Prana to raise $27m from US investors

Prana Biotechnology (ASX:PBT) has obtained agreements to raise US$20 million (AUD$27 million) from US institutional and professional investors through the sale of 3 million ADRs at US$5 per ADR, subject to shareholder approval.

The company is also planning to issue five year warrants to purchase a further 3 million ADRs at an exercise price of US$8, which if exercised will raise another US$24 million.

Prana executive chairman Geoffrey Kempler said the placement would provide the company with enough capital for up to three years, depending on how fast various programs within the company moved ahead.

Prana will use the funds to conduct further trials of its MPAC (metal protein attenuating compound) technology, with clinical trials of the second generation product PBT-2 expected to commence later this year, Kempler said. In addition, the company expects to progress its research programs on other degenerative diseases suspected of resulting from metal-protein interactions including Creutzfeldt-Jakob disease, age related cataracts, motor neuron disease, and Parkinson's disease.

"Most biotechs in Australia have enough money to get them to one, or maybe two milestones. The real breakthrough is when you can get investors to fund you for several years," Kempler said. "It really is a broad acknowledgement that Prana's whole strategy involving MPACs is worth supporting."

The placement was led by OrbiMed Advisors and Xmark, with Rodman & Renshaw acting as agents. The transaction is expected to be approved by shareholders at a general meeting in late May.