LONDON - Alizyme plc, which specializes in obesity and gastrointestinal disorders, has reported a placing and open offer to raise up to £6.3 million.

Of that amount, £4.25 million has been committed by institutional and other investors for 14.2 million new shares at 30 pence per share. One investor, the private equity arm of Mercury Asset Management, has agreed to invest £1.5 million for approximately 15 percent of the equity.

“This will provide a sound financial basis for moving the company forward,“ Richard Palmer, CEO, told BioWorld International. Cambridge, U.K.-based Alizyme, which is listed on London's Alternative Investment Market (AIM), is now aiming to qualify for the main London Stock Market.

“We would be eligible to slide up in July 1998, when we will have been on AIM for two years and have three years' trading,“ Palmer said. “But because we are a biotechnology company, we must qualify under the much harder Chapter 20 rules.“

One of the main requirements is to have a market capitalization of £20 million or more. At present Alizyme's capitalization is between £6 million and £7 million. It will rise to £10 million after the current placing is completed. “We expect to double this within the next year, as we drive the share price up by moving products into clinical trials and doing a deal with a pharmaceutical company,“ said Palmer.

Lipase Inhibitor Targets Fat Digestion

While Palmer said he could not elaborate on the status of talks with potential pharmaceutical partners, the company expects to find a partner for its anti-obesity program, AZM-119, for development of lipase inhibitors to block fat digestion in the gut. Alizyme has filed two patents in the area, and anticipates moving a compound into preclinical development during 1998.

Palmer said that much hinges on what happens May 14, 1998, when the FDA is due to give its judgement on Xenical, a lipase inhibitor for the treatment of obesity developed by Hoffmann-La Roche Ltd., of Basel, Switzerland.

Palmer, who has seen the data from Roche's 5,000-patient trial, said, “I am confident it will get approved. It will have limited labeling, but even so, the market is enormous and we are the only other company to have a lipase inhibitor in development.

“The progress of Xenical through the regulatory approval process is encouraging and validates Alizyme's commitment to this approach to obesity treatment,“ he added. “AZM-119 represents a major market opportunity, and as such has attracted considerable interest from potential out-licensing partners, due to the fact that this approach has now been clinically validated and Alizyme is the only other company known to be working in this area.“

Company Sees London Exchange Listing In '99

There are also prospects of licensing ATL-101 for the prevention and treatment of mucositis, a common, debilitating side effect of cancer therapies. Mucositis limits treatments and causes severe morbidity and reduction in quality of life. “This represents a big unmet need,“ said Palmer.

Any such deal would seal Alizyme's progression to London's main market. However, Palmer said, “Qualifying is one thing; the state of the market is another.“

Even so, he expects to join sometime in the second half of 1999. “There is a strong logic for doing so, because more institutional investors are allowed to invest in main market companies.“

Alizyme announced the fund raising as it released results for the year ended December 1997 showing a loss of £3.1 million. This compared with a loss of just more than £1 million for six months of 1996. R&D expenditure was £2.7 million.

The company operates on the virtual model, outsourcing development work. Palmer said that during 1997 the benefits of this approach became apparent, with an increased proportion of total spending going toward research.

At the year end the cash balance stood at £2.6 million. Palmer said that following the placing the burn rate would go up slightly. “We plan to move more resources into the programs that are going particularly well.“ *