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XTL biopharmaceuticals Ltd Announces Fundraising to raise $17.8 million (£9.8 million)

RNS Number:3610A

Rehovot, Israel, 1 July 2004 - XTL Biopharmaceuticals Ltd (London Stock Exchange: XTL) (XTLbio), the Israel-based biopharmaceutical company developing drugs against hepatitis, today announced that it proposes to raise $17.8 million (£9.8 million) through an Open Offer incorporating a UK Placing, an Israeli Private Placement and a US Private Placement (the Fundraising). The New Ordinary Shares are being offered at 17.5p, a discount of 9.1% to June 30th closing price on the basis of 1 New Ordinary Share for every 2 existing Ordinary Shares held at the Record Date.

The UK Placing is being underwritten by Altium Capital Limited. Code Securities Limited is acting as financial advisor and broker in relation to the Open Offer and UK Placing.

XTLbios main focus is the development of its two clinical programmes in phase 2 clinical studies; HepeX-B and HepeX-C are aimed at preventing Hepatitis B and Hepatitis C infections in liver transplant patients, a potential $500 million market. HepeX-B was recently licensed to US-based Cubist Pharmaceuticals Inc. who will provide development and commercialisation costs.

Following the Fundraising, XTLbio intends to focus its efforts on its two hepatitis C programmes:

  • HepeXTM-C, currently in a phase 2a clinical study in Hepatits C Virus (HCV) associated liver transplant patients. XTLBio is in advanced negotiations with a third party regarding the co-development of HepeXTM-C, whereby development costs will be shared by the parties.
  • HCV-SM is XTLbios pre-clinical programme focused on developing small synthetic drug candidates against chronic HCV infection. XTLBio intends to develop compounds through clinical proof-of-principle (phase 2) after which it intends to license such compounds for further development and commercialisation.

Dr Martin Becker, Chief Executive Officer of XTLbio, said,
"Given current market conditions, we are delighted to have been able to raise significant new funds for the Company and to have attracted a number of top tier investors both from the UK and internationally. The recent deal with Cubist provides important validation for our technology and we look forward to taking our lead programmes through to market."

Enquiries

XTLbio    
Dr. Martin Becker President and CEO      +972-8-930-4440
Jonathan Burgin Chief Financial Officer   +972-8-930-4442
Code Securities Limited    
Christopher Collins   +44 (0) 20 7024 2000
Financial Dynamics    
Julia Phillips   +44 (0) 20 7831 3113

Background
XTL Biopharmaceuticals Ltd. is engaged in the development of pharmaceutical products for the treatment of infectious diseases, particularly the prevention and treatment of hepatitis B and C.

The Company currently has two products in clinical development, HepeXTM-B and HepeXTM-C. HepeXTM-B is currently in a phase 2b trial and HepeXTM-C is in a phase 2a trial. Both products are fully human monoclonal antibody (hMAb) products and are being developed to prevent hepatitis B and hepatitis C infection of transplanted livers in hepatitis patients. The Company has licensed HepeXTM-B to Cubist and plans to partner HepeXTM-C prior to commencing phase 3 trials. The Company also has a synthetic small molecules development programme in preclinical development, targeted at treating chronic hepatitis C (HCV-SM).

The Companys competitive advantage lies in its proprietary drug validation tools, in particular those it has developed for viral hepatitis B (HBV) and viral hepatitis C (HCV). These tools enable the Company to accelerate its internal product development programmes, to reduce the risk in its development pipeline and to secure rights from third parties to new drug candidates. This technology has enabled the Company to develop HepeXTM-C, HepeXTM-B and HCV-SM to the stage they are today.

Strategy
XTLbios strategy is to develop treatments for the prevention of hepatitis re-infection in liver transplants as well as chronic hepatitis infections, which together represent a worldwide market estimated to be over $3 billion per annum. The Company plans to achieve this by:

  • leveraging its technology to secure rights to new drug candidates and identify proprietary new drug candidates;
  • developing drug candidates through clinical proof of principle (usually phase 2); and
  • commercialising clinical development products through co-development or licensing.

Employing the above strategy, XTLbio has:

  • identified and developed two new drug candidates to phase 2, HepeXTM-B and HepeXTM-C;
  • secured rights to HCV-specific small molecule drug candidates including lead candidates in preclinical development;
  • entered into a licensing collaboration with Cubist for the commercialisation of HepeXTM-B;
  • acquired exclusive rights to a broad panel of HCV antibodies; and
  • secured rights to bacterial targets for use in developing new monoclonal antibody drug candidates.
Current trading and prospects
The Companys audited financial statements for the 12 months ended 31 December 2003 (the "Financial Statements") stated that the Companys liquid cash reserves were $22.4 million. Note 1a to the Financial Statements included the following statement "continuation of the Companys current operations after utilizing its current cash reserves during 2005, is dependent upon the generation of additional financial resources, either through agreements for the commercialization of its product portfolio or through external financing". The Directors believe that the HepeXTM-B Collaboration and the Fundraising provide such additional financial resources.

Since the beginning the current financial year the Company has announced:

  • the establishment of a commercial agreement with Cubist for the licensing and development of HepeXTM-B (the "HepeXTM-B Collaboration");
  • the grant of orphan drug status from the EMEA for HepeXTM-B; and
  • the grant of an hMAb patent for hepatitis C.

The Company also announced the partial clinical hold of one of the dosing arms in its HepeXTM-C phase 2a clinical trial. This followed a patient failing to survive a liver transplant operation. Following an examination of the final post mortem report and reports from external consultants, the Directors believe that the causal factors of the incident are unlikely to be related to the administration of HepeXTM-C. The post mortem report and other information has been supplied by the Company to the US Food and Drug Administration and discussions are continuing regarding the potential resumption of the highest dosing arm of the phase 2a HepeXTM-C clinical trial. The Company is in advanced negotiations with a third party regarding the co-development of HepeXTM-C, whereby the Company would share development costs.

The Companys financial and trading prospects are in line with the Directors expectations, and the Directors have no reason to believe that this will not continue for at least the rest of the current financial year.

Timetable

Record Date for entitlement under the Open Offer      close of business on 25 June
Latest time and date for splitting of Application Forms (to satisfy bona fide market claims)   close of business on 23 July
Latest time and date for receipt of Application Forms and payment in full under the Open Offer   3 00 pm on 27 July
Latest time and date for receipt of Forms of Instruction for holders of Depository Interests   10.00 am on 28 July
Latest time and date for receipt of Forms of Proxy   10.00 am on 31 July
Extraordinary General Meeting   10.00 am on 2 August
Dealings in New Ordinary Shares commence   3 August
Credit CREST accounts with Depository Interests   3 August
Definitive certificates for New Ordinary Shares dispatched   by 10 August

This information is provided by RNS The company news service from the London Stock Exchange

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