Leading fund manager Karst Peak Capital has secured a significant interest in a little-known Aussie pharmaceuticals research company, following the significant success they experienced with a large holding of Avita Medical.
Originally based in Hong Kong but now also with an office in Sydney, Karst’s investment focus includes the healthcare, biotech and pharmaceuticals industry which turned heads last week when the fund secured a 8.90% stake in Pharmaxis (ASX: PXS) for $3.21 million.
Raising eyebrows in the medical investor community was the fact the investment was made via private Placement at $0.08 per share which was higher than the last traded price at the time. Furthermore, it was noted that Pharmaxis was well capitalised and has approximately $20m cash in the bank after the placement with a revenue stream from their mannitol products, putting the Company in a healthy position.
Also as part of the Placement, BVF Partners LP invested a further $800k to maintain its shareholding in Pharmaxis at 19.5%.
Interestingly, Pharmaxis is indirectly networked to one of Karst’s very successful investments – Avita Medical, of which Karst Peak held a 14.9% stake in 2018 when AVH shares were trading around $0.07 each. Prior to the onset of COVID-19, AVH shares traded as high as $16.30 per share in February 2020 before Avita redomiciling to the United States in June 2020.
The flagship product at Avita Medical responsible for the commercial explosion was RECELL, the commercial product developed from ‘Spray-on-Skin’ which was invented by the Company’s founder, Professor Fiona Wood AM. As RECELL sales grew and Avita expanded internationally, building on Wood’s research, she took a step back from corporate operation to focus on medical research where her work is responsible for saving thousands of lives around the world.
Pharmaxis’ primary research focuses on the compound PXS-5505 which targets myelofibrosis, a rare form of cancer, however on 1 April 2021 the Company confirmed that Professor Wood is heading research into their other lead compound PXS-6302. This second discovery has shown promising pre‐clinical results in skin scarring models. Critically, the application of compound PXS-6302 has the potential to inhibit the enzymes responsible for scar tissue formation during the healing process.
While RECELL has the ability to regenerate skin after burns or trauma, the world-first trials of PXS-6302 have the potential to stop scars forming altogether. Professor Wood notes scar-less healing is the vision that has motivated our work in the field over many decades.
Although clinical trials of PXS-6302 are still in the early stages of recruitment, it is understandable why Karst believes Professor Wood has the midas touch given the success they have achieved by backing her in the past.
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