BioWorld International Correspondent

LONDON - Therapeutic vaccines specialist Virax Holdings Ltd. is joining the Alternative Investment Market (AIM), adding a London listing to its long-term membership of the Australian Stock Exchange (ASX).

The Melbourne-based company hopes to raise £5 million (US$7.6 million) in the process, to fund a Phase II U.S. and Australian trial of the lead product, a therapeutic HIV vaccine.

"We believe there are deeper pools of capital here," David Beames, CEO, told BioWorld International. "There are more experienced biotech investors, and we are looking to find people who can understand our story a little better."

In particular, Beames said he likes that AIM is a route to tapping institutional investors. "Currently we have 3,200 shareholders, of which the top 50 own 50 percent. The rest is a retail base with a very long tail, so it is a totally different make-up from what we would expect on joining AIM."

In its 10 years of being listed on ASX, Virax has seen some severe share price perturbations. "This is great for investors that sell at the right time," Beames said. But he added that it is a serious flaw in the system for anyone trying to grow a biotech company.

Beames also said that Virax has been held back because there are very few biotech analysts in Australia. "If we were a junior mining company, there would be plenty of people who would understand our story," he said.

The end result is that after all those years on a public market and investing A$22 million (US$16.9 million) in its technology, Virax's valuation is A$15 million.

The lead product, VIR201, for treating HIV, has been manufactured to GMP standards in Germany and currently is completing toxicology studies in Scotland. Virax intends to lodge an investigational new drug application with the FDA before the end of 2006 for the Phase II trial, involving 180 patients.

The company is applying also to carry out a trial in South Africa, which it will fund through donations from a number of international companies led by the mining group BHP Billiton. The trial will cost $6 million.

A group of HIV/AIDS clinicians, led by Des Martin, president of the South African HIV/AIDS Clinicians Society, is helping to develop a suitable clinical trial protocol.

In an Australian Phase I trial in 35 patients with early stage infection there were no safety concerns in patients receiving VIR201 injections in addition to standard antiretroviral treatment.

Of these, 25 patients took part in an extension Phase II trial where they received a booster dose of VIR 201 and stopped taking antiretroviral drugs a week later. Patients receiving VIR201 had a 10-fold reduction in viral load and some stayed off antiretroviral treatment for the entire 20-week study.

Virax's second product, VIR501 for treating late-stage hormone refractory prostate cancer, is in GMP manufacturing development, with plans for a Phase I/IIa trial next year. A third product, VIR401 for treating hepatitis B infection, is in preclinical development.

In addition, French company Transgene SA has two cancer vaccines in late-stage clinical development that Virax said are based on its Co-X-Gene technology. While that provides additional evidence of the effectiveness of the format, the two companies do not have a licensing agreement, and the current European patent on Co-X-Gene runs out in 2007.

Co-X-Gene combines disease-specific antigens and an immune-modulating cytokine in a single construct. Those are delivered with a fowlpox viral vector. In the case of VIR201, that delivers gag and pol, which are considered to be the most highly conserved HIV genes.

Speaking as he was about to return to Australia after assessing the mood of potential investors in London, Beames said: "It's been a very encouraging reception. The people we've been talking to don't see any difficulty. We've been on the ASX for the past 10 years so we can progress fairly quickly.

"It's not as if we are a biotech company that hasn't done a trial yet. We've got positive results in one product and a second one moving into manufacturing."

Virax aims to raise an initial £1 million by the end of September, followed by £4 million by the end of 2006. That will fund the company until mid-2009, giving it time to complete the Phase II trial of VIR201 and then look for a licensing deal.

"We've spent time talking to potential partners - who have said to a person - immunotherapeutics are a new area, we like what you are doing, come back when you have got Phase II results," Beames said. "If the trial works the way we expect it to, we have then got two quarters funding to do something with the results."