Avexa ends year with two years' cash in the bank

Melbourne-based biotech Avexa (ASX:AVX) has finished its first financial year of operation with AUD$15.7 million in the bank -- enough operating cash for two years, according to CEO Julian Chick .

As the corporate entity for Amrad's (ASX:AML) spun-out anti-infectives drug portfolio, Avexa commenced operations on July 1, 2004 with $12 million in cash. In March 2005, Avexa conducted a significant capital raising, primarily to fund the costs of a phase IIb study for AVX754, an HIV drug it in-licensed from Shire Pharmaceuticals in January.

Over 57.6 million shares were issued raising $11.5 million, from which transaction costs of nearly $0.9 million were deducted.

The company posted a loss of $13.5 million for 2004-05, which reflects Avexa's policy of writing off the $12 million cost of its intellectual property on a straight line basis over the first 24 months of the company's operations, giving rise to a $6 million amortisation charge for the year.

The operational cash burn for the period was therefore $6.8 million, including $2.5 million associated with the purchase of clinical trial product required to conduct Avexa's phase IIb trial for AVX754. The trial commenced on July 25 and results are expected in the 2006 financial year.

Employee expenses were $1.5 million for the year.

"There will be an increase in overall expenditure in the next financial year associated with the phase IIb clinical program," said Chick in a statement. "However, I believe that the company is in a strong position with up to two years' operating cash for the core business and enough funds to complete the phase IIb plus a 24-week extension study for the lead project AVX754."

Avexa announced last month that it was unable to generate significant blood levels of its non-nucleoside AVX491 -- an inhibitor of Hepatits B replication -- in its proof-of-concept study. The company is still looking for ways to potentially progress into clinical studies with this class of drug.

Avexa is also working with the Shanghai Institute of Organic Chemistry in China to optimise its series of HIV integrase compounds and anticipates that its lead compound will enter into animal studies by the end of 2005. The company is also working on two classes of inhibitors in the vancinycin resistant infections field and a lead compound is expected to enter animal trials by the end of 2005.