Avastra shares slump below float price

Sydney-based biotechnology company Avastra (ASX: AVS) has turned in one of the poorest performances amongst recent biotech IPOs, after listing without fanfare earlier this week. In their Wednesday debut, Avastra shares dropped below their AUD$1.00 issue price to close at $0.85. At time of writing, they had slumped further to AUD$0.72.

Avastra sold 8 million shares at $1 per share -- equivalent to 29 per cent of the company – to raise $8 million in the float.

Avastra's BioWeld technology -- developed at Macquarie University and the Microsearch Foundation of Australia -- uses a protein solder which is activated by laser light to join arteries and veins. According to the company, BioWeld bonds can take as little as 3 minutes to fuse blood vessels, compared to the 25 minutes needed for normal sutures.

The company plans to commence clinical trials in September with a 24-patient study, and anticipates regulatory approval and its first sales in non-US markets by 2005.

Avastra has lodged a pre-IDE investigational device exemption submission with FDA and expects approval in 2006. European CE Mark approval is also on the cards.

The first applications of BioWeld will be 'free-flap transfers', where a piece of tissue from a donor site is patched in to arteries and veins at the site of the graft, providing blood flow and drainage. Procedures where this technique is used include breast reconstructions, surgery on head and neck cancers, burns and cosmetic surgery.