SYDNEY, Australia - Biotech companies are rushing onto the stock market to take advantage of strong investor interest in the biotech sector, as two companies proposed initial offerings last week to raise a total of A$27 million (US$16 million).

Of the two companies to release prospectuses, Peplin Biotech Ltd. in Brisbane is the closest to commercialization, with a compound undergoing Phase II testing. The other company is the Starpharma Pooled Development Fund in Melbourne.

Peplin is seeking A$7 million to further develop different anticancer uses of a range of compounds, which the company describes as macrocyclic diterpenes.

Peplin Managing Director Garry Redlich said a Phase II trial on 40 patients with solar keratosis, squamous cell carcinoma, intraepidermal carcinoma and basal cell carcinoma at the Mater Hospital in Brisbane, was about 70 percent complete.

There had been complete clinical responses in 90 percent of patients treated, the company said, and the compound worked well with existing treatments.

Peter Parson, director of preclinical research at the Queensland Institute of Medical Research in Brisbane, said the treatment appears to be selective for cancerous cells.

"Most of the patients involved in the trials were in the older age group with extensive or advanced disease, many of whom had failed previous conventional therapy. The cancer was arrested after only one or two three-day courses of treatment, and there were no side effects other than limited local inflammation," Parson said.

Redlich said that another version of the treatment now in clinical trials will be tested again, as a drug for skin cancer, in Phase II trials next year. In addition, other variations of the lead compound will be tested as treatments for melanoma and prostate and breast cancers in 2002.

Once the trials are completed, Peplin will seek a commercialization partner for the treatment, he said.

The second IPO, Starpharma, plans to raise A$20 million to further develop a range of products including its main product, a vaginal gel designed to prevent transmission of sexual diseases.

The gel is 18 months away from clinical trials and, like the other products Starpharma has under development, uses a particular configuration of a group of large molecules called "dendrimers." That class of molecules, the company said, can be reconfigured to fight different diseases.

Structured as a pooled development fund, a structure that takes advantage of concessions under Australia tax laws, the Starpharma IPO was planned in May but held back due to the then unfavorable markets for high-tech stocks.

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