Starpharma raises $32m to fund VivaGel trial

Starpharma Holdings (ASX:SPL) has raised $32 million in a significantly oversubscribed institutional placement.

The Melbourne-based biotech, which develops dendrimer technology for disease prevention and treatment, will follow up with a $3 million share purchase plan at the placement price of $1.075 per share.

The placement and SPP will boost Starpharma's cash balance to over $50 million, and the expected $35 million windfall will be used to fund product development activities.

The lion's share of $16 million will be put toward accelerating phase III development of VivaGel, a vaginal microbicide designed to prevent the transmission of STIs including HIV and genital herpes. It has also demonstrated efficacy as a treatment for bacterial vaginosis.

Starpharma has this year negotiated deals to supply the product to Ansell and Okamoto for the production of VivaGel-coated condoms.

A further $13.5 million will be put towards advancing projects from the company's drug delivery and agrochemical programs into commercial products. The remainder will be used for working capital.

Starpharma's placement is the seventh major capital raising by Australian listed biotechs in the last 12 months, following raisings by Alchemia (ASX:ACL), QrxPharma (ASX:QRX), Bionomics (ASX:BNO), Prima Biomed (ASX:PRR), Mesoblast (ASX:MSB) and most recently Phosphagenics (ASX:POH).

At the AusBiotech 2011 conference late last month, attending companies reported piquing strong interest from international investors.

Starpharma (ASX:SPL) shares closed level at $1.08 at the end of trading on Wednesday.