Applied Microbiology Inc., with only a few months of cashreserve, said Tuesday that it has raised $1.5 million in aprivate placement to Burns Philp & Co. Ltd. The transaction isthe first part of a deal in which the Australian multinationalcorporation will obtain a majority interest in Applied.
Burns Philp, parent of Applied's key supplier, will receive349,000 shares of Applied stock (NASDAQ:AMBIC) at $4.30 pershare. Burns, which already holds 1 million shares, will thenown 18 percent of Applied stock. The stock closed Tuesday at$4.63, up 38 cents.
The funding will bring Applied's cash to $1.9 million. The NewYork company has a burn rate of $80,000 to $100,000 permonth, said David Guttmann, chairman.
The agreement also provides for an additional equityinvestment of $1.5 million by Burns Philp on the same termsafter Applied buys designated amounts of product from Aplin& Barrett, a subsidiary of Burns Philp.
Aplin & Barrett supplies nicin, the main ingredient used inApplied's Ambicin anti-bacterial compound. Nicin, a peptide,has been used by cheese makers to prevent bacterial growthfor about 25 years.
Applied also agreed to buy Aplin in exchange for anundisclosed amount of Applied stock. Although terms haven'tbeen finalized, the transaction will make Burns Philp a majorityshareholder in Applied.
"If the transaction goes through, the company will be profitablein 1992," Guttmann said. Aplin had 1991 product revenues of$4 million to $5 million, he said. In 1991, Applied lost $1.2million, or 17 cents per share, on revenues of $819,000.
Applied sells one Ambicin-based product, Consept, throughBabson Brothers. Consept, which began selling last July, is anexternal dip to prevent bovine mastitis.
In April, the company said it had found that Ambicin killsHelicobacter pylori, the bacterium that has been implicated instomach ulcers and in some stomach cancers.
Applied has had less luck developing partnerships to developAmbicin as an oral health product. Proctor & Gamble Co. inFebruary decided not to continue a joint development projectand Pfizer ended an agreement on the product last June.
-- Karen Bernstein BioWorld Staff
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