Biotech entrepreneur considers float for his latest drugs company

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Astex Technology, the Cambridge-based biotech group chaired by the sector grandee Peter Fellner, is considering an initial public offering as confidence mounts that the market for life sciences flotations may be returning.

Ark Therapeutics is expected within a week to become the first substantial biotech company to confirm plans for a float since 2001. Its progress has been keenly watched and fund managers now expect it to be successful in raising close to £50m, valuing the company at more than £150m.

Astex said that, if Ark shares performed well after flotation, it could press ahead with its own fundraising towards the end of the year. The company, founded in 1999, is developing drugs using innovative "X-ray crystallography", which identifies particular shaped molecules that could interact with disease-causing molecules in the body.

Backed by the UK private equity groups Apax Partners and Abingworth, as well as several overseas institutions, it is still a very early-stage venture. But it is expecting revenues of £6m this year from service contracts with big pharmaceuticals companies including AstraZeneca and Aventis, and is also developing its own cancer drugs. The first of these could begin human trials next year.

Dr Fellner, who took on the chairmanship of Astex in 2002, is also chairman of two of the oldest quoted biotechs, Celltech and Vernalis, formerly British Biotech.

Tim Haines, the Astex chief executive, said: "There are signs that fund managers are becoming interested in biotech. If markets do pick up, we will absolutely be ready. If you miss out on one IPO window, there might not be another one for four years.

"We are in no rush to float but public monies would allow us to do more programmes of drug development work, to build the size of company that could compete with US biotechs."

Sector watchers are focusing on two key events that they say could trigger a burst of interest in the biotech sector. After the Ark flotation, the second is data from final trials of an ovarian cancer drug developed by Antisoma, a veteran of the quoted markets. If the drug works, it is likely to become one of the few developed by the UK industry to reach the market. Its failure would be a harsh reminder that years of investment can go to waste in this risky sector.