Virax aims to raise $3.85m after NIH disappointment

Melbourne immunotherapy developer Virax Holdings (ASX:VHL) has lodged a prospectus to raise AUD$3.85 million through a rights issue for the further development of its HIV therapeutic vaccine VIR201 following its unsuccessful bid for US NIH funding.

In October Virax received notification from the US National Institutes of Health (NIH) that its application in collaboration with the National Centre in HIV Epidemiology and Clinical Research (NCHECR) at the UNSW, for a contract award to fund a phase II trial for VIR201 was unsuccessful.

"We were very disappointed not to received NIH funding, but were pleased to be judge as one of three projects considered 'fundable', said Virax CEO Dr David Beames. "It was frustrating for us and our shareholders because it took so long to be judged -- one year behind schedule.

"The rights issue is not going to fund the trial. We need capital for preparation work for the phase II trials -- funding for the Investigational New Drug (IND) application to the FDA in the US and a Clinical Trial Notification (CTN) to the TGA in Australia and ethics committee approvals at the institutions were the trials are to be conducted."

Virax plans to have the preparation work completed during Q4 2006 with patient enrolment to commence by the end of 2006. The interim trial results are expected to be available late 2007 and the final results by mid-2008.

The company plans to fund the phase II trial from a major capital raising in the order of US$6-8 million (AUD$8-11 million) which it says in its prospectus is most likely to be from major new investors who are likely to be found overseas. This raising is not expected to be finalised before the second quarter of 2006.

Virax uses a non-infectious fowlpox virus as a vector to deliver its patented Co-X-Gene technology into human cells. The genetically engineered virus expresses genes for key antigens associated with particular disease, along with genes that boost the patient's immune response to those antigens, particularly the cell-killing arm of the immune system, cytotoxic T-cells.

The lodgement follows the raising of $250,000 through the placement of approximately 1.282 million shares at a price of 19.5 cents per share last week. The non renounceable pro-rata rights issue will allow each shareholder the right to subscribe for three new shares for every eight shares held on December 5 at a price of $0.15 per share. The offer also includes one option for every three new shares at an exercise price of $0.20, with a four year exercise period. The closing date for the option is December 21.

The offer is being managed by Bell Potter Securities.