Biotech boffins go it alone

POLYMASC, a fledgling biotech company being spun off by the Royal Free Hospital medical school in Hampstead, north London, will this week become Britain's first ever academic venture to float without first seeking outside finance.

A prospectus will detail PolyMASC's plans to raise about pounds 5m by a public offer of 25 per cent of the shares on the second-tier Alternative Investment Market.

It will also explain the unprecedented move of going direct from medical school status to the market without first tapping venture capitalists - the traditional source of seed capital for small, growing companies.

"We are keen to get through to delivering therapies without losing control," said Dr Gillian Francis, chief executive.

PolyMASC hopes to cash in on the current City biotech craze. Shares in British Biotech more than tripled to pounds 16.75 last week on news of a possible breakthrough for its anti-cancer drug, Marimastat. Shares in Celltech and Proteus registered double-digit percentage gains.

The Royal Free's medical school, part of London University, is swapping assets such as patents, intellectual property rights and licensing agreements for a 26 per cent stake in PolyMASC. Nine scientists from the school's molecular cell pathology unit will retain a near 32 per cent stake worth almost pounds 7m.

Scientific research teams normally benefit from their innovations through royalty income. But payment can be slow if the commercial potential of their work is under-exploited. Taking an equity stake in a quoted company can offer them a faster way of realising gains from scientific breakthroughs.

PolyMASC's novel funding approach was attacked by one analyst, who said it may mean PolyMASC was not able to raise funds elsewhere. "It's very risky. I imagine that a lack of venture capital involvement means it is easier and more attractive for them to go straight to the market," he warned.

No trading record is available for PolyMASC, though it hopes to reach break-even within two years on forecast income of pounds 2m.

Analysts warned yesterday against piling into this notoriously high-risk sector. "This is not for punters but for long-term investors," said one.

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