Virax takeover clinches anti-cancer drug

Virax Holdings has agreed to acquire Pathway Oncology in a takeover under which the Australia-listed company will gain control of a global licence for emerging anti-cancer technology.

Perth-based Virax said the deal would transform the group into one of only a few ASX-listed biotechnology companies with potential for multiple clinical trials in the US as part of the Food and Drug Administration’s investigational new drug program.

Under the agreement, Virax will issue 60 million shares to Pathway in addition to a further two tranches of 90 million shares when certain milestones are reached.

Virax, which currently has about 553 million shares on issue, said a raising of a modest amount of additional capital to fund the expanded operations of the company was also a condition of the deal.

Following the takeover, Virax will control the exclusive licence for a drug, known as GGTI-2418, that blocks cancer growth enzymes and specific circuits, which allow cancers to survive and spread.

Virax chairman Wayne Millen said acquiring control of GGTI-2418 represented a major corporate achievement for the company.

“This catapults Virax straight into the elite club of mid-clinical stage ASX-listed biotech companies,” he said.

The drug was developed at Yale University in Connecticut and Moffitt Cancer Centre in Florida, the third-largest cancer centre in the US.

It has the potential to treat multiple myeloma, breast and pancreatic cancers, according to Virax, and has shown to cause significant regression in breast tumours during trials on mice.

“Now the drug holds tremendous potential in a range of cancers, as a monotherapy or in combination with existing chemotherapies to improve patient outcomes,” Virax said.

The deal comes after a revival in capital raisings in the Australian biotechnology sector in 2013.

A total of 13 deals were completed last year raising $90.3 million, including a $2.5 million raising by Virax, which was managed by Otsana Capital.

Following completion of the deal, Paul Hopper, who is chairman of former Perth-based biotech firm Imugene, will be appointed executive director of Virax.

Virax non-executive directors include Roland Toder and Brendan de Kauwe, who is also corporate advisor at Otsana.