Anti-scar drug firm in £150m flotation

Renovo, a biotechnology firm developing a drug to heal scars, has appointed Goldman Sachs to advise it on a £150m float.

Renovo, a biotechnology firm developing a drug to heal scars, has appointed Goldman Sachs to advise it on a £150m float.

The company is targeting the huge potential market for clearing up scars caused by surgery, including cosmetic surgery, as well as burns, skin grafts and scarring of the body's internal organs.

Its corporate goal, according to its website, is "to create a scar-free world" and its main product, code-named RN1001, is entering the third phase of clinical trials. The company is understood to be looking for funds to help to develop the product.

Renovo is testing the drug on women undergoing breast enlargement surgery. To measure the drug's effectiveness, one breast is treated with RN1001 and the scars are then judged against those on the other, which is treated with a placebo.

The company has issued shares and share options to five directors. "All options are exercisable upon either sale of the company, its assets or IPO [initial public offering] for a maximum period of up to 10 years from the date of the grant," its most recent accounts state.

The company, which employs 76 people, has £16m in cash on its balance sheet and spent £6.1m on research and development last year compared with £4.2m in 2003. It recorded a £5.2m loss for 2004 compared with £3.8m in 2003.

Renovo was founded in 2000 by Mark Ferguson, the company's £280,000-a-year chief executive, and Sharon O'Kane, executive director in charge of research, based on Manchester University technology.

Its website says: "According to external research performed for Renovo by the Mattson Jack Group, in the USA alone there are at least 42 million patients per annum who can benefit from pharmaceuticals that prevent or reduce scarring in the skin. This market is larger in patient volume than depression, osteoporosis, asthma and diabetes."