SYDNEY, Australia - A new biotech company, Prana Technology Ltd., is about to start a Phase II clinical trial of a new treatment for Alzheimer's disease. However, researchers working for Melbourne-based Prana said the study, expected to involve 40 Alzheimer's patients, will be a proof of concept, as the compound being tested will not be the one eventually developed.

Colin Masters, chairman of Prana's scientific advisory board and head of the Department of Pathology at the University of Melbourne, said that while the first molecule was in clinical trials, others would be designed.

In addition, the company will look at treatments for a range of other conditions including cataracts and the central nervous systems disorders of Tardive dyskinesia, Creutzfeldt-Jakob disease, motor neuron disease and Parkinson's disease.

He said each of those new molecules would be deliberately designed to use the same basic principle as the first treatment - the principle of countering the abnormal reaction between copper and iron-based molecules and neurons believed to be involved in those diseases.

But researchers also may look at mass bioscreening of potential compounds to find suitable candidates for development, Masters said.

Prana raised $A8 million ($US4.8 million) and listed on the Australian stock exchange in late March. From the issue price of A50 cents a share, Prana's share price climbed to $A1 before falling again. At the close of business before the Easter break in Australia, and after the general route in high-tech stocks, Prana's share price was A$0.46.

The technology being developed by Prana involves countering a recently discovered disease mechanism in which proteins in the brain bind to copper or iron atoms to become highly chemically reactive. The reactive combination then causes various forms of damage or oxidation of the brain cells. Researchers have suggested that Parkinson's disease, for example, is the result of the accumulation of AB amyloid protein causing nerve cell damage. Both the accumulation of amyloid and the nerve cell damage has been connected to metal ions, including copper, iron and zinc.

Prana hopes to develop a treatment that will improve the clearance of the amyloid protein from the brain and prevent the metal ions and oxygen radicals causing damage.

Prana's prospectus said the company's intellectual property rests on discoveries made by Ashley Bush and Rudolph Tanzi at the Massachusetts General Hospital and Harvard Medical School in Boston, as well as discoveries made by Masters at the University of Melbourne and the associated Mental Health Research Institute.

The prospectus also said a broad patent has been awarded to the University of Melbourne and assigned to Prana covering treatment of Alzheimer's disease using metal chelators. However, sections of the patent are being disputed by a European company, and the same company has filed a patent with conflicting claims in the U.S.

A portfolio of more specific patent applications related to metal, oxidation and several of Prana's disease targets filed for the Massachusetts General Hospital have been optioned by Prana.