Medica achieves funding target in placement

Medica Holdings has raised $3.25 million in a private placement to leading Australian institutional investors.

The funds have been earmarked to primarily go to Medica subsidiary Cytopia, which is finishing preclinical studies on its drug for treatment of hormone refractory prostate cancer, in preparation for clinical trials which are expected to begin next year.

"It's what we were aiming for, it's enough to allow us to make sure that Cytopia is funded for the next twelve months," said Medica's managing director Dr Kevin Healey.

The placement was arranged by Emerging Growth Capital (eG Capital), and attracted some high profile Australian institutions as investors, including AMP, Escor Group, ING Australia and Wilson Asset Management.

The issue was priced at $1 per share, which was in the trading range of the stock in the weeks prior to the placement. Healey said that this was significant, as the current market environment was extremely tough for raising funds.

"In this environment, where many companies in our sector are finding it difficult to raise new capital, to be able to do so at no discount to recently traded share prices and with quality investors, is a strong endorsement of our investee companies and our management team," he said.

Healey said that there was also a possibility that Medica would invest in one or two more companies in the next twelve months. According to Healey, Medica plans to eventually invest in five to seven companies.

At present, Medica has three investments in biotech companies, owning 18.6 per cent of Alchemia, 79 per cent of Cytopia and 39.5 per cent of Xenome.

"We like to be in the early, rapid growth phase of a company," said Healey. He explained that at this stage in a company's development, there was a chance to really add value to the company.

Alchemia, which was Medica's first investment, has platform technology for the production of oligosaccharide libraries. As well as its own drug discovery and development projects, the company has a major production alliance with Dow Chemicals, and another collaboration with Belgian company Euroscreen targeting G-protein coupled receptors, important in cancer and inflammation.

In the coming year, Alchemia would probably complete at least one more deal, according to Healey. He also said there was a possibility that the company would be publicly floated, but declined to speculate when that would be.

Melbourne-based Cytopia recently moved into new facilities at the Baker Institute of Medical Research. The company is expecting to move into phase I clinical trials in 2003 with their drug discovery program targeting JAK kinases, which play crucial roles in inflammatory processes and cancer.

Medica's third company, Xenome, is also hoping to enter clinical trials next year, for its cone snail derived neuropathic pain treatment. In addition, Healey said that the company is working with three companies, including Cytopia, to screen its library of conopeptides for a variety of targets, and hoped to form more alliances in the near future.

"A lot of people think conopeptides are just for pain, but we're thinking much more broadly," he said.