UNSW spin-off Biosignal to list in reverse takeover

Biosignal, a spin-off from the University of NSW, is to list on the ASX in late March through a reverse takeover of CTI Communications (ASX:CTC), a telecommunications services company.

The transaction will include a share issue expected to raise some AUD$4 million at a share price of $0.20, and the re-listed company would have approximately $6 million, said Biosignal managing director Michael Oredsson.

Biosignal is developing furanone compounds as inhibitors of bacterial signalling -- a process known as quorum sensing inhibition. The compounds were originally discovered in a species of seaweed in Botany Bay, and since then around 200 synthetic analogues of furanones have been developed.

Furanone compounds prevent bacteria from forming biofilms -- a major problem in industrial surfaces as well as the basis of bacterial infection. "Furanones prevent biofilms forming in the first place and can also help break up existing biofilms," Oredsson said. "These compounds don't kill bacteria -- they tell them to go away."

The company says one big advantage of furanones is that, unlike antibiotics, they avoid triggering the development of resistance in bacteria exposed to them. Oredsson said that in proof-of-concept studies in a mouse model of cystic fibrosis, furanone compounds showed higher efficacy as a treatment for lung infections than traditional antibiotics.

Initially however, Biosignal will be concentrating on development of furanones as an anti-infective technology for biomaterials, in particular the contact lens and contact lens solution market -- a global market with a need for anti-infective technology.

Oredsson said Biosignal is collaborating with two major contact lens companies at present, and ultimately will end up partnering with one of them to take the technology to the market.

The idea is to covalently bind furanones to the surface of biomaterials to prevent biofilms from forming. But other mechanisms for delivering the furanones are also being investigated.

Unlike the therapeutic drug market, the time required to develop and launch products in the biomaterials market is expected to be relatively short, and the company believes that its first contact lens product could be in large-scale clinical trials within 12-18 months and on the market in three years.

next applications

But the company is already looking at the next applications for its technology. "The catheter market is the one we are most interested in as a next step for us," Oredsson said. "It's a big market, infection rates are very high and infection is very difficult to prevent. And there is resistance [from the medical community] to using antibiotics in catheters."

After catheters, Oredsson said that stents, orthopaedic implants and dentures are all possible candidates for furanone technology. While therapeutic applications of the compounds are also on the horizon, they are not likely to be a high priority for a while.

In addition, the company has several non-medical applications under development, including an anti-fouling marine paint, and some industrial surfaces applications. These projects are all collaborative with industrial partners who typically foot the bill for the development of the application.

"When it comes to industrial applications, and potential consumer applications, we're not going to spend money on that ourselves -- they are funded by partners," Oredsson said.

As with the medical applications, marketable products are still around three years away.

The technology was originally developed by Prof Staffan Kjelleborg and Assoc Prof Peter Steinberg at UNSW, and spun out into a company by UNSW commercialisation group Unisearch in 1999, with funding from partners, as well as from the Federal government in the form of two BIF and one COMET grant and through various NSW Department of State and Regional Development programs.

Perth-based CTI, a marketer and developer of call centre software and support and communications hardware and software, listed on the ASX in 2000. In a statement, CTI said a November fundraising aimed to assess two of its communications products and also to look at new business opportunities.

"The opportunity to merge with Biosignal was presented to the company in early December and, following a short intensive due diligence process, the board has resolved to proceed with the acquisition, subject to shareholder approval," CTI said.

CTI said Biosignal had an extensive intellectual property position surrounding the furanone compounds, including an exclusive licence to 13 patent families protecting different aspects of its technology including the compounds themselves, their manufacturing process and product applications of the compounds. One of the conditions CTI has placed on the acquisition is that all of the IP currently controlled by Unisearch is assigned to Biosignal. CTI expects to hold a general meeting to approve the transaction on March 10, 2004, and the company plans to re-list on the ASX on March 24.