Autogen, Antisense to raise $10m in separate placements

Two Melbourne companies, Autogen and Antisense Therapeutics, have launched fully underwritten share placements to raise more than $10 million between them in capital.

They join recent fundraisers Norwood Abbey and Medica Holdings in successfully obtaining funding, despite the weak market currently in place.

In both cases, the placements have been fully underwritten by investment banks, meaning that the companies are guaranteed of a minimum placement.

Autogen's CEO and managing director Prof Greg Collier said that while the money-raising market was far more difficult than a few years ago, he believed that investors were favourably disposed towards companies with a solid base and good prospects.

"The market is obviously tough at the moment. People are thinking about where they are putting their money," he said. Autogen cancelled a proposed placement earlier this year, citing the economic uncertainty at the time.

Autogen, whose underwriters are Southern Cross Equities and major shareholder Charter Pacific, is offering one new share for every two existing shares at a price of 35 cents per new share. The underwriter will place shares not taken up by existing shareholders to other investors. The placement is expected to raise around $6.65 million before expenses.

According to Autogen's prospectus for the placement, Merck-Sante, which holds 14.9 per cent of the existing shares, has already indicated that it will not participate in the placement, as it is already committed to fund the diabetes and obesity program until 2006.

Collier said that while Autogen was expected to become cash-flow positive by the end of the 2002-2003 financial year, the cash raised by the placement was intended to further strengthen the company's already strong position. He said that the fee-for-service opportunities would be expanded over the coming year, and the company was in the process of developing the depression and anxiety program with an eye to finding suitable partners in 2003.

In addition, Autogen recently began the process of listing on US technology stock exchange Nasdaq. Collier said he saw the cash raised by the placement as putting the company in a strong position for expansion, possibly even mergers or acquisitions, in the US, where it had already established the Centre for Human Statistical Genetics in San Antonio, Texas under the guidance of Dr John Blangero, a member of Autogen's scientific advisory board.

Antisense will raise at least $4 million from its placement, which has been underwritten by ABN Amro Morgans, said managing director Mark Diamond. The offer, which has an issue price of 7.5 cents, also has an oversubscription capacity that could bring in another $1 million.

Diamond said that the company was reasonably confident that the placement would be oversubscribed, but said that it was too early in the process to predict.

Both institutional and retail investors will be able to take part in the offering, he said. The two major shareholders in Antisense, pooled development fund Circadian and Isis Pharmaceuticals, developers of antisense technology, have also committed to taking positions in the placement in order to retain their percentage shares in the company.

According to Diamond, the funds will be used to progress the company's lead compounds as well as develop the pipeline.

"It will be primarily used to fund the ongoing development of our lead compound for multiple sclerosis, allowing us to complete the Phase I clinical trial," he said.

In addition, the company will be able to further progress the pre-clinical studies on psoriasis drug ATL1101, and perform pilot studies on new lead compounds. If the offer is oversubscribed, the extra funds will go towards ATL1101 and the pipeline, said Diamond.

Intersuisse analyst Peter Russell said there were a number of companies "replenishing" their funds at present, and said that he expected more small placements to occur. However he said that investors were still rather wary of biotech stocks.

"I still feel optimistic on long-term prospects, but investors are not as excited as they were," Russell said. He noted that while cash flow out of biotech companies had been quite heavy, fund raising activities were less than last year, and that in some cases raising money via placements and other activities might just delay the inevitable cash flow problems.

Both Autogen and Antisense had reasonable prospects, Russell said.