Prana raises $5m from institutional investors

Joining the list of companies taking advantage of increased investor interest in the biotechnology sector, Prana Biotechnology (ASX:PBT) has raised AUD$5 million in a placement to institutional and sophisticated investors at a price of $0.70 per share.

According to CEO Geoffrey Kempler, the placement demonstrates a vote of confidence in the company by investors, and increased understanding of what Prana is trying to achieve.

The funds raised will be used to accelerate the pre-clinical development of the company's lead compound PBT-2 as a therapeutic for Alzheimer's disease. The drug was recently selected from a library of around 300 metal protein attenuating compounds (MPACs) to advance through to clinical trials, and in pre-clinical studies has outperformed PBT-1 (clioquinol), an existing off-label drug that has been successfully tested in proof-of-concept human studies.

"If all goes well, we would like to see Phase I trials start before the end of 2004, probably in the third quarter," said Kempler.

With existing cash, he said, the company had more than $7 million in the bank, enough for at least the next 18 months. Prana also has a milestone-based agreement in place with pharmaceutical company Schering, which will provide $7.3 million in R&D funding plus milestone payments and potentially royalties over the next few years towards new research targets identified by Prana and the development of diagnostics for Alzheimer's disease.