Chemeq raises $25m

Perth biotechnology company Chemeq (ASX: CMQ) has raised a whopping $AUD25 million in a share placement to institutional and sophisticated investors.

The funds will be used to upgrade and expand Chemeq's manufacturing facility for its polymeric antimicrobial drug, which is currently under construction and due to be commissioned from October this year.

Among the upgrades planned for the manufacturing plant are expansions of warehouse and formulation areas to accommodate a production capacity of up to 750 tonnes per annum. The plant will also be upgraded to allow production to continue uninterrupted during maintenance and cleaning activities, and to bring it up human pharmaceutical standards. Currently the plant is designed to meet FDA standards for veterinary pharmaceuticals.

The company is also planning to begin construction of a larger manufacturing plant, with a capacity of 200 tonnes per annum, once the current 20 tonne plant has been completed.

"We'll start planning to build it around the end of the year, as soon as the commissioning is finished for the 20 tonne plant. I would expect it to take 12 to 18 months to complete," said Chemeq's CEO, Dr Graham Melrose.

The new shares were placed by Bell Potter Securities at a price of $5.35, a discount to the current trading level, which at the time of writing was $6.20. The company's share price has gone as high as $8.64 in recent weeks in response to increased investor interest and demonstrations of Chemeq's key product's potential use as a human therapeutic.