ImmuPharma raises £2M, gains AIM listing by reverse takeover

ImmuPharma, a U.K. drug development company that is commercializing medical discoveries at France’s state Centre Nationale de Recherche Scientifique, said it raised £2.05 million and gained a listing on London’s AIM exchange through a merger with an exchange-listed cash shell company, General Industries.

ImmuPhara is in the league of companies “where over time you need to raise some money before you generate sales and obviously the AIM market is a very efficient market for fund raising,” said Richard Warr, the executive chairman of ImmuPharma in an interview.

The complicated financial transaction – of a type increasingly common on London's small-company market, AIM - entails a so-called reverse takeover, in which General Industries issues shares to acquire ImmuPharma, and then changes its name to ImmuPharma PLC. At the same time, ImmuPharma raised a minimum of £2.05 million in cash to fund clinical trials for its lead drug candidates. The placing agreement also contains a provision which allows ImmuPharma to allot 3,140,963 shares to raise £1.3 million in additional cash, according to Warr.

Under the agreement General Industries will buy the issued share capital of ImmuPharma by issuing 58,750,000 new General Industries shares, which, based on a closing middle market price on 20 January 2006 of 45.5 pence per General Industries share, values ImmuPharma at £26.7 million.

“General Industries is an investment company with cash in it and is looking for acquisitions to enter to the stock market,” said Warr. “They have issued papers to us then their board will step aside and my board will step in. We are actually taking over them but the mechanism is they issue shares to us.”

ImmuPharma has three main drug candidates. The first one IPP-201101 is for the treatment of Lupus, which Warr said has “blockbuster potential” as it is estimated to generate annual sales of over $4 billion by 2016. The candidate is currently entering into clinical phase one trail and is expected to be in phase two in the second quarter this year, Warr added.

ImmuPharma’s drugs are at a relatively early stage in development. A Phase I trial is the first step in clinical testing in humans, and is intended to ascertain whether a potential drug candidate is harmful. Reliable information on whether a drug is helpful often doesn’t emerge until Phase II trials – and even then regulators usually require a third, bigger trial to compare the drug’s effectiveness against existing treatments. The process of getting a drug through all trials generally takes several years, and only a small minority if drug candidates actually make it through to market approval by regulators.

ImmuPharma’s other product IPP-102199 is for the treatment of moderate and severe pain such as cancer pain and postoperative pain, and its IPP-203101 product is for the treatment of MRSA (methicillin-resistant Staphylococcus aureus), which is a strain of Staphylococcus bacteria that is resistant to conventional antibiotics;  and other severe and hospital acquired infections.

ImmuPharma, which has subsidiaries in France and Switzerland, has a research collaboration agreement with CNRS which relates to the therapeutic use of peptides and peptide derivatives. The company has been granted the worldwide exclusive rights to exploit all discoveries made pursuant to this agreement and will co-own the relevant intellectual property with CNRS. ImmuPharma currently has 7 direct employees, as well as 7 CNRS employees.