pSivida raises $6.5m, raises stake in UK subsid

Biomedical nanotechnology company pSivida (ASX:PSD) will strengthen its stake in its United Kingdom operating subsidiary following a AUD$6.5 million capital raising, the biotech announced today.

The Perth-based company said it would use the funds to increase its shareholding in pSiMedica ahead of that company's listing in the UK next year.

The pre-initial public offering investment round will see pSivida inject £2 million to increase its stake from 50.7 per cent to almost 53.1 per cent.

The company said another pSivida subsidiary, QinetiQ (formerly the UK Government Research and Development Agency), would also be investing £1 million in pSiMedica's pre-IPO stage.

The $6.5 million, which significantly builds on pSivida's end of year consolidated cash reserves figure of $1.2 million, was raised through the placement of 13 million shares at 50 cents each.

The company's managing director Gavin Rezos said the capital raising was more the 1.7 times oversubscribed.

"The support -- coupled with the recent increase in the company's share price -- provides further evidence of the market's commercial validation of the BioSilicon technology platform following recent announcements and scientific results," he said.

Diagnostic application

The company also announced today that it had signed an exclusive worldwide license agreement with pSiMedica for the use of its BioSilicon technology in diagnostic applications as implants in humans and animals.

The deal is in compensation for pSivida allowing an industry partner and European crossover funds to support pSiMedica's IPO by September 2004.

The company would not reveal the names of the industry partner or crossover funds providers today, saying the agreement was happening on a staged basis and details would be released in the next couple of months.

"The industry partner wants a financial position in the company and the second stage would be a form of collaboration in relation to their particular industry," pSivida's Rezos said.

Under the license agreement pSivida will be in a position to develop a wholly-owned diagnostics business making use of the biodegradable, sensor, charge bias and drug monitoring capabilities of BioSilicon.

The company also has the first right of refusal from pSiMedica to develop products using skin patches and topical applications for body diagnostics, which are currently being developed within pSiMedica.

The 'smart' applications using micro-sensors and chips are reserved by pSiMedica for collaborations with global electronics and chip technology companies who have already expressed an interest in developing such products.

Potential applications for non-invasive diagnosis include personalised medicine, disease management and drug monitoring, as well as animal diagnostics, with the total market estimated in 2002 to be worth about US$20 billion.

As well as the international collaborations, Rezos stressed that pSivida was keen to establish agreements centred on its broad-based diagnostic platform with Australian universities, research institutes and business.

At the time of writing, pSivida's shares were trading 6.3 per cent higher at 68 cents each.