Caution despite pSivida prospects

BIOTECHNOLOGY listed outfit pSivida could make an exciting prospect for investors willing to back local technology.

PSD recently announced that its subsidiary, pSiMedica, was granted a European Patent for the use of BioSilicon in the range of therapeutic applications relating to the transfer of materials into cells using BioSilicon as a cell-entering vehicle.

The technology has gained the interest of stockbroker Paterson Ord Minnett, which slapped a ‘speculative buy’ on the stock at 15.5 cents.

pSiMedica has intellectual patent rights over 15 patent families, four granted patents, more than 40 patent applications, and has six more family patent groups in development.

These technologies include materials comprising bioactive, resorbable and biocompatible silicon that are used in the fabrication of orthopaedic implants and diagnostic tools.

pSivida Limited managing director Gavin Rezos said the patent also protected the BioSilicon technology in the key markets of the US, United Kingdom and Europe and gives the company play in a market Mr Rezos expects to double to $100 billion by 2005.

But the successful patent was just one of a number of positive announcements the company made over the last month.

On October 9 pSivida pronounced that it had successfully identified novel human diagnostic products that will alleviate the need to utilise techniques such as hypodermic needles to collect blood and fluid samples through means of skin patches.

Potentially fuelling the research and development campaign by pSivida is a $7.5 million equity line of credit the company secured on September 17.

The fully underwritten credit facility is with New York based private equity group, Global Emerging Markets.

The facility allows pSivida to raise capital in small amounts from time to time by issuing shares to GEM at its discretion. Options to acquire 2,000,000 shares in pSivida at 20 cents each will be issued to GEM as part of the commitment fee.

Impatient to get things moving on October 10 the company announced that it had raised $840,000 via a placement to “accelerate BioSilicon development and commercialisation in Australia”.

Mr Rezos said the placement would be added to working capital.

“[It will] also allow us to take up a number of valuable opportunities to develop BioSilicon products in Australia where we will be working with world-class research institutions and scientists, but with a lower cost base for facilities than could be achieved in Europe or the US,” he said.

The placement of 7,000,000 shares at 12 cents each was placed with institutional and sophisticated investor clients of Burdett Buckeridge Young Ltd.

But the company’s efforts to drum up support for its technology has fallen on deaf ears at the stock exchange. Investors have continued to punish to stock.

Since December last year traders have slashed the stock price down from a high of 36 cents to as low as 10 cents earlier this month before finding some support at 12 cents.

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