidiary. Udaras, McRae said, is affiliated with the Irish government and promotes the use of the Irish language, known as Irish-Gaelic. The first language in Bioniche's Galway plant is Irish-Gaelic.
The loans attained from the Bank of Ireland are secured and bear interest at the European overnight interbank rate, (Euribor) plus about 1.8 percent per year for the first €5.6 million facility, and at Euribor plus 1.75 percent per year for the second €2.6 million facility. They are repayable in quarterly installments over nine years for the first facility and over five years for the second facility. The payments would start 15 months after the first funds are advanced.
As for the preferred shares purchased by Udaras, they are redeemable over a five-year period beginning on the fifth anniversary of subscription, and bear interest on a cumulative basis at the rate of 5 percent.
Bioniche came into existence as an animal health company in 1979. It celebrated its 25th anniversary last week. The company went public on the Toronto Stock Exchange in 1994 and eventually divided itself into three business units: animal health, food safety and human health, which is divided into a therapeutics unit and a pharmaceuticals unit. The company opened the Galway manufacturing facility in 1988, and renovated it in both 1994 and 1999.
In its pipeline, Bioniche recently completed a Phase II trial of a mycobacterial cell wall DNA complex for bladder cancer. Data showed that complete patient response at 12 months ranged from 43 percent to 64 percent. The company is talking with U.S. and European authorities to design a pivotal trial for the product.
"We're right down to the wire with the FDA and the European authorities and we're hoping to be able to use just one protocol in the U.S. and Europe," McRae said.
Another of the company's products, Cystistat, missed its primary endpoint last summer in a pivotal trial in interstitial cystitis (IC). The Cystistat response rate was not statistically different from that of placebo, but the placebo rate was unusually high, the company said. On its own, Cystistat was more than 50 percent effective in eliciting a response, an endpoint defined by patient global satisfaction and pain reduction. (See BioWorld Today, Aug. 19, 2003.)
McRae said Bioniche is talking with the FDA about amending the protocol for an IC study to make recruitment a little easier, as well as doing a second study with a different indication - catheter-induced associated urinary tract infection.
Bioniche's stock (TSX:BNC) closed Monday at C$1.65, unchanged.