Minomic says no to Probiomics

Privately held Sydney diagnostics company Minomic International has withdrawn from a proposed merger with listed nutraceutical company Probiomics [ASX: PCC], citing a decline in PCC's share price.

Minomic's board also felt PCC did not have the ability to raise sufficient new capital to fund Minomic's commercialisation plans.

The proposed merger between the two was a share, rather than a cash deal, worth $12 million at the time. Since then, the shareprice of Probiomics has declined and the value to Minomic would now only be $4.5 million.

Minomic's founder and CEO, Dr Brad Walsh, said the company was worth substantially more than that and was a great opportunity for investment. "We are months away from completing our clinical trials and we've already had two large pharmas come to us," he said.

"We're in a very strong position and have a group of investors who have been very supportive so we will go back to them. We will consider opening up to a number of new investors to raise the money we need to take it to the next stage."

He said relations between the two companies remained very friendly.

Minomic is developing several diagnostics, including a urine-based test for prostate cancer based on a monoclonal antibody against a prostate cancer antigen. The other is a urine-based type 2 diabetes diagnostic. Further down the track is a potential diagnostic for retinopathy in diabetics using teardrops.

Probiomics' shareholders voted overwhelming for a merger with Minomic on June 23. At the time, Probiomics CEO Stuart Craig said the logic behind a merger between two such disparate companies - Probiomics has developed technology based on a patented strain of Lactobacillus fermentum - was that PCC had done as much as possible with its technology and was looking for further IP.

PCC signed an exclusive license agreement with global food giant Nestle to use its L. fermentum strain in infant and child nutrition products in 2007.

It has also just announced a letter of intent with Denmark's Christian Hansen company, the world's largest probiomic manufacturer, to globally distribute the lactobacillus product through its network.