SYDNEY, Australia - An Australian biotech company with two products in Phase II trials and another two past the Phase I stage plans to raise A$17.4 million (US$10.4 million) in an IPO to pay for the next three years of its development schedule.

The prospectus for GroPep Ltd., based in Adelaide in South Australia, says that the company owns rights to 13 patent families and, besides four treatments in clinical trials, has another four drug candidates in pre-clinical development.

GroPep Managing Director John Ballard said that his company did not do any discovery research; instead, it looks for likely drug candidates identified by other parties.

He said that of the drug treatments now under development, the most promising was a treatment for the loss of sensory nerve function (peripheral neuropathy) in diabetics, which was now about halfway through its Phase II trials. As diabetes is a common condition and extreme cases of peripheral neuropathy may result in amputation, this form of neuropathy results in 50,000 amputations each year in the U.S. alone, Ballard said.

The GroPep prospectus stated that the neuropathy treatment, known as PV705, is a formulation of the insulin-like growth factor IGF-I.

The second product in Phase II trials, known internally as PV707, is a formulation of another growth factor to treat burn wounds. The company is also developing treatments for venous ulcers resulting from chronic wounds, another for short-bowel syndrome, a drug preparing patients for liver transplants, a local treatment for tendon injuries and a treatment for osteporosis.

Besides the treatments under development, GroPep also has a cash-flow business in manufacturing recombinant growth factors, including IGF-I and IGF-II, for research and industrial purposes, and manufacturing cell cultures for other companies. Its forecast revenue for the financial year 2000-2001 mainly from that business is A$7.9 million (US$4.6 million.)

The company will issue around 9.4 million shares at A$1.60, but also plans to issue additional shares to meet expected excess demand, to pull in a total of A$17.4 million. GroPep will list on Aug. 30.

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