Money-trail paving Virionyx's route to the US

A year after nearly folding, Auckland biotech company Virionyx has secured new United States funding and is considering moving overseas.

Chief executive Simon Wilkinson said Virionyx was choosing between two options that would inject at least US$5 million ($7 million) .

"We're in a position of going from famine to feast," he said.

One option would see US-based investors take a 15 per cent stake in the company.

The investment options follow two recent visits by Virionyx to Texas which generated "very significant interest" in the science the company is developing.

Wilkinson said the company was also investigating the possibility of moving to the United States.

"However, moving Virionyx to the US is a major step and one that we would not take lightly,' he said.

"We have New Zealand-grown science here that is on the brink of international success and while it is our first preference to stay in this country we cannot ignore the reality that long-term funding at the required level is more readily available if we relocated to the US."

A year ago, Virionyx was in upheaval, with the board, the chief financial officer and the auditor having left the company, and shareholders disagreeing over fundraising.

Shareholders at the company's annual meeting, due to be held in Auckland on December 14, will be asked to approve the relocation.

Wilkinson said re-incorporating to the US would give greater comfort to potential American investors who "want to invest in their own back yard".

But 90 per cent of operations including laboratories, manufacturing and management would remain in New Zealand, he said.

The new funding will be used primarily for phase II trials of the company's lead drug HRG214 - a treatment for AIDS patients for whom existing therapies are failing.

The company said doctors in the US and Mexico who used the drug on 77 late-stage AIDS patients in the mid-1990s, as part of a compassionate release programme, reported many sufferers experienced "significant long-term benefits".

Frank Gelder, the drug's inventor and a founding director of Virionyx, said although anecdotal evidence could not be relied upon, the reports were nevertheless exciting.

"One possible explanation is that HRG214 has dramatically reduced the patients' total HIV viral burden and, in effect, has shifted their disease status back in time," Gelder said.

"Another is that we may have triggered a therapeutic immune response in some of the patients."

US Food and Drug Administration phase II trials of HRG214 are planned to start in June. The trial will involve 50 patients in Dallas, Houston and Mexico.

Virionyx has also entered into a joint venture with New York company Zeptometrix to develop a treatment for people infected with anthrax.