NEW YORK (GenomeWeb) – Just months after disclosing that it is reestablishing its American footprint with a laboratory in Northern California, Australia's Benitec Biopharma announced that it has formally arranged for its stock to be traded in the US on the over-the-counter (OTC) market.
Meanwhile, Benitec has now become a clinical-stage drug developer, initiating patient dosing of its expressed RNAi treatment for hepatitis C TT-034 — the firm's first drug to enter human testing since it was founded roughly 17 years ago.
Benitec shares have long traded on the Australian Stock Exchange, and for some time they have been available in the US as American Depository Receipts (ADRs), which are bank-issued certificates that represent a specified number of shares of a foreign stock. However, this ADR program was not sponsored by Benitec and therefore out of the company's control.
Last week, Benitec officially established a level 1 ADR program, allowing its shares to be traded in the US under the authority of a company-appointed bank, in this case the Bank of New York Mellon. Because companies with level 1 ADRs are not required to file financial reports with the US Securities and Exchange Commission or follow generally accepted accounting principles, the certificates can only be traded on the OTC market.
According to Benitec, under the sponsored program, each ADR will represent five of its ordinary shares. The unsponsored ADR program will remain in place, it added, but investors holding these ADRs will have until the end of June to transfer their holdings to the new ADRs without incurring fees by BNY Mellon.
Through ADR program, Benitec said it is now able to "widen the secondary capital market" for its stock, allowing it to be more easily traded by US investors. "Given that many US institutional investors are now on the Benitec Biopharma share register, the company believes formalizing a sponsored ADR program is important," the firm stated.
Notably, ADRs are commonly used by foreign companies to gauge US investor interest before pursuing an initial public offering. Benitec has not stated that this played a role in its decision to establish a formal ADR program, but the company has previously taken steps to expand into the US.
Back in 2004, under a previous management team, Benitec had its sights set on leaving Australia to become a publicly traded US-based company. As part of that process, Benitec that year paid $5.4 million in stock to acquire California-based startup Avocel and its HCV program.
Although Avocel provided Benitec with the US presence it was seeking, by 2006 the company closed down these satellite operations and restructured as a significantly smaller firm back in Australia. At that time it was involved in protracted patent-infringement litigation that drained its coffers, tarnished its reputation, and led to the rejection of the company's core US patent by the US Patent and Trademark Office.
Benitec was also forced to license off its flagship HCV program to Tacere Therapeutics, which was founded by former Avocel staffers.
The company hobbled along until 2010, when the USPTO upheld the claims in the disputed patent, opening the door for a number of successful financing rounds that enabled Benitec to ramp up operations and acquire Tacere and TT-034.
As disclosed last week, Benitec has now officially begun clinical testing of TT-034, kicking off a 14-patient Phase I/IIa trial designed to establish the drug's safety in HCV-infected patients. The 14-patient study will test sub-therapeutic doses of TT-034, after which higher, potentially therapeutic doses will be evaluated.
Specific endpoints include a sustained reduction in HCV viral load, viral vector DNA and shRNA expression levels in liver biopsies, shRNA expression levels in serum exosomes, and blood vector DNA levels.
In support of TT-034, and following the close of a nearly $30 million financing round in February, Benitec has started setting up a small lab in California that will be run by David Suhy, its senior vice president of research and development who spearheaded the TT-034 program at Tacere.