Ascot pays pounds 30m for stake in ChiroTech

CHIROSCIENCE, Britain's second-largest biotechnology company, yesterday sold a 30 per cent stake in its drug manufacturing unit to chemical group Ascot for pounds 30m in a deal which will raise around pounds 15m to fund drug research.

The sale of the minority stake in ChiroTech, which develops complex compounds for pharmaceutical companies, triggered a rally in Chiroscience shares. The stock closed up 3 per cent to 225.5p. Ascot shares rose 12.5p to 273.5p.

Chiroscience said that the sale of the stake in ChiroTech would bring its cash reserves for the year to pounds 60m, enough to pay for at least two years of drug research spending. Chiroscience spends around pounds 18m a year on research, but costs tend to rise during clinical trials.

Like most biotechnology companies, Chiroscience reports losses in the early stages of drug development in the hope of recouping the money when the compound is sold on the market. John Padfield, the chief executive, said: "This deal proves once and for all we don't have to go back to the stockmarket to raise more cash."

He said Chiroscience could sell the remaining 70 per cent of ChiroTech, which revenues of pounds 16m and operating profits of pounds 7.1m last year, if it needed to raise more cash. The company hopes to win approval for its first major drug, the anaesthetic Chirocaine, later this year

Ascot, a pounds 250m-a-year business with interests in chemicals and engineering, said the deal would strengthen its existing drug-making businesses.