BioWorld International Correspondent

LONDON - Xenova Group plc took on the extremely depressed markets, announcing a £9.9 million (US$15.2 million) rights issue to fund further development of its pipeline.

The 8-for-33 rights issue represents a discount of 25 percent to the closing middle market price of 43.25 pence per share, the day before the issue was announced on Sept. 10. Despite the discount, analysts said that with the issue fully underwritten by Nomura International plc, it was a positive sign for the sector.

Xenova shares fell by 5.25 pence to 38 pence on Sept. 11, after the issue was announced.

The fund raising will give the company, based in Slough, cash of £22 million, enough to last 18 months, and strengthen its hand in partnering and licensing negotiations.

CEO David Oxlade said he was pleased to have a fully underwritten rights issue at a time of such volatile and difficult market conditions. "The funds raised will help Xenova to continue to develop and further strengthen its portfolio of innovative new drugs and progress a number of new drug candidates toward or into clinical trials."

At a time when many other companies are cutting projects to make the money last longer, Xenova, with eight products in the clinic and eight in preclinical development, intends to boost expenditure. Specific projects the money will fund include Phase III trials of the lead product tariquidar, for the prevention of multidrug resistance in cancer. North American rights are licensed to QLT Inc., of Vancouver, British Columbia, but Xenova retains the rights and will carry out development elsewhere.

Emma Palmer, analyst at WestLB Panmure, said the implicit support of the institutions for the fund raising was a "very positive sign for the sector, indicating willingness to back companies with strong pipelines and management."