Microscience float in doubt after cool reception from City

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The Independent Online

The flotation of Microscience, the biotech company based in Berkshire that has a citrus-flavoured drink for vaccinating against typhoid, was hanging in the balance yesterday after underwhelming demand from investors.

The flotation of Microscience, the biotech company based in Berkshire that has a citrus-flavoured drink for vaccinating against typhoid, was hanging in the balance yesterday after underwhelming demand from investors.

The valuation has been slashed from the £140m originally planned, but it remained unclear last night if the company would attract sufficient support from fund managers, even at a level below £100m. Microscience is trying to raise £30m, which would be topped up by £10m from its venture capital backers, which include Merlin Biosciences, run by the biotech entrepreneur Sir Christopher Evans, and Apax Partners.

It is trialling vaccines for typhoid, travellers' diarrhoea, hepatitis and meningitis, but even the most advanced is not expected to be commercially available until 2008. It has not licensed any of its products to a big pharmaceuticals company.

Fund managers said they had been offered shares valuing it as low as £60m before the new money. Microscience was locked in talks with its advisers ABN Amro yesterday, but has told people in the City that it has a "plan B" to raise cash if the flotation fails. It could do a smaller private funding round.

Microscience, led by Rod Richards, its chief executive, has proved the weakest of three biotech floats aiming to be tied up this week. Norwood Immunology, the new vehicle for Rolf Stahel, formerly of Shire Pharmaceuticals, halved its valuation to £50m but is confident of raising £5m of the £15m it said it wanted to fund a new cancer product. Vectura, which is conducting trials of an "inhaled Viagra", is confident of a successful fund-raising, which is expected to be announced tomorrow. It was hoping to raise £20m, but it may have to shave the price, with a market value below its £45m-£60m range. Andy Smith, manager of the 3i Bioscience investment trust, said: "The struggle to get these floats away tells us that quoted market investors now know the right questions to ask: How much cash is left? What was the valuation at the last funding round? And who is the product licensed to?"

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