Coal mine could help find HIV treatment
An Australian biotechnology company looking to develop an HIV drug has turned to a US coal mine for help.
After searching for an estimated $30-40 million from traditional pharmaceutical investors, Melbourne-based Avexa had exhausted traditional funding routes and needed to look elsewhere – which ended up being Alabama.
Avexa will invest $10 million in Coal Holdings USA for a 25.5 stake in the miner which has the rights to develop the North Pratt coal mine which is expected to be production within 12 months.
The investment could yield Avexa around $12.5 million per year, based on annual production of 660,000 tonnes and a selling price of US$130 per tonne tonne.
Avexa chairman Iain Kirkwood said many options were considered but the coal mine looked to be the fastest return with the right profit.
“This opportunity stands out. We believe the model will change the paradigm for funding biotechnology, which previously has been done via multiple equity raisings and government grants,” he said.
“Many biotechs also look to big pharma to support or buy into their projects. However, since the global financial crisis both big pharma and shareholders have become much more risk averse and reluctant to support even late stage drug developments.”
The actual mining and operation will be left to contractors and US-based companies leaving Avexa to focus on its medicinal and anti-bacterial products until the profits can cover the advanced trials of its ATC project, which the company hopes could treat HIV.
“The ATC project is proceeding more slowly than we’d like…since we don’t have $30 million…we need to break the ‘stalemate’.”
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