Singapore's Cygenics issues prospectus for $18 million ASX float

Singapore-based stem cell therapeutics company CyGenics has issued its prospectus for an AUD$18 million float on the ASX.

With a pre-money valuation of $50 million, CyGenics will have a market capitalisation after the float of $68 million.

The company has three business divisions -- Cordlife, Cell Sciences and Cytomatrix -- located primarily in Singapore and Boston, and has based its Australian operations, which will focus on clinical development of stem cell-based therapeutics, at the new Bio21 Molecular Science and Biotechnology Institute in Parkville.

According to chairman Chris Fullerton, the company chose to list on the ASX because of its support for small biotechnology companies, as well as the level of expertise available in Australia for stem cell research.

Funds raised in the share offer will be used to expand Cygenics' existing businesses and initiate clinical trials in Australia, anticipated to start in late 2004 to mid-2005, said CEO Steven Fang. While the company is not yet profitable, revenues for the year ending June 30, 2003 were around $3 million, and the company does not expect to have to do another placement in the near term.

Cordlife was set up in Singapore in 2001 to focus on umbilical cord blood and peripheral blood stem cell banking on a fee-for-service basis. In April last year, Cordlife acquired US biomaterials company Cytomatrix, which had developed a proprietary three-dimensional cell growth scaffold. A third company, CellSciences, is focused on developing consumable products for the growth of cellular products including a three-dimensional cell culture system.

CyGenics' Australian operations are expected to focus on clinical trials activity. The company plans to start Phase I clinical trials later this year for two applications of its technology, the ex vivo expansion of peripheral blood stem cells for use in autologous transplants in patients with leukaemia and other diseases, and ex vivo production of mature differentiated T cells for treatment of immune deficiencies caused by HIV infection and other diseases.

Both applications use the Cytomatrix scaffold technology, in the first case to recreate bone marrow like conditions in culture, and in the second case in the form of an artificial thymus which can be populated with stroma cells to assist with the maturation from undifferentiated stem cells into fully differentiated T cells. The latter technology is also the focus of a US Department of Defence contract worth US$1.7 million to screen vaccine prototypes.

Because the cells are returned to the patient from which they originated, approval of the product will be subject to regulations governing cell therapeutics -- generally a quicker path to market than that followed by small molecule drugs and biologicals. Cytomatrix is already in use as an in vivo orthopaedic biomaterial, reducing safety concerns. And, due to the nature of the applications, the trials are likely to be fairly small and inexpensive.

"They are very manageable trials, we are quite excited by them," said Fang.

The stem cell transplantation trial will be performed in Melbourne with the company currently completing discussions with a local institution to carry out the study, while the T cell development trial has not been finalised as yet.

In the medium to long term, CyGenics expects to licence out some applications of its technology while developing others itself, Fang said.

"We see a very viable way forward -- with diseases that CyGenics will work on and diseases that we will partner out," he said.

The market for stem cell therapies including is expected to grow to a value of US$38.1 billion worldwide by 2012, from US$9.2 billion in 2002.

The offer of 18 million shares at $1.00 per share is scheduled to open on May 12, and the shares are likely to be listed on the ASX by mid-June. The float is being fully underwritten by Sydney-based boutique investment bank eG Capital.