LONDON - Xenova Group plc is raising #10 million (US$14.9 million) by the issue of 2.9 million units at #3.45 per unit.

The units consist of five new shares and four warrants. If the warrants are exercised in full it would raise a further #9.8 million. The warrants are 85 pence each and are exercisable between Jan. 1, 2001, and Oct. 31, 2001. The issue has been underwritten by Nomura International plc.

Shares in Xenova closed at 76.5 pence on July 12, before the fund-raising was announced.

CEO David Oxlade told BioWorld International, "I'm very pleased with this. The market is not what it was in January of February and I'm delighted to have raised sufficient cash, which, along with the warrants and existing reserves, is enough to last for the next two to three years."

Oxlade believes there is recovering interest in the sector. He presented Xenova at a meeting of investors in Frankfurt, Germany, on July 12 and said, "A large number of continental investors were interested in the company, and there are definite signs the market is improving. Those of us who have been in the sector 10 to 12 years have seen these ups and downs three or four times."

Xenova, based in Slough, UK, has two compounds currently approaching the end of Phase II, and the money will be used to complete this work, to move its second-generation cytotoxic, XR11576, a topoisomerase I and II inhibitor, into Phase I, and to advance preclinical work on other compounds.

XR9576, for the prevention of multidrug resistance in cancer, will complete Phase II within the next two months. Oxlade said there is interest from a number of potential partners. He also has had discussions with potential partners for the first-generation topoisomerase I and II inhibitor, XR5000.

Results of three Phase II efficacy studies of XR5000 in glioblastoma and ovarian and non-small-cell lung cancer are due before the end of 2000. XR5000 showed no effect in a study in colorectal cancer that reported in May. "We will wait and see what the data show. If XR5000 shows significant value in Phase II studies we would expect to find a partner," Oxlade said.

XR11576 showed increased potency in preclinical development compared to XR5000, and has the potential for oral delivery. Xenova has a third topoisomerase inhibitor, XR5944, which is structurally distinct, and has shown high potency in preclinical studies on human cell lines.

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