ImmuPharma raises £8.3mln to fund potential blockbuster

ImmuPharma (LON:IMM) successfully raised £8.3mln. The cash will be used to fund its share of the costs of developing Lupuzor, the potential blockbuster drug for the autoimmune disease Lupus, which is currently undergoing phase III clinical trials. It will also provide the firm with its working capital requirements through to 2018. The City fundraiser is being done in two parts. The first was a traditional share placing that brought in £3.9mln. The company sold the new stock at 26p. The 10% discount to last night’s closing price suggests there is decent appetite for the equity issue. ImmuPharma also entered what’s called a sharing agreement with Lanstead Capital for the remainder of the cash. The company will keep £660,000 of the proceeds and receive the outstanding balance over the next 18 months. The amount will be adjusted according to the prevailing share price. Rather than go with a tie-up with a traditional pharma firm, Immupharma last year opted to outsource the phase III trial work to contract research organisation (CRO) Simbec-Orion. It has fast-track status with the regulator US Food & Drug Administration, which will reduce development costs significantly. It is highly unusual for a small biotech like ImmuPharma to still own all the rights to its drug at this late phase III stage, but that does mean its full grip on the potential value of the candidate should mean the returns, when they come, will be sweeter. As mentioned earlier, Lupuzor has "blockbuster" potential, which means under the pharma industry's own definition, a drug which could sell at US$1bn or more a year, so it's probably worth looking now at what Lupus is and who is affected by it. Systemic Lupus Erythematosus (SLE) is a debilitating and painful disease, which sees the body's immune system turn against itself for reasons still not fully understood. It can affect various organs in various people in various ways so many symptoms can ensue, which calls for treatment from heart, liver and skin specialists. It is much more common in women, appears most often in African-Americans, Asians and Hispanics and it is estimated that up to five million individuals worldwide may be affected. The company does not claim Lupuzor is a cure but it hopes it will offer significant relief to sufferers such that their quality of life is greatly improved. It is also thought to work better than other products available, such as Glaxo's Benlysta, as it interacts with the body in a "different way" and at a "higher level" and also offers fewer side-effects. In all, 200 Lupus sufferers will be brought on board at least by the end of 2016, and the aim is to complete the phase III trial by the end of 2017. Then the commercialisation process and all-important sales start coming into view. Chairman Tim McCarthy told investors: "ImmuPharma is in an enviable position of owning a potential blockbuster drug in Lupuzor, which has been awarded the 'gold standard' by the FDA of a special protocol assessment and fast track status due to its strong efficacy and safety profile. “With the pivotal phase III trial having commenced, the proceeds of the placing and subscription provide us with the necessary funding to complete this trial. “We are confident that throughout this year and the next, further value enhancing news-flow will be announced on the progress of our Lupuzor phase III trial with top line results at the end of 2017, as well providing updates on the development of our earlier stage pipeline.”