Norwood on track for spin-off's UK listing

Norwood Abbey (ASX:NAL) is on track to list its immunology spin-off in the United Kingdom within six months.

The AUD$52.5 million subsidiary, Norwood Immunology, could float on London's AIM board as early as this year, but is realistically expected to list in the first quarter of 2004.

Norwood Immunology, the result of an equity agreement between Norwood Abbey and Monash University's commercial arm, is focused on rejuvenating the adult immune system.

A successful Phase II trial of its GnRH analogue in 80 leukaemia patients in Melbourne has led to a large-scale trial involving key cancer centres in the United States and Europe that is slated to commence next year.

The company has also indicated that it is in "late-stage negotiations" with a US pharmaceutical company over the development and commercialisation of its work.

Norwood Abbey marketing director Bernie Romanin said the company wanted to list the immunology business on a world-renowned exchange because the research work was now international.

He said the company selected the UK over the US for the listing because the Nasdaq had proved patchy over the past year.

"One of the reasons why we were looking internationally is that this business is becoming more international in terms of the people we're collaborating with," Romanin said.

"This is not a device or gadget. It's taking great science and putting it into the clinic. So partnerships with leading clinical research institutes are a cornerstone of our strategy."

He said the move was also convenient for Norwood Immunology's London-based CEO and his UK networks, as well as making investing in the company easier for overseas investors.

Norwood Abbey holds a 92 per cent stake in Norwood Immunology, with 3 per cent held by Monash University and the remaining 5 per cent in the hands of private investors.

In a presentation to analysts this month, Norwood Abbey said it expected to retain between 60 and 80 per cent of the subsidiary at the point of initial public offering.

The company said the drug, which would cost up to US$3000 per treatment, was aimed at a market of several million patients and had applications in cancer, viral disease, auto-immune disorders, transplantation and vaccinations.

It said its commercial strategy was to maximise royalties, with revenues expected to commence in 2005.

The subsidiary was established as a vehicle for Monash University research led by Prof Richard Boyd, in which gonadotrophin releasing hormone (GnRH) is used to stimulate the adult thymus into producing critical T-cells.

The thymus is the body's immunity centre, converting immature stem cells into T-cells needed to fight infection.

But, after puberty, the thymus shrinks from the size of a small fist to the size of a pea, resulting in fewer T-cells and making people more susceptible to infection.

During 15 years of research, Boyd's team found they could use GnRH as a blocking agent to stop the release of sex hormones and thereby regenerate the thymus to its youthful size and function.

This reversible chemical castration has shown promise in helping boost the immune systems of patients, enabling them to fight infection and better cope with treatments where the immune system is compromised.

Norwood Immunology's human trials of the treatment are set to extend into the US and Europe next year with medical collaborators including the MD Anderson Cancer Centre in Houston, London's Royal Free Hospital, New York's Memorial Sloan-Kettering Cancer Centre, Rochester's Mayo Clinic, the University of Minnesota, Boston's Dana Farber Cancer Institute and University Hospital is Basel, Switzerland.

Australian clinical work has been conducted by the Peter MacCallum Cancer Institute and Alfred Hospital in Melbourne.

Romanin said the work was attractive to patients and investors alike because it involved a new use for an existing class of drug, which meant it could surpass lengthy early-stage safety and efficacy trials to potentially move into the clinic sooner. He said GnRH had long been used to slow the progression of prostate cancer.

At the time of writing, shares in Norwood Abbey were trading 1.9 per cent down at $1.53. The company's share price was as low as $0.40 as recently as May this year.