NeuroDiscovery raises $3.2m for pain trials

Perth-based neurology research company NeuroDiscovery Ltd has announced plans to raise $3.2 million through a share issue and share purchase plan to fund further human trials of its pain-treatment drugs.

The company will initially place 4.7 million shares at 17 cents each with Perth-based Biotech Capital Ltd to raise $800,000.

NeuroDiscovery will then seek shareholder approval to place a further 11.5 million shares at 17 cents each with Biotech Capital to raise $1.9 million, bringing the total amount raised to $2.75 million.

The company also seeks to raise up to $500,000 through the share purchase plan, offered to all shareholders registered by June 19, 2007.

The full text of a company announcement is pasted below

NeuroDiscovery Ltd (NeuroDiscovery or Company) (ASX Code:NDL), a neurology-focused research and development company, is pleased to announce plans to raise additional capital of up to A$2.75 million via the issue of ordinary shares at an issue price of A$0.17 each to a specialist biotechnology investment fund, sophisticated and professional investors.

The Company also intends to undertake a Share Purchase Plan (SPP) at the same issue price to a maximum subscription amount of A$500,000. The maximum to be raised under the placement and SPP is $3.25 million.

The funds raised will be used to progress the human clinical trials of its lead pain programmes NSL 043 and NSL 101. Over approximately the next eighteen months the Company will be undertaking and completing two Phase I trials and commencing a Phase IIa trial for NSL 043. In addition the Company anticipates commencing a Phase IIa trial on NSL 101 - a naturally occurring compound also targeting pain.

Biotech Capital Ltd (BTC), an ASX listed specialist biotechnology investment fund, have today subscribed for and will be issued 4,700,000 ordinary shares in NeuroDiscovery at an issue price of A$0.17 each to raise A$800,000. The first tranche of the placement will be completed under the Company's 15% share issue capacity.

Shareholder approval will be sought for a further placement to sophisticated and professional investors via the issue of 11,476,471 ordinary shares at $A0.17 each to raise A$1.95 million. As part of this second tranche Biotech Capital has committed to subscribe for a further 4,123,530 ordinary shares at $0.17 bringing its total capital committed to A$1,500,000. The balance of the funds will be placed by the Company to sophisticated and professional investors.

In addition, the Company will offer eligible shareholders who are registered at the close of business on 19 June 2007 the opportunity to purchase up to $5,000 worth of ordinary shares at an issue price of $0.17 each pursuant to an SPP.

A Notice of Meeting and information regarding the details of the SPP will be mailed to shareholders and lodged with the ASX on or about 5 June 2007.

It is expected that the offer of shares under the SPP will be mailed to eligible shareholders soon after the ex-date for participation, being 19 June 2007.

The Company also wishes to advise shareholders that the composition of its board of directors is being reviewed to prepare the Company for the next phase of its operations and development. A further announcement in this regard is expected to be made before the end of August.

NeuroDiscovery Executive Director, Mr David McAuliffe said, "NeuroDiscovery has matured significantly since listing the Company in 2005, and this has been achieved without the need to raise additional capital as a consequence of contributions from the profitable revenue business which has successfully supported some of the significant costs of conducting pre-clinical studies on our lead pain programmes. We are extremely pleased to have been able to attract a cornerstone investor in Biotech Capital and encourage existing and potential new shareholders to support both the Placement and the SPP."

BioTech Capital Ltd Managing Director, Mr Harry Karelis said "We have been following Neurodiscovery for some time. We believe the company to be significantly undervalued compared to its peer group of clinical stage companies and expect a strong re-rating in the company's value off the back of clinical success. The addition of a profitable fee for service business with strong growth prospects in its own right provides investors with further downside protection and gives the company a solid base to continue developing its therapeutic pipeline."