BTG £122m rights issue to put firepower behind inventions

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BTG, the technology group, yesterday announced a £122m rights issue to put some financial firepower behind its work in developing leading-edge inventions.

BTG, the technology group, yesterday announced a £122m rights issue to put some financial firepower behind its work in developing leading-edge inventions.

The company, which splits its activities between biotechnology and information technology, has so far lacked money to invest in the technologies it develops. Instead it has had to focus on bringing its patent and technical expertise to projects brought to it.

Ian Harvey, BTG chief executive, said: "It's time to step up the pace. We can get a better return if we invest money alongside our skills. This rights issue will be a step change in our investment capacity."

He said that BTG has had to run many of its projects, such as its electronic product labelling system, on a shoe-string, which has slowed down their development. The group aims to get this tagging accepted as the industry standard.

The system is based on the emission of radio waves, which are picked up by a receiver. It is an alternative to the use of bar-codes, which need to be within the line of sight of a laser scanner in order to be registered.

Patrick Yau, the company's house broker at CSFB, said: "There is a perception that in the past, BTG's ability to get hold of some technology has been hampered by not being able to invest directly. Often, companies want to see the colour of your money." Mr Yau said the £122m that would be raised in the rights issue should meet BTG's financial needs for the next three or four years.

The funds would, for example, allow BTG to buy patent rights outright from inventors, rather than the current arrangement under which it shares the rights and consequent revenues.

BTG is a former government agency charged with commercialising research. It was bought out by management in 1992 and floated three years later.

It has seen its share price rocket over the past year from 339p to close yesterday up 55p at 1,660p, valuing the company at £1.5bn. The one-for-nine rights issue was priced at 1,200p. The 170 staff and directors own 3 per cent of the equity of the company, with 20 paper millionaires among them.

BTG has more than 300 technologies in the development pipeline, and said it had a potential "blockbuster" treatment for varicose veins. About £35m of the money raised in the rights issue will be used to put the treatment through regulatory hurdles and to launch it.

Mr Harvey said the potential sales of the treatment, which is due to be commercially available by 2006, could be £2bn a year. It would have to split these revenues with the inventor of the technique, a Spanish surgeon.

The procedure, known as Varisolve, makes surgery to remove the veins unnecessary. Instead, a foam is injected into the veins, which expands to remove all the blood from them. After that the veins shrivel and should cease to be troublesome. Mr Harvey said: "Varisolve is one of the largest potential revenue earners I have ever seen."

He said the completion of the mapping of the human genome presented BTG with a big opportunity. Its expertise in patents would allow it to bring order to the chaos of competing rights in gene-related discoveries. Pharmaceutical companies are generally only willing to commit the large sums required for drug trials if intellectual property rights are settled.