British biotech Bone to list on ASX

With the close of its placement expected on 3 August, British biotech company Bone is well on its way to a backdoor listing on the Australian Stock Exchange through former WA property management company Revenir (ASX: REV).

Shareholders will vote at a meeting on 2 August whether to accept the reverse takeover, which will see a one to four consolidation of capital, followed by issuance of 34 million shares to Bone vendors in payment for 80 per cent of the British companies' ordinary shares as well as all of its preference shares. The merged company will change its name to Bone Medical, and expects to relist on the ASX around 10 August (ASX: BML).

The placement, which is not underwritten, is expected to raise AUD$1.5 million, with an extra $1 million available through oversubscription. The company will also have access to another $2.5 million in the Revenir shell.

Bone CEO Dr Jim Phillips, a former executive at Novartis and Johnson & Johnson, said the company had received a positive reception from potential investors.

"There is a lot of interest in the story," he said. "As a company our focus is totally commercial. Because we're not doing blue sky research, we can focus on developing products."

Phillips said that listing the British company in Australia made a lot of sense, citing three main reasons for the move, including the quality of science and clinical care in Australia, the significant savings in cost of R&D here, and recent regulatory changes in Europe that require full GMP manufacturing even for early clinical trials, adding to the cost of drug development there.

The company will base itself in Perth, but will continue operations in the UK as well in Australia to make the most of business development opportunities in the northern hemisphere.

"Given our structure, Perth is the best place to be as the time difference allows an overlap in the business day of about four hours," said the Perth-based COO John Fitzgerald.

The company has a healthy pipeline of drug candidates with one drug in Phase II trials, a second about to commence Phase I trials and several more in various stages of preclinical development.

Bone recently announced that the Phase I clinical trial of its lead candidate BN002, an orally available form of calcitonin, used as a treatment for osteoporosis, had been successfully completed. Phase II trials are ongoing.

Because injectable and intranasal formulations of calcitonin have been on the market for 25 years, Bone is pursuing a bioequivalence registration, which means that Phase III trials are unlikely to be required. Phillips said the company expected the drug to be on the market within 12-18 months.

"With a fair wind, that will be our first revenue producing product," he said.

It's a lucrative opportunity for the company -- the global market for calcitonin is currently around AUD$1 billion. And with some of the preclinical studies conducted for Bone by big pharma, the company is well into discussions for partnering the program.

Hot on the heels of oral calcitonin is an oral version of parathyroid hormone (PTH), also used to treat osteoporosis, which is expected to enter the clinic shortly. The two drugs both use the same platform technology -- a protective 'wrapper' developed by scientists at UK R&D company Proxima Concepts, which prevents the hormone from being broken down in the gut and promotes absorption across the gut wall.

But Phillips believes that the real breakthrough products for the company will be its rheumatoid arthritis therapeutics -- short peptides with the ability to down regulate TNF production at the cellular level.

The company has developed a number of these molecules using another Proxima technology called Mozaic, and is testing potential lead candidates at the Institute of Bone and Joint Research at Sydney's Royal North Shore Hospital. Other Mozaic-based products targeting other bone and joint conditions are also in the works.

"We have a large array of future products using this technology," said Phillips. "It's a good pipeline -- there are some fast track products. It's certainly our intention to have commercial outcomes and break even in the next two to three years."