Tight budget at Monash forces Metabolic sell-off

In a drastic move to raise more funds for medical research, Monash University has sold off 6 million of its shares in promising Victorian biotech Metabolic Pharmaceuticals (ASX:MBP).

The university, now Metabolic's second-largest shareholder, said the sale was necessary to allow it to continue its leading-edge medical research under "current tight budgetary conditions".

The university originally acquired 36 million shares through its arrangement with Metabolic for commercial rights to Prof Frank Ng's invention of a peptide analogue drug, based on an active fragment of the human growth hormone molecule, to treat morbid obesity

The university assigned 8 million shares to Ng, the molecule's inventor, under an income sharing arrangement, and the latest sell-off to institutional investors reduces its holdings to 22 million shares, or around 12.8 per cent of the company.

"We've been trying to find a home for some shares for a long time, and we were able to assist the university to get a better price, and do it at a time that will not be detrimental to the company's future, said Metabolic's VP of corporate development, David Kenley.

"It makes sense for the university to take some of its money back off the table, to recoup some of the costs it incurred in developing the IP that gave them their original shareholding."

The university has stressed that it regards itself as a long-term investor in Metabolic, and it has agreed to place the balance of its holding in voluntary escrow for a period of at least two years.

Recruiting for trial

Kenley said Metabolic would begin advertising next week for volunteers, who had been diagnosed as morbidly obese, to participate in a Phase IIb, three-month weight-loss trial. Dosing is expected to begin within two weeks.

Apart from its lead compound for weight-loss, Metabolic recently acquired commercial rights to a potent analgesic compound developed by Prof Bruce Livett's Melbourne University research group. ACV1, derived from the venom of an Australian cone shell. It shows promise in the treatment of treatment of chronic, intractable pain, and has an estimated market potential of more than US$1 billion.