Small Talk: Proteome Sciences will struggle to win backers

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The Independent Online

Investors look to be abandoning Proteome Sciences at quite a pace. Shares in the biotech company hit fresh lows last week. Closing at 46.5p, they stand at levels not seen since 2002. The City seems to be concerned about two key issues at the company.

The first is Proteome's inability to win a significant licensing deal for its technology. The group is focused on developing systems to analyse proteins, their role in disease and potential therapies. In 2004 it promised major licensing deals but since then investors have heard virtually nothing on this front.

Second, unless it finds some way to generate revenues Proteome will soon need to raise fresh funds. According to analyst forecasts it will face a cash crunch this year. In June 2005 the group said it had £4.9m in reserves. Given that it spends £4m a year there can't be much left.

Last April, Proteome was bailed out by Fidelity Investments. It raised £4.7m by selling news shares to the institutional investor at 59.5p. This left Fidelity with a 12.7 per cent stake in Proteome. But since then Fidelity seems to have lost faith in the company and has been busy dumping stock. A disclosure to the London Stock Exchange this month showed it had cut its stake to 7.9 per cent.

Clearly, Fidelity is not going to bail out Proteome again. So who will? The group is going to struggle to find backers when it next comes to the City in search of cash and if it does, any fundraising will be done at a significantly lower price than the present 46.5p. Investors who abandoned Proteome last week were right to do so.

Burst on the media scene

Online advertising is the fastest-growing part of the UK media sector at present. Companies now spend more money on getting their message across using the Web than through outdoor advertising and radio, and the industry is forecast to continue to grow at 20 per cent a year for some time to come. Given these stats it is no surprise that Burst Media, an international internet advertising services agency, has managed to raise a whopping £38m of new money from an IPO on AIM. This will give it a market capitalisation of about £70m.

Shares in the Boston-based group are due to start trading on Friday. Burst says it helps to deliver more than 5 billion monthly advertising impressions across its network of 3,400 websites, reaching about one in three people online in the UK and US.

DCS takeover talk

Buyers circled the IT services minnow DCS Group in a big way during the tail end of last week. They drove shares up to close at 21.5p. Last month the stock was set alight by news that the company had received a takeover approach and since then a whole host of blue-chip names has been linked with the supplier of software to automotive retailers. However, the clever money is betting on a takeover by France's Renault at 31p.

Don't tyre of Transense

A little bird tells Small Talk good news is on the way from Transense Technologies. Word has it the company has signed another licensing agreement with a top-level US company. An announcement from Transense could come this week.

The management seemed to signal that good times were ahead for the group in last month's annual results. They contained the most positive outlook statement in a long time. In it, Transense promised that its tyre-pressure monitoring system would go into production this year. The stock is definitely one to keep an eye on over the coming months. Back in 2001 it peaked at nearly 700p. It closed at 77p last week.

IGM is a Chinese first for London

IGM will soon become the first Chinese mobile technology company to list in London. The group, which provides multi-media services to mobile phone operators in China, Hong Kong, Malaysia, Taiwan and Macau, will unveil its float plans today.

In conjunction with the listing, the company aims to raise $25m (£14m) of new money to fund its expansion in the Far East and the development of its technology. IGM is certainly targeting a fast-growing market. In China alone, the number of mobile phone subscribers is expected to grow from about 400 million at present to 560 million in 2008. By this time, the segment of the mobile phone market that IGM is targeting should be worth about $19bn.

Readers can expect to see the stock trading on AIM in the first half of this year.