BioWorld International Correspondent
SYDNEY, Australia - A company that says it has a new way to identify lead candidate molecules and another firm that says it has a treatment for cystic fibrosis are among the biotech companies that raised a remarkable A$180 million (US$111 million) in the third quarter.
But despite the surge of fund raising in the quarter - the sector raised just A$100 million for all of 2002 and showed little activity in the first half of the year - both companies said recently renewed investor interest in biotech stocks did not influence their decision to have an initial public offering.
Instead, spokesmen for the companies - Cryptome Pharmaceuticals Ltd. and Pharmaxis Ltd. - said their decisions were made several months ago in the depths of the bear market.
Cryptome, of Melbourne, raised A$7.5 million, and Pharmaxis, of Sydney, raised A$21 million, and the companies are the only two significant IPOs in the quarter. The rest are stock placements or rights issues (issues made to existing shareholders, usually on a pro rata basis).
Warren Kinston, an executive director of Cryptome Pharmaceuticals, said that the decision for an IPO was made because the company required funds for its next stage of development. Stock market timing was not an issue. The decision was taken during the bear market and was made at "bear-market values," he said.
"The IPO investors are getting as good a price as the original seed investors," he said.
The IPO documents state that the new discovery method being developed by Cryptome involves creating a library of protein fragments and peptides from biological material. Groups of those proteins can then be mass screened in a way that will allow single, promising protein fragments to be detected.
Pharmaxis Ltd. CEO Alan Robertson also said that the decision for an IPO was made several months ago and done for corporate reasons.
Robertson said the company business model is not to farm out lead projects to a pharmaceutical partner but to do all research and development, manufacturing and marketing.
The company has several research leads. The most promising is a treatment for cystic fibrosis called Bronchitol. There are three others that are immune response modifiers targeted at multiple sclerosis and rheumatoid arthritis. A lung function test is in Phase III testing.
The offer period for stock subscriptions for both companies is still open, but neither company expects any trouble raising the money required.
Mark Pachacz, co-editor of an Australian biotech stock report called Bioshares, said that several more floats are expected in the next few months.
A series of indices calculated by Bioshares increased sharply during the quarter, including its leaders index, which increased 13 percent. The Australian stock market's main index, the all-ordinaries index, increased by 5.9 percent in the same period.