Norwood expects revenues from next month

Norwood Abbey (ASX:NAL) executive chairman Peter Hansen told shareholders at the company's AGM yesterday that the first revenues from the company's laser assisted drug delivery device would flow into the company in late December or early January.

The company expects to place around 10,000 of the devices worldwide by the end of 2006, and estimates that each device will be used at least 1000 times a year. With a single use disposable component to be sold for at least US$1, the potential gross revenues are estimated to be as high as US$10 million, according to Hansen.

And the company is planning to list subsidiary Norwood Immunology, which just signed a deal with US company TAP Pharmaceuticals, on London's AIM board within six months. London brokers KBC Peel Hunt, who managed the AIM listing of Novogen subsidiary Marshall Edwards, have been appointed to manage the float.

"The past year has certainly been the most successful of Norwood's history," Hansen said.

The company's share price has risen from a low of AUD$0.39 in early June to a high of $2.45 on the day the TAP deal was announced. But since the announcement, the price has steadily slipped down on higher than average volumes to close on Thursday at $1.34.

Topic of concern

Hansen said part of the reason for the decline was due to retail shareholders selling out at a profit. But in the days after the TAP announcement, board member Derek Ryan sold 10 per cent of his shareholding, which although legal, worried many major shareholders. The issue was a topic of concern raised by several shareholders at the AGM, which didn't surprise Hansen at all.

"It's more than understandable," he said. "[Ryan] had valid reasons to sell, but we are taking steps to make sure it never happens like this again."

According to Hansen, Norwood's strategy over the coming year would be to expand its board of directors with two or three new directors, carefully chosen to bring appropriate commercial experience to the company's leadership as it moved into the commercialisation phase of its products.

UK float

Richard Williams, CEO of Norwood Immunology, said the AIM listing was planned to take place in around six months, giving the company time to put together an independent board and management team.

The company plans to raise around AUD$30 million in pre-IPO and IPO offerings, and expects that Norwood Abbey will retain a 60-80 per cent majority share in the spin-off.

The UK-based Williams officially joined the company in April, but had been working as a consultant for around a year prior to that, becoming intimately involved in the TAP licensing deal.

He said the deal was unusual, in that it didn't involve a new molecule, but instead provided new applications for an existing one. "It had never been done by TAP before," Williams said.

Williams' next task is to license the immune-boosting technology for use outside the US, as the TAP deal is exclusive to that market. He expects to do that in 2004, and is targeting TAP's Japanese parent company Takeda as the licensing partner of choice.

But he is also looking at secondary licences for the technology, particularly in applications such as adult vaccinations, an area of interest to a number of companies, he says. He envisages that partnerships between Norwood Immunology, TAP and third parties will be forged to develop these opportunities.

In the meantime, Williams has a number of clinical trials to get underway, including a multi-centre trial for the use of TAP's GNrH analogue Lupron for bone marrow transplants in the US and Europe to build on Australian studies, and the HIV/AIDS trial planned by a Swiss consortium. A chemotherapy trial is also on the horizon.

Norwood Abbey is also working on a needle-free delivery system, being developed by researchers at Massachusetts General Hospital. The company already has a bench-level prototype and expects to have a handheld device by mid-2004. The potential market size for a needle free device is expected to be in the hundreds of millions, the company says.