Market downturn scars flotation plans of biotech groups

Renovo, the Manchester biotech group whose aim is "to make scars a thing of the past", is telling fund managers it is prepared to compromise on the valuation of its shares to get a flotation away next week.

Renovo, the Manchester biotech group whose aim is "to make scars a thing of the past", is telling fund managers it is prepared to compromise on the valuation of its shares to get a flotation away next week.

The group is one of two high-profile drug developers planning a listing, who are finding that market sentiment has hardened against unprofitable companies over the past few months.

Two biotech groups abandoned their flotation plans yesterday - Speedel, a Swiss company, and EpiTan, an Australian firm planning to list on AIM, the UK's junior market - citing poor market conditions.

EpiTan, which is developing an injection that gives patients a tan and protects against sunburn and skin cancer, was hoping to raise £15m. It said: "A deterioration in the investment climate has led to the decision to suspend the UK funding and AIM listing plans."

Shares in Arpida in Switzerland and Ardana in the UK have collapsed since they were floated this year, hitting sentiment towards the biotech sector.

Renovo planned to raise £65m, but has indicated that it no longer believes the valuation of the company will be in the £160m to £200m range predicted by its advisers. The company is raising money for trials of a drug to prevent scarring after breast enlargement surgery, but it is drawing up contingency plans in case it fails to raise the full £65m.

ProStrakan has appointed Morgan Stanley as its banker and pencilled in 18 May for an announcement of its intentions, but it has never confirmed its plan to float or its hoped-for valuation of £250m. It could decide to wait until autumn.

Sources said investor meetings have gone well, and the company believes it can differentiate itself from more speculative biotech ventures. It has women's health products on sale across Europe and more close to being approved for launch.