The Investment column: BTG's share price puts too much store by varicose veins treatment

BTG, THE intellectual property company, has something to set your pulse racing - a treatment for varicose veins which could bring sales of pounds 250m a year. Unfortunately, the first such year is 2006 and for now BTG's 8,000 patents - including, controversially, a patented gene - continue to generate losses.

Those losses narrowed markedly in the half year, from pounds 6.6m to just pounds 680,000. Even so, Ian Harvey, BTG's chief executive, is warning BTG will not necessarily break even in the full year, or even next year. Much depends on the timing of milestone payments and the exercise of options by third parties, he says.

In the period, milestone payments for Campath, a leukaemia treatment, and a sharp increase in revenues from BeneFIX, the patented gene technology that treats haemophilia, lifted revenues from technologies acquired since BTG listed in 1995.

The onset of significant and stable royalties from these licences means BTG can no longer complain that its 400-odd technologies make it misunderstood and undervalued. Campath, which has received fast-track approval in the US, is set for launch in 2000, with revenues following six months later. Royalties from BeneFIX are to expected to climb to pounds 19m in 2003, and reach pounds 88m by 2006.

BTG also sees scope for developing non-core electronics technologies owned by Lucent, the US technology giant, following its acquisition of parts of the company's smartcard portfolio.

Near-term, however, Varisolve, which treats varicose veins without the need to strip them out, will soak up cash during its development. Mr Harvey is so enthusiastic about Varisolve that he has established a wholly owned subsidiary to develop it - BTG previously licensed out its technology, or, occasionally, set up venture capital funded start-ups.

Meanwhile, BTG is surveying the globe for the next Varisolve, though progress is slow. The group typically rejects 80 per cent of the 400 inventions put to it annually. But in the half year it reviewed 400 and rejected 95 per cent.

Analysts forecast a pounds 3.23m loss for the full year and pre-tax profits of pounds 0.7m in 2001, rising to pounds 10m and earnings of 10.4p per share in 2003. The rush into technology stocks, aided by the launch of the techMARK index, has seen BTG's shares soar 80 per cent in the past month to 610p, or 55 times 2003 earnings.

Hopes for Varisolve explain the racy rating, but the commercialisation of the treatment is many years away and, at these heady levels, investors should take profits.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links