ferrets stock to watch: psivida limited

Ferrets Stock to Watch: PSIVIDA LIMITED
08:30, Tuesday, April 10, 2007

PFIZER INVESTS AND COLLABORATES WITH LOCAL COMPANY

Sydney - Tuesday - April 10: (RWE Aust Business News)
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OVERVIEW
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pSivida Ltd (ASX:PSD) has signed an exclusive worldwide
collaborative research and licence agreement with Pfizer Inc covering
its controlled drug delivery technologies, including the Medidur
technology, in ophthalmic applications.

Under the terms of the agreement, pSivida will receive up to
$191 million in development and sales related milestones.

The two companies will work together on a joint research program
aimed at developing ophthalmic products using pSivida's sustained drug
delivery technology.

In addition to milestone payments, Pfizer will fund the cost of
the joint research program.

Pfizer will have an exclusive licence to market all products
developed as part of this research collaboration in ophthalmic
applications and will pay pSivida a royalty on net sales of those
products.

Pfizer may terminate the agreement on 60 days notice without
cause.

The following day, the Perth-based pSivida announced the private
placement of 40,957,050 million fully paid ordinary shares issued at
26.95c each to raise about $11 million before costs to US and European
investors.

Each two shares will be issued with one free attaching option at
an exercise price of 26.95c and a term of four years.

The issue price was equal to the five-day volume weighted
average closing price of pSivida's ordinary shares on the ASX through to
March 30.

HPC Capital Management Corp, a southeastern US-based investment
bank, acted as the sole placement agent.

"The placement of these shares together with proceeds received
under our new agreements with Pfizer allows the company to retire the
convertible note debt held by Castlerigg Master Investments Ltd which
was announced yesterday (April 4), thus placing the company on much
better financial footing," said Dr Paul Ashton, managing director of
pSivida.

In addition to the development and sales milestones and payment
of the cost of the joint research program, Pfizer has agreed to invest
$6.1 million in ordinary shares of pSivida upon entering into the
licence agreement, the proceeds of which will be held in escrow until
such proceeds can be used (together with other cash available to
pSivida) to redeem an outstanding convertible note.

If pSivida does not repay the full amount outstanding under the
convertible note prior to June 4, Pfizer may elect during the 90-day
period following June 9 to cause pSivida to return the $6.1m held in
escrow, in which case the licence agreement would terminate.

Pfizer has also agreed to invest an additional $6.1m in pSivida
common equity in the future, subject to certain conditions.

"We believe this collaboration is another significant validation
of the drug delivery systems that pSivida has been developing since its
founding," declared Dr Ashton.

"pSivida plans to pursue development and additional
collaborations exploiting our innovative drug delivery technologies in
other parts of the body," he added.

Medidur is a tiny, injectable device designed for the sustained
release of drugs and is currently being studied for the treatment of
Diabetic Macular Edema (the leading cause of blindness for Americans
under the age of 65).

Medidur in combination with Fluocinolone Acetonide is in Phase
III clinical trials in DME in collaboration with Alimera Sciences Inc, a
specialty pharmaceutical company focused on the ophthalmic industry.

SHARE PRICE MOVEMENTS
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Shares of pSivida fell 3.5c to 25c on Thursday prior to the
Easter break. Rolling high for the year is 70c and low 20c. The company
has 464.6 million shares on issue with a market cap of $116.15 million.

Royalty revenue recorded in the December quarter totalled
$218,000 which represented an increase of 12 per cent compared to the
same period in 2005, and a decline of 18 per cent compared to the
previous quarter.

The reported amount is 50 per cent of the actual revenues that
would have been earned in this fiscal quarter.

The reduction in royalties earned and collected is in accordance
with a royalty advance agreement the company entered into with Bausch &
Lomb in June 2005.

Although the Retisert drug delivery device has been marketed by
Bausch & Lomb in the United States since June 2005, a product-specific
J-Code and Medicare Payment Rate recently went into effect on January 1.

This replaced the Medicare hospital outpatient C-Code and should
streamline the process for Medicare rebate for both hospitals and
physicians and help patients get timely access to this therapy.

BACKGROUND
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pSivida Ltd is a global bio-nanotech company listed on Nasdaq,
Australian, and Frankfurt stock exchanges.

The company is committed to the development of drug delivery
products in the healthcare sector, initially in ophthalmology and
oncology.

pSivida has developed the only two FDA-approved
sustained-release back-of-the-eye treatments for chronic eye disease and
has a next-generation product in phase III clinical trials.

It also owns the right to develop and commercialise a new
biomaterial, nanostructured porous silicon, BioSilicon, for multiple
potential applications in healthcare with a core focus on drug delivery.

pSivida's strategic partner is QinetiQ, the former UK Government
Defence Evaluation & Research Agency and Europe's largest research and
development organisation.

The back-of-the-eye treatments for chronic eye disease are
Vitrasert and Retisert.

Both products are manufactured and sold by global ophthalmology
company, Bausch & Lomb.

A next-generation product, Medidur in Phase III clinical trials,
is licensed to Alimera Sciences for the treatment of Diabetic Macular
Edema.

pSivida has granted exclusive licences to its subsidiaries, AION
Diagnostics Ltd and pSiNutria Ltd, to develop and commercialise
diagnostic and food technology applications respectively, using
BioSilicon.

The company's lead BioSilicon product is BrachySil, a
brachytherapy product in pivotal Phase IIb clinical trials, which is
being developed for the treatment of inoperable primary liver cancer.

Phase IIa clinical trials demonstrated significant tumour
regression as well as being both safe and well tolerated in humans.

pSivida has a licencsing agreement with Beijing Med-Pharm
Corporation for the clinical development, marketing and distribution of
BrachySil in China.

It has four evaluation agreements for the company's drug
delivery technologies with three of the five largest pharmaceutical
companies in the world.

pSivida has a further evaluation agreement with an undisclosed
global medical device company to evaluate cardiovascular delivery of
drugs using pSivida's drug delivery technologies.

ENDS

Copyright © 2007 RWE Australian Business News. All rights reserved.