Epitan raises AUD$6.9 m, plans AIM listing

Melbourne-based Epitan (ASX:EPT, ADR:EPTNY, XETRA:UR9) has raised AUD$6.9 million before costs via a private placement to institutional and private investors and will once again seek to list on London's AIM stock market.

This follows a capital raising of $3.5 million in July and the suspension of Epitan's plans earlier this year to list on London's AIM stock market with the hope of raising £15 million (AUD$37 million).

"We were just very unlucky and very unfortunate back in April," said Epitan managing director Iain Kirkwood. "We went for a big capital raising in London and it was just that whisker too late. The market just popped like a balloon."

In conjunction with its adviser, UK-based stockbroker Teather and Greenwood, Epitan anticipates that admission on AIM will now take place in December.

"We know that there are a number of investors in the UK in the Europe who are very keen at looking at the stock, but can't invest until you're on AIM," said Kirkwood.

Kirkwood said that Epitan does not need to raise any more capital upon listing, so the company will apply to list using the AIM Designated Markets or "fast-track" route, essentially a compliance listing.

Private placement

The recent capital raising saw a total of 21 million new ordinary shares placed at $0.33 per share, representing a 6.1 per cent discount to the five-day volume weighted average price ahead of the placement.

The capital raising was assisted by Australian-based Mariner Corporate Finance and was oversubscribed.

"Probably about 40 per cent of the money we raised was European based, but we also got very good support out of Australia," said Kirkwood. "The market's always tough for biotechs but we're very pleased to get this particular placement tucked away."

Epitan chairman-elect Dr Roger Aston and Kirkwood also participated in the capital raising.

"I've contributed $100,000 of shares of my own money," said Kirkwood. "That always sends a good signal to the market, that the managing director and chairman are prepared to back the company as well."

Share purchase plan (SPP)

Epitan will also be conducting a share purchase plan with Australian and New Zealand shareholders being able to subscribe for up to $5,000 worth of shares at $0.33 per share.

"We haven't had [a SPP] for a long time," said Kirkwood. "We have over 3,500 domestic shareholders, so we're going to give them a go at the same price as the institutions."

Use of funds

With $4 million in cash reserves at September 30, the money raised from the placement and SPP will be used to progress Eptian's lead compound EPT1647 (formerly Melanotan) through to phase III trials, allow the company to seek listing on the AIM market and to consolidate Epitan's wholly-owned subsidiary EpiPharm's position in the Australian prescription dermatology market.

"It gives us 12 months plus of working capital and it gets us to a point where we are in a very mature position with regard to the drug development," said Kirkwood.

Epitan currently has three EPT1647 phase II trials in progress, one in Sydney, another in Melbourne and the company is planning a much larger European trial with a focus on polymorphous light eruption (PMLE) planned to start in March or April next year. Kirkwood said that the phase III trials for EPT1647 are planned to start in Australia this time next year.

"In past times there has been some scepticism about our ability to get the drug to market under the sunburn indication, but I think with our new tack on PMLE we're very confident that we've now got a strategy which will see us on the market," said Kirkwood.

Topical trial begins

Epitan has also commenced a dose-escalation clinical trial of its newly developed topical formulation of EPT1647, with the first volunteers being recruited this week. The London-based trial is being overseen by the William Harvey Research Institute at St Bartholomew's & The Royal London School of Medicine and Dentistry.

The trial will investigate the safety and efficacy of the new topical formulation of EPT1647, as well as the optimal dose of the drug when applied to the skin.

Up to 30 healthy volunteers will receive 1mL of the topical formulation, sprayed onto the arm daily for ten days.

Epitan's shares were trading at $0.375 at the time of writing.