ML Laboratories, the little biotech group which makes a novel kind of inhaler, tied up a rescue rights issue yesterday that will help bring in £14.3m to fund the development of new drug projects.
The company admitted last week it was no longer confident it had sufficient working capital to carry on as planned, after it failed to license any of its early-stage work to bigger pharmaceuticals companies in the time it had hoped.
ML, whose founder Kevin Leech was forced from the board in 2002 after being declared bankrupt, is offering a new share for every four already held in a fully underwritten rights issue that will raise £8.7m. But it has additionally sold 31 million new shares to institutional investors, several of whom are new to the share register.
Although sources close to the company believe a new chief executive will be appointed later this year, the fundraising has not been accompanied by any promise by Stuart Sim, the executive chairman, to reduce his role. A chief executive will be hired "at the appropriate time", he said.
Mr Sim has overseen a dramatic downsizing of the business over the past 18 months which has seen the sale of contract manufacturing businesses, including the flotation on AIM of Cobra Bio-Manufacturing.
"Today's restructuring on the financial side is the final part of the restructuring of the business," Mr Sim said. "Our broker is predicting maiden profitability in 2005."
The new shares are being sold at 22p, a 34 per cent discount to the price before last week's admission that the company was out of cash. The stock was down 0.25p at 25.25p yesterday.