Alchemia raises $10.2m in placement

Alchemia (ASX:ACL) has raised $10.2 million in a heavily oversubscribed share placement and plans to follow this up with a $2 million share purchase plan.

The drug development company allocated 34 million new shares to investors in Australia and the US at $0.30 per share.

This represents a 9.6% discount to Alchemia’s weighted average trading price for the five days leading up to March 6, when Alchemia entered a trading halt prior to announcing the raising.

Proceeds from the $12.2 million capital raising will primarily be used to fund the company’s phase III trial of HA-Irinotecan in metastatic colorectal cancer.

Alchemia completed recruitment of the 415 patients to be involved in the trial late last month.

The company also plans to scale up manufacturing of the product candidate and use the funds to support a phase II small cell lung cancer trial.

HA-Irinotecan is a combination of chemotherapy drug irinotecan with hyaluronic acid. It is produced using Alchemia’s HyACT cancer drug platform.

Alchemia also revealed it has not given up on splitting off its oncology business, despite pulling the plug on a spinoff and US listing late last year due to lack of interest.

In an ASX filing announcing the recent capital raising, Alchemia said it will “continue to pursue the independence of its oncology subsidiary, Audeo Oncology”.

If a spin-off takes place, Alchemia will be left with its standalone business of producing generic fondaparinux - an anticoagulant - for marketing partner Dr Reddy’s Laboratories. Alchemia started receiving a cut of the profits from this product in mid-2012.

Alchemia (ASX:ACL) shares were trading 10.14% higher at $0.038 as of around 3:45 pm on Monday.