Biotech Botanix has raised $7.4 million in a placement of new shares to help it fund the further development of its dermatology products that contain a synthetic form of the cannabis compound, cannabidiol.
Botanix on Wednesday said the placement of about 134 million new shares, at 5.5 cents each, to institutional and sophisticated investors was significantly oversubscribed.
"The overwhelming support for the placement is a clear vote of confidence from the institutional and sophisticated investment community in relation to Botanix's business strategy," Botanix executive director Matthew Callahan said.
Botanix will use the proceeds for the further clinical development of its dermatology products and to commercialise its Permetrex drug delivery system.
The company is set to begin a Phase I safety and dosing trial of acne treatment BTX 1503 in the coming weeks.
It also will fast-track the clinical development of BT 1204, a treatment for atopic dermatitis.
Botanix said it would pursue opportunities to generate revenue in the near term to further enhance its funding position.
To that end, the company will start a human clinical pilot study on an over-the-counter acne cleanser, BTX 1701, which will not require extensive clinical studies or approval from the US Federal Drug Administration.
Botanix also is talking to potential pharmaceutical partners on the licensing of the Permetrex drug delivery system for use in the treatment of dermatological diseases.
The global market for acne prescription products, driven mainly by the US market, is expected to grow to more than $US4.5 billion ($A5.9 billion) by 2018.
The larger dermatology market including treatments for psoriasis, eczema and other skin diseases is worth around $US20 billion a year.
Cannabidiol is a chemical that can be naturally extracted in raw form from the cannabis plant.
Botanix has developed a synthetic cannabidiol, which the company says has advantages over the natural form because it has consistent purity, greater scalability and more straightforward prospects of gaining regulatory approval.
Furthermore, Botanix says, the Permetrex drug delivery system can deliver cannabidiol efficiently into the skin whereas medicinal cannabidiol is generally taken orally, which is less effective.
Botanix shares were 0.1 cents, or 1.47 per cent, lower at 6.7 cents at 1135 AEST.