Western Australia’s biggest biotechnology stock, pSivida, is planning extensive changes over the coming year, including the establishment of a second spin-out company to target the food industry.
Western Australia’s biggest biotechnology stock, pSivida, is planning extensive changes over the coming year, including the establishment of a second spin-out company to target the food industry.
pSivida’s first spin-out company, AION Diagnostics, is about to enter the next phase of its development by raising venture capital in the US.
pSivida is also looking to recruit a new US-based chief executive, who will run the company from Boston, within the next 12 months. These changes follow the company’s recently agreed $140 million merger with private US drug delivery company, Control Delivery Systems.
The flow of news has, to date, done little to support the company’s share price.
After peaking at about $1.40 last year, pSivida’s share price has fluctuated widely and is currently about 55 cents.
The company has attributed the latest slide to selling by two of its top 20 shareholders for “personal reasons” and says this selling is nearly complete.
Company founder and current managing director, Gavin Rezos, said the shareholders had been selling each time the company made a positive announcement.
Looking ahead, pSivida will start to earn substantial revenue over the next one to two years.
Industry newsletter Bioshares recently gave pSivida a plug, saying the CDS acquisition was a “very neat fit”.
“It delivers to pSivida a revenue stream from sales of the key product Retisert and importantly, pSivida anticipates the combined business turning cashflow positive in 18 months,” it said.
pSivida’s core technology is BioSilicon, a form of nano-structured porous silicon that was developed in the UK.
It is developing numerous commercial applications, with the lead product being BrachySil, a micron-sized silicon particle that can be used to treat liver cancer.
It recently commenced a new round of clinical trials, following initial success with BrachySil, and is aiming to register the product in 2007.
However, the first source of serious revenue is expected to be royalties from Retisert, which is used to treat eye disease and is marketed through pharmaceutical company Bausch & Lomb.
The market for this product has been estimated at about $US100 million. Each Retisert implant sells for about $US18,000 and pSivida is expected to earn royalties of between 10 and 20 per cent for each sale.
Mr Rezos said pSivida needed a US-based chief executive to be close to the big pharmaceutical companies, the US industry regulator and US and European investors, who own 60 per cent of the company.
He said he would continue as managing director for a transitional period before handing over next year to the new recruit.
Mr Rezos is planning to continue as non-executive chairman of pSivida subsidiary AION Diagnostics and will be executive chairman of its new spin-out, pSiNutria. pSivida has funded AION’s first year of operations and licensed diagnostic applications of BioSilicon.
AION managing director Anna Kluczewska said the company’s research team in Perth had identified about 15 product opportunities in the healthcare sector, targeting the early diagnosis and treatment of medical conditions.
She said the company would soon be raising venture capital to support the establishment of a US operation to undertake clinical trials.
pSiNutria will also be funded initially by pSivida and will be licensed to use BioSilicon in the food sector, in areas such as traceability and quality control.
Mr Rezos said pSivida could seek a trade sale or float of pSiNutria within two years.
