BTG raises £27m for veins treatment

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The Independent Online

BTG, the technology group privatised in 1992, has launched a £27m rights issue to rescue trials of its revolutionary varicose veins treatment, which have stalled after US regulators raised safety fears.

The company said it would cap its investment in the project after completion of the latest fund raising, and signalled it would be willing to sell the technology completely.

Varisolve, an injectable foam that destroys varicose veins without surgery, has accounted for most of the value of the company, whose shares slumped in November when US trials were halted. The Food & Drug Administration became concerned when pieces of foam entered the bloodstream and cases of deep vein thrombosis were recorded. The US launch date for the product slipped again yesterday, into 2009, but BTG's finance director, Rusi Kathoke, said new laboratory and human tests would reveal by November whether the trials can proceed.

Just over £5m of the rights issue proceeds will fund the extra trials, with £14m going to finish a manufacturing plant in north Wales. The extra investment would mean BTG will be able to get a better deal with one of the 20 or so pharmaceuticals companies who have indicated an interest in funding or acquiring Varisolve, Mr Kathoke said.

Varisolve was developed by Juan Cabrera, a surgeon in southern Spain who has successfully treated thousands of women. BTG has renegotiated its initial contract with Dr Cabrera, reducing the surgeon's entitlement to royalties.

The two-for-five rights issue is priced at 70p, a 39 per cent discount to Wednesday's closing price, but the shares jumped by more than a fifth yesterday to 140p.

Investors were cheered by the promise that BTG will not eat into its £40m central fund to prop up Varisolve.