Parental approval for BioPharmica spin off, prospectus launched

The spin-off and listing of BioPharmica was approved at a general meeting of Grandbridge (ASX: GBA) shareholders today by more than 99 per cent of shareholders.

BioPharmica's IPO is expected to raise at least AUD$2.25 million through the issue of 11.25 million shares at $0.20, with the option to raise up to $4.5 million if the offer is oversubscribed. In addition, Grandbridge shareholders will receive one BioPharmica share for every Grandbridge share held.

Chairman David Breeze said that the spin off would allow the business to increase its capital and skill base to create a corporate structure more conducive to partnering and alliances.

BioPharmica will use the capital raised to fund two projects. The first is the development of diagnostic and therapeutic applications for a tumour suppressor gene, HLS5, with a potential role in breast, prostate and colorectal cancers. This project is based at the Western Australian Institute for Medical Research's Laboratory for Cancer Medicine, and headed by Prof Peter Klinken. It has been supported thus far by more than $1 million in grants from the NHMRC and the Cancer Council of WA, among others. Breeze said BioPharmica would look at opportunities to obtain further funding to support commercialisation from the appropriate federal government granting programs.

BioPharmica has invested $75,000 in the HLS5 project so far, and the company has the right to earn up to 55 per cent equity in the project through the investment of $600,000.

The second project involves development of genetics-based diagnostic systems for bacterial infections, with an initial focus on diagnosing respiratory tract infections. Biopharmica has entered into a partnership with the inventors of the technology, RMIT scientists Dr Benjamin Fry and Dr Viraj Nawagamuwa, and their company Diagnostic Array Systems.

Breeze said the project comes with the option to earn a minimum of 50 per cent equity in Diagnostic Array Systems via expenditure of at least $600,000 in the project. In return, BioPharmica will provide corporate, commercialisation and management experience.

The capital raised in the float would be sufficient to "last for an extended period of time" said Breeze.

"We would expect that government grant funding, together with the capacity to license and form partnerships will be beneficial for the funds usage rate for the company."

The company is planning to seek licensing agreements and partnering arrangements to facilitate the development of the technology, Breeze said.

BioPharmica's offer is expected to close on 25 June, 2004 and the company is expected to list on the ASX on 2 July. The offer is not underwritten.