SYDNEY, Australia - BresaGen Ltd., a biotech company based in Adelaide in South Australia, said it will spend A$6.2 million (US$3.9 million) over three years on a technique it says can modify cells taken from humans into cells of any tissue type.

In the prospectus issued for BresaGen's initial public offering (IPO), which will raise A$12 million, the company also said it holds intellectual property that may legally block attempts by other companies to modify embryo stem cells into a cell of a specific tissue type such as liver, heart or brain cell.

The documentation said the company will buy the intellectual rights to the exploitation of an intermediate stage in cell development - a recently discovered stage that comes after embryo stem cells but before the cell develops into a specific type.

BresaGen managing director John Smeaton said his company intends to develop a means of turning stem cells harvested from a patient into cells of a particular tissue type by genetic reprogramming. The cells would then be cultured and transplanted back into the patient.

A great deal more development work has to be done, but the technique has potential in treating many different conditions, including Parkinson's disease, by replacing diseased cells with reprogrammed healthy cells.

Other companies are working on ways of turning stem cells into different tissue types. Smeaton said, however, that depending on how the research turned out, the intellectual property bought by BresaGen (for A$2 million) would block development by those other companies.

BresaGen said in May it would raise A$12 million in an IPO, but at that time Smeaton would say only that the company would be developing a discovery made at the University of Adelaide.

The discovery, made by researchers led by Peter Rathien, head of the university's Department of Biochemistry, involves a cell stage called primitive ectoderm-like. As reported in May, ectoderm-like cells show more development than stem cells as some of the cell's genes have been turned on and some turned off but they have not differentiated into particular tissue types.

A report on the technology and printed in as part of the legal requirements for a prospectus said two preliminary patents have been filed on the technology.

It said, "The uniqueness of the technology is the identification of an intermediate cell phase that embryonic cells must pass through prior to differentiation. It is this cell stage to which the patent applications apply. Other organizations may have patents on the use and modification of embryonic cells for therapy. Those other companies, it is claimed, will need to access the cell therapy patents, if granted, in order to exploit their own technology. This is potentially the most valuable technology being developed by BresaGen."

The company's strategy is to obtain proof of concept that cells can be programmed to become neuronal, blood precursor or other cell types and to license the intellectual property to a large pharmaceutical company. It is reasonable to expect that licenses will be issued for various therapeutic applications, the company said.

BresaGen's prospectus also noted it has an anticancer drug in Phase I clinical trials, has a protein manufacturing business and is developing human and animal medicines.