Xenova launches £11m rights issue

The biotechnology company Xenova yesterday unveiled plans to raise £11m in a move that will give it an 18-month window to carry on developing its cancer drugs.

It is raising the cash, equating to £9.9m of funds net of expenses, through a rights issues of 33.7 million shares priced at 32.5p each – a 25 per cent discount to Tuesday's closing price.

Shares in Xenova closed down 12 per cent, or 5.25p, at 38p yesterday. The eight-for-33 rights issue has been fully underwritten by Nomura.

David Oxlade, the chief executive, said the money would help the company continue to develop and further strengthen its portfolio of drugs and "progress a number of new drug candidates towards or into clinical trials".

In particular, the company plans to progress its key drug, tariquidar, through phase III clinical trials as well as progress various addiction vaccines through clinical trials. Xenova has eight products in clinical trials and a further eight in pre-clinical development.

"The directors believe that the additional financial strength resulting from the rights issue will put the group in a better position to negotiate favourable terms for its licensing agreements or any other corporate transactions," it said.

Nevertheless, Xenova said that losses and cash outflows would continue for "a number of years" and said the timing of further fundraisings would depend on the "timing and magnitude" of sales. At the end of June, the company had £15.1m of cash.