Vela Technologies (AIM:VELA ) said it has acquired an economic interest in a late-stage Phase II therapeutic project to develop a potential coronavirus treatment for diabetics.
The investment company said it is investing £2.35m in the project which will be partly funded by Vela raising £1.25m via a placing of new ordinary shares at 0.065p for an interest in the potential commercialisation of the asset from medical charity, St George Street.
UK-based St George Street (“SGS”) takes clinical-ready assets from pharma companies and progresses them through Phase II medical trials, before licensing them on for Phase III trials and commercialisation in order to create a return for investors and the charity alike.
Under an agreement entered into back in August 2019, SGS acquired the right to develop and commercialise two assets from a major global pharmaceutical firm, one of which includes the licence to a drug that could benefit diabetic patients suffering with COVID-19.
Diabetics have significantly higher mortality compared with non-diabetic patients with COVID-19, and in clinical studies the drug, SGS002, has been found to be safe in almost 1,000 patients with diabetes and has a blood glucose lowering effect for four months.
Shares in Vela Technologies have increased 250% in value since August 2020 to open 13.73% higher this morning at 0.0725p following the announcement.
SGS plans to recruit up to 150 patients in a clinical trial to test SGS002, which it estimates will take 5 months to complete. SGS plans to work to a compressed time scale ‘given the urgency of the COVID-19 situation’ and anticipates reaching clinical stage in early May 2021.
Under the agreement, pursuant to either commercialisation route for the Asset, SGS will pay Vela 8% of proceeds received by SGS in excess of £19.2 million. Vela's interest shall be renegotiated should SGS receive further funding from third parties in the future.
“Vela looks forward to providing shareholders with news on the outcome of these trials as this highly regarded team pursues its quest for a drug to provide a therapeutic treatment for the effects of COVID-19 on diabetic patients,” said James Normand, Executive Director of Vela.
In a separate statement, the group posted its half-year results for the six months ended 30 September 2020 which it said represented ‘a significant period of activity’. Chairman, Brent Fitzpatrick, said Vela is positioned on ‘a stronger financial footing’ with a solid investment portfolio as well as a strong pipeline of near-term investment opportunities.
Vela is now debt free and well capitalised with a portfolio of six investments, holding cash on deposit as at 30 September 2020 of £1.628m. Post period end, Vela invested £0.25m in Mode Global Holdings plc, a UK-based fintech group, as announced on 5 October 2020.
‘The Board is currently considering a number of investment opportunities in line with its existing investing policy and certain of these potential new investments are at an advanced stage of due diligence, documentation and/or completion.’
‘The Board anticipates a lively second half of the financial year and announcements will be made by the Company at the appropriate time,’ Vela added in this morning’s statement.
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