Pharmaxis launches global capital raising

Sydney-based drug developer Pharmaxis (ASX:PXS) has opened a public offering on the sale of ordinary shares in US and a placement of shares in Australia to fund further clinical trials of its lead drugs Bronchitol and Aridol.

Pharmaxis has filed a registration statement with the US Securities and Exchange Commission for the sale of 21 million ordinary shares in the form of 1.4 million American Depositary Shares (ADSs) in a public offering to be led by CIBC World Markets. Each ADS equals 15 ordinary shares.

Pharmaxis also announced that it would conduct a simultaneous placement of up to 17.5 million of its ordinary shares to non-US institutional, sophisticated and professional investors to be managed by Wilson HTM Corporate Finance in Australia.

The capital will be used to fund the clinical development of Bronchitol for cystic fibrosis and additional clinical trials in asthma and chronic obstructive pulmonary disease to broaden the commercial opportunity for Bronchitol and Aridol.

Earlier this month the company reported Bronchitol had produced positive results from a phase II trial in cystic fibrosis patients and enrolled its first patient for the phase II clinical trial to assess the ability of Aridol to predict the usefulness of inhaled corticosteroids as a treatment of chronic obstructive pulmonary disease (COPD).

Pharmaxis applied for regulatory approval for Aridol as a test for Asthma in Australia in January and Europe in May. Proceeds from the capital raising will also be used for the international commercial launch of Aridol.

The clinical development for Bronchitol in patients with bronchiectasis and chronic bronchitis, the investigation of additional clinical opportunities for Bronchitol and the further expansion of Pharmaxis' manufacturing facilities and preclinical pipeline will also be funded through the public offering and placement.

The offering may be increased by up to 20 per cent of 4.2 million ordinary shares. The US registration also provides for the sale by certain funds managed by GBS Venture Partners for a total of 3.15 million ordinary shares in the form of 210,000 ADSs in order to satisfy an option that may be exercised by CIBC World Markets to satisfy any over-allotments in the US offering.

The price of ordinary shares will be the same in the US offering and Australian placement and will be determined after the marketing of the offerings, based on demand, current market prices and other related factors. The closings of the offerings are not contingent upon one another.

Pharmaxis will seek approval from shareholders at its AGM on October 28 and if approved it is expected to be completed by November or December 2005.