Bionomics acquires Iliad Chemicals

Bionomics (ASX:BNO) has acquired unlisted Melbourne discovery company Iliad Chemicals for 40.9 million Bionomics shares - approximately AUD$6.1 million at current market prices.

Iliad has a synthetic chemistry platform and two drugs in advanced preclinical development programs, targeting blood vessel formation and multiple sclerosis.

Bionomics is similarly focused on CNS diseases and cancer.

The acquisition is part of Bionomics' bid to become a AUD$200 million company in three years. Late last year, the company acquired French contract research organisation Neurofit, which specialises in pre-clinical testing of central nervous system drug candidates.

And Bionomics is still on the merger and acquisition trail, according to CEO Deborah Rathjen.

"I think that we'll be continuing to look for opportunities to grow Bionomics," said Rathjen.

"We have been, for almost two years, on the merger and acquisition trail," said Rathjen. "What attracted us to Iliad was their two therapeutic programs and the fit - the synergy - with Bionomics' own areas of interest,"

Iliad uses its proprietary MultiCore synthetic chemistry technology platform to discover and optimise new drugs.

"The Iliad chemistry platform is useful at many points," said Rathjen. "It's useful in the early stages of discovery, where you can make very quickly focused libraries around hits that come out of screening, it's very useful at lead optimisation and it's also useful in the scale-up stage."

The acquisition of Iliad also includes a potential payment of $3 million in Bionomics shares if Iliad achieves either successful entry into a clinical milestone or a significant licensing deal around one of the company's current compounds.

Placement

Bionomics has also completed a capital placement of $6 million to institutional and sophisticated investors, including a commitment of $2.9 million by the shareholders of Iliad: Start-Up Australia Ventures and ANU Investment, said Rathjen.

"The use of those funds will be directed at progressing drug discovery and development in cancer and CNS. So supporting those key Iliad programs, the TPI (tubulin polymerisation inhibitor) and also the multiple sclerosis program," said Rathjen.

Alternative to IPO

Iliad's CEO Dr Bernard Flynn, who will join Bionomics when the acquisition is completed, said that the "clear and immediately apparent synergies" between Bionomics and Iliad were one of the major factors in deciding to take the merger and acquisition pathway rather than floating the company.

"As we were entering into giving consideration to capital raising and moving towards an IPO we saw that to be successful we would probably want to broaden the scope of our activities and that would obviously require additional investment pre-IPO and some time to put those arrangements in place," said Flynn.

"Bionomics made an announcement...that they were interested in doing merger and acquisition processes and obviously we were conscious that they were already a listed company. We felt that, given the toughness in the market for capital raising, that might provide an alternative to us where we felt that all other considerations were being met."

It is expected that the series of molecules that Iliad has developed to target cancer blood cells will lead to drug candidates and that clinical trials will commence in 2007. Iliad is also currently collaborating with the Walter and Eliza Hall Institute to develop its MS lead candidates.

Following the acquisition, Iliad will be fully integrated into Bionomics in terms of both people and programs, and Dr George Jessup of Start-Up Australia Ventures will join the Bionomics board.