Iain Cubitt, chief executive of Cambridge-based Axis Genetics, yesterday criticised a "failure of confidence" among City investors, who shied away from providing pounds 10m to fund the expansion of clinical trials of its products.
Six weeks ago, an American university began human trials of a vaccine against hepatitis B, which kills one million people every year, made from GM potatoes produced by Axis Genetics. The company, which grew its crops in sealed greenhouses, was also working on GM plants including bananas to produce vaccines against diarrhoea and even cancer.
If any of the products proves itself in trials it could be a massive moneyspinner. But when the funding fell short, the business last week laid off 25 of its 50 staff and has gone into administration, one step away from bankruptcy.
With no obvious British buyer, a US biotechnology company - such as Monsanto - may be keen to acquire the technology. Dr Cubitt said: "I think it's a tremendous loss for us, as we have gone far enough already to show that there's a chance of succeeding." But he declined to say whether he had been approached by potential buyers.
The company's problems make it one of the most visible casualties of the European backlash against genetically modified products, which was sparked in 1996 by American farmers' refusal to separate GM soya - which has no benefit to the consumer - from conventional strains.
Opposition to the technology has snowballed in both Britain and continental Europe, forcing supermarkets and manufacturers to declare their foods GM-free. Last week, consumer pressure finally forced one of the biggest American soya processors to tell farmers to separate GM and conventional strains after harvest.
Peter Melchett, executive director of Greenpeace UK, blamed the situation on pharmaceutical companies' decision to ally themselves with GM food techniques. "We told the Prime Minister earlier this year that if they didn't distinguish between medicines, and crops and food which involved releases to the environment, they would suffer in the backwash of the public's rejection of GM food."
Dr Cubitt said: "Because we are genetically modifying plants, that can be confused in the public mind with all the other issues about GM food. Basically it's a lack of confidence among investors."Reuse content