Avexa Limited
(ASX:AVX) has decided to invest $US4 million into a coal mine owned by Coal Holdings USA to fund its drug development.
The biotechnology company will ask its shareholders for approval to buy a 25.5 per cent equity stake in the Alabama coalmine at its Annual General Meeting next month.
Chairman Iain Kirkwood says this is a bold strategy but the board believes it is the best option for the company and will change the paradigm for funding biotechnology.
Mr Kirkwood says Avexa realised last year its cash resources would be insufficient to fund the development of its drug candidates through late stage trials and the latest coal mine investment gives Avexa the best chance of locking in a stream of fixed payments.
Shares in Avexa fell 9.4 per cent after the announcement was made yesterday to close at $0.029.
Avexa narrowed its net loss to $3.5 million in the full 2012 financial year.
