Starpharma raises $6.9m

Pooled investment firm and nanotech specialist Starpharma (ASX:SPL) has raised AUD$6.9 million in an oversubscribed placement to institutional and sophisticated investors.

The 13,335,000 shares were placed at a price of $0.52.

CEO John Raff said he was delighted with the placement, and noted that it had attracted a number of blue-chip institutional investors, some of who were making their first investments in the industry.

"It is extremely encouraging to see the company now in a position to attract high-calibre Australian institutional investors with the ability and mindset to support the company well into the future," he said.

Raff said recent financial activity in the biotech sector had raised concerns that the industry was again becoming over-heated, with some hyped-up investment based on speculative announcements, particularly among smaller retail investors.

"But we have an opportunity to build, now, in the industry -- build key resources and significant companies," he said.

The funds raised will be used to accelerate the development of Starpharma's dendrimer-based microcidal VivaGel product for the prevention of HIV infection, which recently was given the green light by the FDA to commence clinical trials, as well as continue development of other products in the company's pipeline.

"From our point of view it gives us the cash to build up our programs and develop critical skills required to be competitive internationally," Raff said. Starpharma's cash reserves stand at around $13 million, according to Raff, with an annual burn rate of around $3.7 million.