LONDON — Gene therapy company Oxford BioMedica plc is raising £6 million (£5.3 million net of expenses) to fund the company through the end of 1999, allowing it to proceed with its first two clinical trials.

About £1.43 million will be generated with a rights issue and £4.57 million by a placing. The funding, to be completed on March 21, is underwritten by Beeson Gregory, of London.

Raising the money has been a struggle, reflecting an extremely poor market for biotechnology stocks.

Andrew Wood, Oxford BioMedica finance director, told BioWorld International, "The market response to the company and the sector has been extremely poor. We are pleased to raise this amount — we've been working on it since November 1997."

Although three companies, Quadrant Healthcare plc, of Cambridge, U.K., Oxford Asymmetry plc, of Abingdon, and Oxford GlycoSciences plc, also of Abingdon, have announced plans to join the London Stock Exchange in the past two months, they have been keen to distance themselves from the biotechnology label, stressing expertise in areas such as drug delivery, drug discovery and proprietary technology platforms.

Wood commented, "We're very firmly a biotechnology company. We've suffered more than the rest of the sector because we are at the high-risk end of it."

Oxford BioMedica's difficulty is exemplified by the fact that the venture capital company Prelude Trust plc, which normally funds start-ups, has agreed to put £1.7 million into Oxford BioMedica, which is listed on London's Alternative Investment Market (AIM).

"It is unusual for them to invest at this stage, but the price of this investment has come down so low, it is now like an early-stage investment," said Wood.

Oxford BioMedica, based in Oxford, U.K., had no choice in its timing. It was set up in 1995, and came to the AIM market in December 1996, raising £5 million.

"We knew at the time we would need money a year later," Wood said. "It was inevitable we had to raise it now. Unfortunately, the cycle moved completely against us."

The £6 million gives Oxford BioMedica working capital until the end of 1999. However, Wood said he believes that in the meantime the company will negotiate alliances involving access payments, milestones and royalties.

"I'm confident we can do deals that will bring in significant revenue," he said. Interest in the company's programs is high, particularly in the U.S., and at present discussions are taking place with 20 companies who have expressed interest in candidate products and individual technology components.

To date there is one research agreement, with Rhone-Poulenc Rorer Inc., of Collegeville, Pa., for use of Oxford BioMedica's lentiviral vector in a functional genomics program. Rorer is part of the Rhone-Poulenc Group, of Paris

Two trials, in breast and ovarian cancer, are due to enter the clinic in the fourth quarter of 1998. These are both prodrug activation products, which are proprietary, and are applicable to a wide range of solid tumors.

Oxford BioMedica also announced results for its first, 15-month, accounting period, showing an overall loss of £2.9 million, which it said was "within budget." Expenditure was £3.2 million, of which £2.0 million was spent on R&D.

"We are happy that we have got control of expenditures," said Wood. Starting clinical trials will add to the cash burn, which he expects to be £3 million per annum for the next three years.