BioDiem launches $2.5m rights issue

BioDiem (ASX:BDM) has launched a rights issue to raise up to $2.5 million to support its vaccine development programs.

The renounceable pro-rate rights issue is an offer for one new share for every two shares held at $0.05 each.

Each new share will be accompanied with a free-attaching option, exercisable at $0.08 before the end of 2014.

It has been underwritten by Paterson Securities up to $2 million. While this agreement is contingent on conditions including a group of major shareholders owning 60% of the company taking up their full entitlements in the issue, these shareholders have agreed to do so as sub-underwriters.

BioDiem has revealed plans to use the funds to continue development of its portfolio of potential vaccine and antimicrobial therapies, both internally and in collaboration with other organisations.

BioDiem in May commenced a collaboration with France's VIVALIS to develop a new viral vector using the company's Live Attenuated Influenza Vaccine (LAIV) as a base.

The company is also working with RMIT to extend the LAIV platform for applications beyond influenza vaccines, and collaborating with the US-based Foundation Fighting Blindness to test its eye disease therapeutic BDM-E in preclinical models of retinitis pigmentosa.

BioDiem also recently licensed vaccine technology for hepatitis B and D from the University of Canberra, and for dengue fever from the ANU.

The rights issue prospectus provides a breakdown of where the funds raised will be spent.

Assuming a full take-up of $2.5 million, nearly $500,000 will be spent towards developing the LAIV vector technology to proof-of-concept, another $400,000 will be put to the hepatitis program.

Some $450,000 will be allocated for developing candidate BDM-1 towards use in treatments for infectious diseases including golden staph, with the rest to be put to uses including preparing a BDM-E data package to support a sale or outlicense, and working capital.

BioDiem (ASX:BDM) shares were trading unchanged at $0.062 as of around 2:30pm on Tuesday.