Allied Healthcare Group (ASX: AHZ) is undertaking an equity raising of up to A$6.36 million to progress investment company Coridon's Herpes Simplex Virus 2 (HSV-2) vaccine program.
Indicating the strong investor backing the company has, a commitment of $2 million has already been achieved for a placement that was oversubscribed.
The placement will comprise the issue of around 66.7 million shares at $0.03 each to institutional and professional investors.
Allied Healthcare will also undertake a one for five non-renounceable rights issue, also at $0.03 each, to eligible shareholders to raise the remaining $4.36 million.
Allied Healthcare Group chief executive officer Lee Rodne said the key benefit of having additional capital is that the company will be able to push forward its near term and most promising projects.
"This will allow us to take them to the next phase of development and also help in generating shareholder returns in the immediate future," he said.
The company is a major shareholder in Coridon, which is advancing its HSV-2 vaccine towards clinical studies after successfully completing pre-clinical efficacy testing in October last year.
Coridon tested a number of different formulations of the vaccine which proved 100% effective at protecting animals against HSV-2 infection.
The equity raising will also assist the company in accelerating Coridon's next generation therapeutic Human Papillomavirus (HPV) vaccine targeting one of the most common sexually transmitted diseases in the world.
HPV is associated with several human cancers, most notably cervical cancer.
To give an indication of the revenue potential of a HPV vaccine, the two currently used vaccines generate in excess of $1.5 billion in sales annually.
Coridon's HPV vaccine has been designed to combat existing infection with the HPV virus, to prevent and treat cervical and other HPV-associated cancers.
The development program will be based on preliminary work by Coridon founder Professor Ian Frazer's team and follows on from Frazer's work that resulted in the successful cervical cancer preventative vaccines - Gardasil®, marketed by Merck, and Cervarix, marketed by GlaxoSmithKline.
Allied Healthcare is also targeting regulatory approval of Celxcel's CardioCel® cardiovascular patch and the funds raised will provide greater resources to achieve that.
CardioCel®, which uses Celxcel's ADAPT® Tissue engineering technology, is used to treat heart deformities caused by congenital heart disease, and for heart valve repair and reconstructions.
CardioCel® is scheduled for initial marketing approval towards the end of 2012.