BioProspect at the crossroads

A biotech company in the forefront of mining Australia's natural biodiversity for blockbuster commercial applications is approaching its moment of truth.

BioProspect is mid-way through evaluation agreements centred on its most promising discovery, the natural insecticide Qcide.

The company is "quite close to a lucrative conclusion" with two large agrichemical players, NuFarm and Sumitomo, who are currently evaluating Qcide, says CEO Selwyn Snell, a former president of Zeneca Japan.

But BioProspect's best-case scenario doesn't see a licensing agreement being struck until January at the earliest.

Meanwhile, 18 months after raising $3 million in its initial public offering, the company is sitting on dwindling cash reserves.

At its current cash burn of about $210,000 per month, BioProspect has resources for another two months.

To tide it over until it can complete the commercialisation cycle, BioProspect is going out to its shareholder base and institutions in search of another $3 million.

The non-underwritten shares purchase plan -- of 20 million shares at a 15 per cent discount to the market price -- on the offer's closing date of Oct 18 will bring in about $1.6 million if it is fully subscribed.

BioProspect is hoping institutional buy-in will generate the remainder of the funds it is seeking.

While the licensing manoeuvres continue, BioProspect is positioning itself to launch a commercial planting program in north Queensland of the eucalypt species that produce Qcide's active component.

It is working with the Queensland Forestry Research Institute on soil requirement tests and seed collection.

Snell envisages the plants being grown in rows by farmers in the Atherton area as ancillary crops which would be harvested for their leaf cover three times a year.

Individual plots might not be larger than 20 acres but eventually BioProspect foresees the need for "quite large acreages - initially it could be two to three thousand acres," says Snell.

At the same time, BioProspect has announced the discovery of a second major commercial candidate from its screening program conducted under a biota mining agreement with the Queensland government.

Code-named AP778, it is sourced from a tree species and shows significant activity for control and treatment of termites.

BioProspect has lodged a provisional patent covering the use of AP778 as a repellent, as an anti-feedant which restricts normal feeding and as a direct contact termiticide.

The multi-action effects of the natural termiticide are unique and not duplicated by any existing commercial products, according to Snell.