Metabolic raises $10 million

Melbourne based Metabolic Pharmaceuticals (ASX:MBP) has lifted its trading halt and reinstated its shares on the ASX's official quotation following the completion of a AUD$10 million private placement and the offer of a $10 million share purchase plan.

The capital raising was over subscribed and the placement price of $0.61 per share represents a 12.2 per cent discount to Metabolic's closing share price on 7 June 2005. Metabolic shares were trading at $0.635 at time of writing.

"The only reason we went from a trading halt into a suspension was because we had application forms coming in from overseas and various places around Australia, which can be quite difficult documents to get in time, within 48 hours," said Metabolic vice-president of corporate development David Kenley. "It was just the process, it had nothing to do with difficulty or anything else."

Acorn Capital, a long standing and substantial Metabolic shareholder, increased its interest in the company. A group of Swiss life science investors and Australian institutional investors, who Kenley said did not want to be named, became new shareholders.

"There's been a very strong showing of support by the market, globally and overseas, for this capital raising. It's a sign of support for AOD9604 and the complete pipeline the company has," said Kenley.

Metabolic is also offering a share purchase plan (SSP) where all existing shareholders will be able to purchase up to $5,000 worth of ordinary shares at a value of $0.61 per share. The SSP offer will open on June 24 and close on July 15 and will be made to all shareholders who hold Metabolic shares on June 23.

Metabolic's board has determined that total proceeds from the SSP will not exceed $10 million and if this occurs, and the directors determine that oversubscriptions will not be accepted, shares will be allocated to applicants on a pro rata basis.

The funds raised from the placement and the SPP will be used to conduct further studies into Metabolic's anti-obesity drug AOD9604 with a Phase II dose finding study planned to commence in Australia and New Zealand in September or October 2005. This trial will cost about $8 million. Metabolic will also use the funds to progress its second drug candidate, ACV1, for the treatment of chronic pain, and to accelerate its drug pipeline.

Metabolic now has cash reserves of close to $18 million.

AusIndustry "Commercial Ready" Grant

Metabolic has also been awarded an AusIndustry "Commercial Ready" Grant worth $449,902, representing half of the expected costs to the company in conducting its Phase I single and multiple dose human clinical trial on ACV1.

ACV1 is a 16-amino acid peptide, alpha-conotoxin, one of a rich cocktail of peptide components in the venom of the Australian marine cone shell Conus victoriae. ACV1 has been shown to deliver relief in a rodent model of neuropathic pain.

The ACV1 Phase I trial is expected to commence once ethics approval is obtained in June and the trial is projected to finish before the end of the year. The trial's aim will be to evaluate the safety and tolerability of single and multiple doses (once daily for one week) of ACV1 in healthy normal males. A successful result would enable Metabolic to conduct Phase II studies in patients during 2006.

"This follows the recent grant from the New Zealand Government for our trans-Tasman joint development collaboration with Neuren Ltd on their NRP neuro-regenerative compounds, currently in preclinical stage," said Metabolic CEO Roland Scollay in a statement.