By Brady Huggett
Novogen Ltd. raised about $11.2 million by issuing about 10.5 million shares to international institutional investors and plans to use the funds to push its lead product, the anticancer compound phenoxodiol, through clinical trials until it can form an oncology subsidiary and have an initial public offering.
¿It¿s intended to take us through the next nine months of our drug development,¿ said Graham Kelly, founder of Novogen and its executive director. ¿That will take phenoxodiol through the existing Phase Ia/IIb level and allow us to reach the next level.¿
That next level would be handled by Novogen¿s strictly oncology subsidiary, to be formed in the future. Novogen plans to take its subsidiary, Marshall Edwards Inc., public and use the raised capital to further finance phenoxodiol¿s development.
That subsidiary will focus on Novogen¿s three oncology products: phenoxodiol and two dimer phenoxodiol derivatives, and will give the products the opportunity to progress without being ¿cluttered¿ by Novogen¿s other activities, Kelly said.
¿With those three drugs ¿ the two dimers and the original ¿ we knew we had a major opportunity in the cancer field,¿ he said. ¿That¿s why we are forming the subsidiary.¿
Novogen, based in Sydney, Australia, has a revenue-producing dietary supplement business ¿ it manufactures and markets isoflavone products, including Promesil for menopausal women, Rimostil for post-menopausal women and Trinovin for prostate health. The revenue generated through the sales of the dietary supplements has offset the increased research and development spending Novogen has experienced on the cancer side.
About half of the $11 million comes from new shareholders, Kelly said, but added that all the investors are ¿major funds.¿ The company trades on the Australian Stock Exchange and has about 95 million shares outstanding following the placement. At the end of 2000, Novogen had about $8.1 million in cash.
The share price for the placement was close to the trading price the day the placement went through, Kelly said. Novogen¿s stock in the States (NASDAQ:NVGN) closed Friday at $5.86, up 16 cents.
Phenoxodiol, in a Phase Ia/IIb trial now, is meant to treat a wide range of solid tumors. The drug works by targeting enzyme systems common to all cells but that are inactivated only by the compound in cancer cells. Kelly said Novogen would present data on how the compound knocks out cancer cells and not normal cells, at a scientific meeting in Tucson, Ariz., this week.
For now, Novogen has the money it needs until it can get its subsidiary off the ground and get behind phenoxodiol.
¿We know that we have a remarkable opportunity in phenoxodiol,¿ he said. ¿And for that reason we have accelerated the clinical development beyond what you might normally do with a new drug. This $11 million will underwrite the accelerated program.¿