rights issue, page-5

Yes Macrae12 it was a belt with a wet fish, but not entirely unexpected. With only 14 million being raised, AVX must be counting heavily on positive June phase 3 results to get it over the line. After participating in the 2 for 5 in 2007, when do we stop throwing good money after bad.

This rights issue is just a bandaid on a bigger problem. There has been a lot of rhetoric in the past about partnering discussions, it's time to deliver soon or its all p in the wind.I have no doubt Coates has bettered 3TC this time around and called it ATC, but why can't it attract solid interest from pharma? The next six months will be crucial for AVX.


Avexa seeks remedy to its ills

In the wake of its failure to merge with the cash-rich Progen Pharmaceuticals, Melbourne biotech group Avexa has announced a pro-rata renounceable rights issue to raise approximately $14.8 million.

Avexa, whose shares have been hammered on the perception that it lacks cash, hopes to strengthen its balance sheet and find new avenues to fund the development of its range of anti-infective drugs to treat hepatitis C, bacterial infections, and HIV. Avexa's aprixitabine (ATC) drug was independently valued by Lonergan Edwards at between $150 and $225 million, but without the wherewithal to carry out full trials and a development program the company effectively has a market capitalisation of only $40.77 million, having seen its share price drip a further 12.73 per cent yesterday.

Progen, with $60 million cash in the bank, was seen as a lifeline for Avexa, yet rival bidder and minority Progen shareholder Cytopia scuttled the deal and Progen will now be handing back the bulk of its cash to shareholders and resuming with the commercialisation of its liver cancer drug, PI-88.

Among Cytopia’s arguments against a Progen-Avexa tie-up was that ATC would require something closer to $155 million for a Phase III HIV drug trial program. Avexa chief executive Julian Chick denied that there was a funding shortfall, citing the company’s belief in achieving a 24-week data milestone, but Cytopia – which awkwardly operates out of the same building as Avexa – got its way in the end and the deal was scrapped earlier this month (see Cytopia cuts Progen's lunch, March 9).

A $14.8 million rights issue and a $500,000 break fee from Progen certainly won’t be enough for Avexa’s ATC needs, but if shareholders take up the one for two issue at 7 cents a share then the company will at least have breathing space to assess its options and go some way in the trials. In Avexa's words, it would place the company "in a stronger position of financial leverage in partnering discussions."

Avexa estimates that the issue will cost $845,000, of which the lead manager ABN Amro Morgans will receive fees up to $595,000. Paul Duske and Craig Chipperfield from Gresham Partners have been acting as Avexa’s corporate advisers along with lawyer Craig Semple from Mallesons Stephen Jaques.


http://www.businessspectator.com.au/bs.nsf/Article/Avexa-seeks-remedy-to-its-ills-$pd20090325-QG22A?OpenDocument&src=ei