Biotech firm gets $4m backing

File photo / NZ Herald

Living Cell Technologies, a New Zealand biotech firm developing a type-1 diabetes treatment using cells taken from Auckland Island pigs, is raising $4 million from a Japanese investor.

The ASX-listed company announced yesterday it would issue the Otsuka Pharmaceutical Factory - the research and manufacturing arm of the Otsuka group of companies - with shares to the value of A$3 million ($4.02 million), at A12c a share.

Shares in the firm closed up 2c at A11c on the Australian exchange last night.

Living Cell medical director and co-founder Robert Elliott said the investment was timely, as the company's coffers had been running low.

Otsuka was also prepared to invest more capital. "This is just their first investment - just to keep us off the rocks, as it were," said Elliott.

He said the $4 million would be used to fund the final, phase 3 clinical trials of Living Cell's Diabecell treatment, later this year.

The two companies have also agreed to collaborate on the research, development and commercialisation of the product.

Elliott said Diabecell was expected to be commercialised by 2013, and with around 20 million type-1 diabetes sufferers around the world and immense market awaited the treatment.

Otsuka's investment will be in two placement tranches of A$2.3 million and A$720,000, Living Cell said.

Payment of both tranches must be completed by April 22, although the smaller investment is subject to the approval of Living Cell shareholders at a meeting in June. If approval is not secured then the A$720,000 will be reimbursed to Otsuka, including an interest at a rate of 7.5 per cent per annum, on December 31, the company said.