Small Talk: Biotechs hope to bounce back after disappointments of 2004

Accuma's debt wish; Shell mystery
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The Independent Online

Two of the UK's most interesting private biotech companies are doing the rounds of the City before what could be a wave of flotations in the sector this year.

Two of the UK's most interesting private biotech companies are doing the rounds of the City before what could be a wave of flotations in the sector this year.

The Manchester-based Renovo, whose aim is to "help make scars a thing of the past", is generating a lot of interest among bankers, analysts and veteran industry executives, while Oxxon Therapeutics, a company with potential treatments for skin cancer, hepatitis B and HIV, has lined up meetings in a move that analysts believe will be used to gauge the mood for a possible flotation.

The pair are the latest in a line of early-stage, loss-making drug developers eyeing the public markets for a possible fund raising, after 2004 proved a disappointment for the sector. Several high-profile flotations were pulled because of lack of interest, and investors were scarred by the biggest flotation which did proceed - that of Ark Therapeutics - where the shares have collapsed from their issue price.

Last week, though, Ardana, a Scottish biotech which specialises in reproductive health, said it plans to raise £25m with a flotation on AIM, and Intercell, a vaccines developer with manufacturing operations just outside Edinburgh, plans to list in its native Austria with a racy valuation of about £180m.

Renovo is in the process of appointing advisers. The company was founded in 2000 by Mark Ferguson and Sharon O'Kane, based on Manchester University technology that it believes can help prevent scarring. Its first product, code-named RN1001, is about to go into the expensive third phase of clinical trials, and is being tested on women undergoing breast enlargement surgery. To measure how effective it is, one breast is treated with RN1001 and the scars are judged against those on the other, which is treated with a placebo. The company is at pains to point out that it will treat the other breast for free if RN1001 has made a dramatic difference to the first, for reasons of symmetry.

Oxxon already has a pretty good profile among public market investors. Its board includes John Brown, the former chief executive of the smallpox vaccines group Acambis, who "went plural" last year with a string of non-executive directorships. Last month it licensed some additional technology from Xenova to help develop treatments for chronic infectious diseases and cancer. Run by Deirdre Gillespie, the company opened operations in Boston last year, after a £15m international fund-raising from private equity in 2003.

Its products are therapeutic vaccines, which stimulate a response from the human immune system to help fight disease - skin cancer and hepatitis B in the case of its two most advanced drugs, which are in the second phase of human trials.

Both companies will no doubt be keeping an eye on the response investors give to Ardana and Intercell, which could set the tone for the coming year, before making any final decisions on floats of their own. And, as ever, respect for the managements involved and the strength of their technologies won't necessarily translate into a successful fund-raising if the price asked of new investors is too racy, but biotech's window of opportunity for public fund raising is ajar once again.

Accuma's debt wish

In fact, across many sectors, small company "intentions to float" are piling up. Accuma, debt advisers expert in the fast-growing niche of IVAs (individual voluntary arrangements), say today they are coming to AIM after raising £2.5m in a placing valuing the company at £15m. Accuma is a rival to Debt Free Direct, whose shares have been a soaraway success since its flotation in 2002. An IVA is an alternative to personal bankruptcy, involving a person's creditors writing off some of their loans.

Daniel Stewart, the broker to Accuma, also has another interesting little float on its way. In Cup Plus has developed an ultra-hygienic coffee dispenser and is talking to a major drinks company in the hope of sorting out a distribution deal. Niche Group, the AIM-listed "incubator", has a stake in In Cup Plus. And last week, Iglu.com, an online travel retailer specialising in skiing, villa and tropical holidays, said it had appointed Close Brothers to plan a float on AIM that will value the company at up to £50m. And this morning ...

Shell mystery

A quick update for you on our piece last week unpicking some of the connections between Easier and Boustead, two shell companies where mystery surrounds the whereabouts of their main asset: millions of pounds of cash.

Easier, which was delisted from AIM last year after its auditors resigned over a missing £5.4m, is already rowing back on the timetable it set out for the publication of its 2003 accounts. Small Talk was told that a circular to shareholders would be ready by the end of this week, but that now looks unlikely.

Easier's new auditors, Brebner, Allen & Trapp, still require a few pieces of information before signing off on the accounts, and Easier plans to combine their publication with news of a big acquisition. The hundreds of small shareholders locked in because of the delisting hope it will not prove much longer a wait.

Also, a quick apology to Easier's chairman David Gough, who advised Boustead on the investment that is being investigated by its auditors. He is 76 years old, not 74 as we said.

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