Acrux to deliver a September IPO

Drug delivery company Acrux is preparing for a late September float on the Australian Stock Exchange after filing its prospectus for an AUD$30 million IPO with the Australian Securities and Investment Commission yesterday.

The market capitalisation of Acrux after completion of the placement will be $130.9 million.

The company, which is structured as a pooled development fund, intends to issue 30 million shares at a price of $1.00 in the fully underwritten offer. A further 8.3 million shares may be made available if the offer is oversubscribed.

QIC, the company's largest shareholder, has indicated that it will participate in the placement to increase its holdings to just over 10 per cent.

Acrux was originally expected to float last year, but cancelled its plans due to the poor market at the time.

The funding will primarily be used to support Acrux's R&D and clinical development programs. The company's model is to take existing drugs and reformulate them for delivery using its proprietary metered dose transdermal spray (MDTS) and ACROSS enhancers.

"We look at drugs and markets and see if we can improve them with transdermal delivery. We are also looking at niche markets -- for example there is a lot of unmet medical need in pain management, so we are looking at opportunities there," said CEO Igor Gonda.

Acrux's technology allows injection free delivery, and because the drug is absorbed across the skin, side effects due to peaks and lows in the concentration of the drug or to gastrointestinal irritation can be avoided.

Because the enhancer technology is based on existing compounds used in sunscreens, the regulatory hurdles for the products are relatively low.

So far the company has run 13 clinical trials on six different drugs, and has tested more than 20 different drug candidates suitable for use with the technology. Furthest along the development path are its women's health products, which are being developed by Acrux subsidiary FemPharm and its US-based commercial partner VIVUS.

VIVUS has a US$13 million deal with FemPharm to develop and commercialise two products -- Estradiol-MDTS, for the treatment of symptoms of menopause, and Testosterone-MDTS, for the treatment of female sexual dysfunction. The companies plan to commence Phase III clinical trials for Estradiol-MDTS later this year, with the target of launching the product on the market in 2007. Phase III trials for the testosterone product are likely to commence in 2005.

FemPharm has also entered into a deal with CSL giving the Australian biopharma company distribution rights for the testosterone product in Australia and New Zealand.

A third FemPharm product, targeting the contraceptive market and using a fourth generation progesterone, is being developed in collaboration with the Population Council, an international public health organisation, is also expected to start clinical trials this year.

Outside FemPharm, Acrux has a number of other products in early stage clinical development, including a testosterone lotion currently undergoing Phase I clinical trials for the treatment of testosterone deficiency in men. Other drugs include an MDTS formulation of fentanyl, an analgesic used for treatment of severe post-operative pain and cancer pain, buspirone-MDTS for the treatment of anxiety-related disorders and granisetron-MDTS for the treatment of chemotherapy-related emesis and post-operative nausea and vomiting.

In the pre-clinical pipeline are an incontinence product based on the drug oxybutynin, and an MDTS alternative to the nicotine patch.

Last year, the company also licensed its technology to Eli Lilly subsidiary Elanco for the global development and commercialisation of animal health products.

Another subsidiary, Cosmeceutic Solutions, is developing cosmeceutic products, which are likely to enter the US market next year targeting the anti-aging market

Gonda said the company has a strong patent portfolio built on the technology originally developed at Monash University's Victorian College of Pharmacy.

The offer opens on Monday and is expected to close on September 17, with the ASX float planned for September 29th.

Goldman Sachs JBWere and Wilson HTM are acting as underwriters for the IPO, with Goldman Sachs JBWere as lead manager and Wilson HTM and ABN Amro Morgans co-leads for the offer.