A US biopharmaceutical group is developing a new platform for the delivery of protein therapy to treat chronic diseases after raising a seven-figure sum from an IPO on AIM.

A US biopharmaceutical group is developing a new platform for the delivery of protein therapy to treat chronic diseases after raising a seven-figure sum from an IPO on AIM.

Medgenics, which has its main operations in Israel, has raised £3.28 million from US institutional investors as well as individuals in the US, Israel and the UK. Its shares were sold at 10p each, which has valued the company at some £10.4 million.

The proceeds will fund the second clinical trial of EPODURE, a sustained-release protein therapy product for anaemia suffers.

Medgenics’ chief executive, Dr Andrew Pearlman, said the IPO is a significant milestone for the company.

“We are optimistic about the future of the company and particularly look forward to demonstrating the proof of concept of EPODURE, as well as our innovative Biopump technology, in our Phase I/II clinical trial programme this year, which the fund-raising we have completed will allow us to do.

“The next 18 months are going to be exciting for us and we hope to be able to create significant value for our shareholders in the UK and overseas,” he added.

Medgenics’ nomad was Blomfield Corporate Finance with SVS Securities plc as its broker.

SVS partner Peter Manfield anticipates that this could be a pivotal year for Medgenics and that an investment at this stage may precede a significant price appreciation.

“Key early results of Medgenics’ upcoming clinical trial are expected to be released to the market in the second or third quarter of 2008,” he said.

“If successful, the results could potentially drive Medgenics’ market valuation towards the range of comparable later-stage biotechnology companies. Successful results could also lead to Medgenics entering into a potentially lucrative strategic alliance with a larger pharmaceutical company.”

The IPO’s reporting accountant was haysmacintyre, led by Ian Cliffe and assisted by Andrew Ball.

Cliffe said this was the first time the firm has worked with Medgenics and was introduced to the company by Blomfield due to haysmacintyre’s experience in acting for overseas entities.

“The technology that the company has developed, if proved successful in the clinical trials, is extremely exciting and has great potential for phenomenal growth in a short timescale,” he added.

Medgenics’ legal adviser was Duane Morris, while Cohen Legal Partners provided Israeli law advice.

Duane Morris’ team was led from its London office by partners Ray Smyth, Mark Hartley and David Maislish. They were supported by Edwin Astudilo and Richard Keck in the firm’s San Diego and Atlanta offices.

Smyth said the firm was appointed to advise Medgenics on the IPO because it could provide UK and US legal expertise. He added that to complete the deal teams of patent and scientific advisers as well as placement agents were needed.

“The challenges presented by the IPO arose from the relatively low interest levels in investment in early stage biotech projects in London and the volatility in the markets at the present time,” he added. “Notwithstanding this, the project was successful in raising the required funds and the group is now in a position to proceed to the critical phase of testing the safety and efficacy of its technology.”

Cohen Legal Partners, led by senior partner David Cohen, who was supported by Avishay Schnaidman, also advised Blomfield and provided a legal due diligence review of Medgenics.

“We collaborated closely with Duane Morris and assisted in satisfying the requirements of Blomfield,” he said. “I instigated Israel Angels presentation of the company in the UK to the investors for the pre-IPO round and was subsequently appointed by Blomfield and Duane Morris as Israeli counsel to the company.”

Medgenics’ Biopump technology is designed to enable patients to produce a protein therapy in their own bodies to treat a range of chronic diseases, such as anaemia and hepatitis C. EPODURE is designed to produce the protein steadily for a limited time, up to six months or more. The company is also developing INFRADURE, which will treat hepatitis C.