Oxford Bio sticks by Collins Stewart

Collins Stewart has unveiled its first significant corporate fundraising since becoming embroiled in a bitter public dispute with a former employee. The embattled stockbroker is underwriting a £20m rights issue for Oxford BioMedica, the loss-making biotech group.

Shares in Collins Stewart have fallen by more than one-fifth since allegations of insider dealing and stock ramping were made against the group by a former analyst, James Middleweek. Collins Stewart has vigorously denied the claims, contained in a lawsuit in which Mr Middleweek alleges unfair dismissal.

The shares were up 6p to 382.5p yesterday but remain well off their peak on fears that the row could damage Collins Stewart's reputation.

It is believed that about half of Oxford BioMedica's shareholders had informally agreed to take up their rights by last week but the size of the discount at which they were priced yesterday - 17p compared to Monday's closing price of 25.25p - may tempt many more to participate.

Oxford BioMedica, a gene therapy firm, believes the 27-for-50 rights issue will put it in a stronger position to negotiate a licensing deal for its main product, TroVax, a treatment for colorectal, breast and renal cancers.