Allied Healthcare Group (ASX: AHZ) has received strong investor support for its recent capital raising, netting a further A$2 million to progress investment company Coridon’s Herpes Simplex Virus 2 (HSV-2) vaccine program.
This represents a take-up of over 40% of the rights issue and, importantly, Allied Healthcare has received strong interest in taking up the shortfall to raise the full $4.36 million.
In mid-March the company revealed it had already received investor commitments of $2 million for a placement that was oversubscribed.
The placement comprised the issue of around 66.7 million shares at $0.03 each to institutional and professional investors.
At the same time Allied Healthcare launched a one for five non-renounceable rights issue, also at $0.03 each, to eligible shareholders to raise a further $4.36 million.
Allied’s largest shareholder, The Metal Group, also supported the rights issue, increasing its percentage holding in the company to over 17%.
Lee Rodne, chief executive officer of Allied Healthcare Group, commented:
“This capital raising places Allied in a very strong financial position and enables us to achieve major milestones in the Celxcel and Coridon businesses.
“It removes any concerns about future funding for the company and allows us to focus on achieving our very important, near term value creating milestones.”
Allied Healthcare is a major shareholder in Coridon, which is advancing its HSV-2 vaccine towards clinical studies after successfully completing pre-clinical efficacy testing in October last year.
Coridon tested a number of different formulations of the vaccine which proved 100% effective at protecting animals against HSV-2 infection.
The equity raising will also assist the company in accelerating Coridon’s next generation therapeutic Human Papillomavirus (HPV) vaccine targeting one of the most common sexually transmitted diseases in the world.
HPV is associated with several human cancers, most notably cervical cancer.
To give an indication of the revenue potential of a HPV vaccine, the two currently used vaccines generate in excess of $1.5 billion in sales annually.
Coridon’s HPV vaccine has been designed to combat existing infection with the HPV virus, to prevent and treat cervical and other HPV-associated cancers.
The development program will be based on preliminary work by Coridon founder Professor Ian Frazer’s team and follows on from Frazer’s work that resulted in the successful cervical cancer preventative vaccines – Gardasil®, marketed by Merck, and Cervarix, marketed by GlaxoSmithKline.
Allied Healthcare is also targeting regulatory approval of Celxcel’s CardioCel® cardiovascular patch and the funds raised will provide greater resources to achieve that.
CardioCel®, which uses Celxcel’s ADAPT® Tissue engineering technology, is used to treat heart deformities caused by congenital heart disease, and for heart valve repair and reconstructions.
CardioCel® is scheduled for initial marketing approval towards the end of 2012.
Allied Healthcare’s Growth
Allied Healthcare is on the cusp of building a global healthcare company. The company has expanding revenues, with the objective to increase this to $20-30 million within two to three years via organic growth and acquisitions.
The regenerative medicine market is currently around $3 billion and growing. Allied Healthcare has the upper hand, because at present there is no similar product available to surgeons on the market.
The initial application for the CardioCel® patch is congenital heart disease. About eight in 1,000 children are born with the disease and around half of them have surgery. This presents an extensive global market potential for the technology.
Celxcel is targeting the filing for approval of CardioCel® in various markets and the initial market launch in 2012-13.
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