Cork-based healthcare company EiRx Therapeutics, which is developing drugs to treat colorectal cancer, has raised £1.2 million (€1.73 million) in a share placing after posting a 49 per cent rise in losses after tax of £883,223 in the first half of its financial year.

The AIM-listed company said shortly before the close of business yesterday that it would use the money for general working capital. The funds will also be used to explore business opportunities that would "substantially strengthen the company".

Unaudited losses after tax in July-December 2005 grew to £883,223 from £593,160 in the same period in 2004.

The rise to £914,742 from £595,567 in net operating expenses was attributed to the acquisition last August of Auvation, an Aberdeen company that makes cancer drugs. The company generated revenues of £35,331 in that period, after maiden revenues of £69,070 January-July 2005.

EiRx chairman John Pool said a number of revenue-generating deals in 2005 had failed to materialise due to changes in the "market dynamics" of the drug business.

"The industry has moved away from technology licensing and value is now placed primarily on drug candidates that can help to replenish the constricted pipelines of big pharmaceutical companies.The acquisition of Auvation added promising new drug discovery to our portfolio, and the pace of change in our business strategy accelerated in the second half of 2005."

With £3.43 million in retained losses at the end of 2005 and £5.06 million in shareholders' funds, the company had net short-term borrowings of £67,110 at year end.

Its shares lost 2p to close at 28.5p yesterday.