Shareholder contact pays off for Meditech

An innovative approach in reaching out to shareholders has raised $AU3 million for Melbourne-based biotech company Meditech Research.

The company took the unusual step of contacting as many shareholders as possible in the week before the offer was due to close, to alert them of the closure date and to answer questions about the offer and the company.

"As a very little biotech company, we thought it was quite an innovative approach," said Meditech CEO Chris Carter.

Carter estimated that between 400 and 500 shareholders were reached out of the 4800 on the register at the time, and noted that the feedback from shareholders was very positive.

In the end, about 54 per cent of the shareholders took up the offer to purchase an additional $AU5000 worth of stock in the company, and the balance was placed by underwriters Intersuisse to institutional and sophisticated investors.

The funds will be used to take Meditech's drug delivery technology HyACT into Phase II clinical trials for the treatment of colorectal cancer. The platform technology links known cancer drugs such as doxyrubicin with a hyaluronic acid formulation. This effectively targets the drug to hyaluronic acid binding receptors which are over-expressed on the surface of tumour cells.

Two anti-cancer drugs were tested in Phase I trials of the HyACT technology, doxyrubicin and fluorouracil, with both demonstrating good tolerability of the reformulated drugs by patients and in some cases a partial reduction or stabilisation of tumour size.

Carter said that the Phase II trial, which will be carried out at the Centre for Developmental Cancer Therapeutics in Melbourne, would probably start in March or April 2003 and was expected to last for 12-18 months.

According to Carter, results indicating good clinical performance and reduction in toxicity compared to the native drug would give the company strong data to take to the table in negotiations with potential commercial partners.

The funds will also be used to take Meditech's GAG program into pre-clinical development. GAGs, also known as glycosaminoglycans, are naturally occurring carbohydrate fragments which can act as immuno-modulators in the treatment of a number of inflammatory diseases including asthma, dermatitis, inflammatory bowel disease and melanoma. Carter said that lead compounds would be selected to take forward into pre-clinical testing in the first half of 2003.

Meditech will also be getting its distribution partners set up for its solar keratosis treatment Solarase. Earlier this year, Meditech gave its rights for marketing the technology in Australia and New Zealand to British company SkyePharma, which already markets the drug in Europe and the US. In return, Meditech received the rights to market the drug in China, Taiwan, Indonesia and the Philippines.

Carter said that the current tough market conditions for the biotechnology sector made the success of the placement all the more encouraging.