Scigen to raise up to $16m, Russia's Shreya to take stake

Having announced a revenue increase of 79 per cent to S$6.5 million and a loss of S$4.31 million for the year ended June 30, Singapore-based generics company Scigen (ASX:SIE) will be topping up its coffers with a private placement to Indian-Russian marketing partner Shreya, and a rights issue to existing shareholders.

The capital raising will bring in a minimum of AUD$11.2 million and a maximum of AUD$16.4 million, depending on the level of uptake of the rights issue by SciGen shareholders.

Scigen will place 22 million shares -- approximately 5 per cent of issued capital -- at 7 cents per share with Shreya by mid October 2004. SciGen has also undertaken to place additional shares with Shreya at 6 cents per share to bring Shreya’s shareholding up to 24 per cent of the expanded capital. If shareholder approval for the final placement is granted at Scigen’s annual general meeting on November 22, the placement will be completed by the end of January 2005.

Current shareholders will get the opportunity to top up their holdings by subscribing to a 1 for 4 non-renounceable rights issue, being offered at 6 cents per share.

Scigen markets its human growth hormone and its third generation hepatitis B vaccine in the Asia Pacific region.

“We have the rights for recombinant human insulin that we already have registered and are selling in Vietnam. It now has regulatory approval in India, and the launch will occur in October,” said Scigen managing director Mark Compton. “We’re selling insulin crystals in Pakistan, and have a registration application active in that country.”

Currently, the insulin that Scigen sells in India comes from a European manufacturer. However, Shreya is building a US$20 million biotechnology manufacturing facility near Mumbai -- capable of manufacturing Scigen's products -- which is due to be commissioned in 2005.

“Like all companies we’re always looking for the opportunity to consolidate our product portfolio, and we’re looking to secure new opportunities. [The capital raising will allow us to] look to do this through novel delivery systems or formulations of the products. It could mean a new delivery system that differentiates the product,” said Compton.

The Shreya Group began in 1995 as an Indian firm importing consumer goods -- including pharmaceuticals -- to Moscow. Shreya is now the third largest marketing and distribution company in Russia, turning over US$427 million in the 2003 financial year. It remains a privately-held firm, operating in Russia, India and Africa, and is moving to establish a European operation from its base in the UK.