Cantab pleased despite shortfall in placing value

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SHARES in Cantab Pharmaceuticals have been placed with UK institutions at 460p, valuing the biotechnology company at pounds 45.3m and raising pounds 13.8m after expenses, writes Paul Durman.

Cantab had expected a market value of pounds 50m or more, and was looking to raise at least pounds 15m and up to pounds 20m.

Paul Haycock, chief executive, said Cantab had to strike a balance between the interests of existing and prospective shareholders, and its own needs for cash. 'It's a very successful flotation for all concerned,' he said. 'We are very pleased that the confidence of British investors has allowed us to come to the market.'

Cantab also announced 'significant progress' with the virus that it is developing to combat genital herpes, the largest of the 'markets' that it is addressing. Cantab has prepared a more advanced version of the herpes simplex virus, which it expects to be more effective.

More than 10 million people suffer from herpes, and another half- million contract the disease every year.

The placing of one-third of Cantab's enlarged share capital has raised the proportion held by UK investors to about three-quarters. The company already has a quote on the Nasdaq market in the US.

Cantab will have about pounds 21m to fund its research, whose cost is expected to rise sharply. The company keeps the cost of early-stage research low by working closely with Cambridge and other universities. Its agreement with Cambridge allows it the option to develop discoveries by the university's scientists in the field of therapeutic immunology.

The company is also seeking treatments for cervical cancer and genital warts. Its most advanced product treats kidneys intended for transplants to reduce the likelihood of rejection by the patient.

Dealings in Cantab's shares will begin next Tuesday.