Alchemia (ASX: ACL) will move to de-merge and separately list its wholly owned subsidiary Alchemia Oncology after receiving strong support from domestic and international investors for its recent institutional placement which closed oversubscribed, raising A$15 million.
A number of leading specialist life sciences funds in Australia and the U.S. joined the Alchemia share register following the placement of approximately 62.5 million new shares at $0.24 per share.
The offer price represents a 20% discount to the 20 day volume weighted average price of Alchemia shares traded on the ASX to November 3, 2011, and is equal to a 12.7% discount to the closing price on that day.
Alchemia now plans to use the funds to create a stand-alone company containing all of the HyACT® oncology assets including its lead cancer drug, HA-Irinotecan, for the treatment of Small Cell Lung Cancer.
Alchemia is aiming for a listing of the new entity either in Australia or the U.S. or both.
After the de-merger and listing of Alchemia Oncology, Alchemia will continue to be listed on the ASX with fondaparinux being its primary asset.
The company made the choice to head down this path because it recognises that the risk/return profile of the fondaparinux and HyACT® oncology businesses is markedly different.
By separating the oncology business from Alchemia, the aim is to have the majority of profits arising from fondaparinux to fall to Alchemia’s bottom line.
Equally, it will allow investors who want to participate in the upside potential of HA-Irinotecan and the HyACT platform to do so in a separate company.
Alchemia will also use the funds raised from its placement to begin recruitment for and advancement of a pivotal Phase III trial of HA-Irinotecan, to continue Phase II trials of the drug and finalise the manufacturing process.
Additionally, the company is undertaking a share purchase plan offering all eligible shareholders the opportunity to subscribe for up to $15,000 of Alchemia shares at the lower of the $0.24 placement price and a 7.5% discount to the five day average closing price on the ASX prior to the date of issue of the shares.
Participation in the share purchase plan will be open to all holders of Alchemia shares with a registered address in Australia or New Zealand as of 7pm (Brisbane time) on November 3, 2011.