BioWorld International Correspondent

SYDNEY, Australia - BresaGen Ltd. plans to shift most of its operations to the U.S. and take advantage of that country's more active biotech industry by raising US$20 million to US$25 million in private stock placements to develop two new lead compounds.

BresaGen President and CEO John Smeaton said that the money would be raised by one of two new, unnamed U.S. corporations to be set up by Adelaide, Australia-based BresaGen for use in taking the new products through to market.

The company's decision was due to the U.S. having "a large and more sophisticated biotechnology investment environment" for its business of protein pharmaceuticals, as well as "significantly more attractive government funding opportunities for embryonic stem cell therapy."

He said that the company had yet to announce the products it intended to develop but would do so in the coming months. For the moment, all he could say was that they are peptides, with one as a generic product and the other as a generic drug in a "novel" drug delivery system.

At present, BresaGen has operations in Adelaide, and in a dedicated facility at the University of Georgia in Athens. Those operations involve protein pharmaceuticals and stem cell research, with BresaGen holding several of the stem cell lines approved for U.S. federal government grants.

In the plan announced last week, the company will be split into two separate divisions - Protein Pharmaceuticals and Cell Therapy. The divisions will operate as separate companies.

All of the cell therapy division will eventually be moved to the U.S., to take advantage of new partnership arrangements that attract both public and private funding.

"The U.S. National Insitutes of Health has already awarded BresaGen major grant funding and other grants are anticipated in the next few months," Smeaton said.

In the protein division, the manufacturing, drug development and research will largely remain in Australia, but all the corporate operations, including management and business development, will be established in the U.S. That division also will raise the US$20 million or more and develop the two lead compounds.

Smeaton said that in that business model the protein pharmaceutical company will become a U.S. company with Australian manufacturing and research facilities. BresaGen will continue to be listed and become a holding company owning the protein pharmaceutical company, although its stake in the company will be considerably diluted when the investment money is raised.

BresaGen also will continue to own the Cell Therapy company, but Smeaton noted that additional capital and intellectual input will be required to realize the commercial potential of its assets.

"We remain a proudly Australian company, but BresaGen must look outside Australia for future raisings," he said.

Another factor in the decision is undoubtedly BresaGen's erratic share price, which has remained around A$0.30 for most of this year. It peaked at A$1.80 in late 2000.