Chiroscience to sell off division

CHIROSCIENCE Group, one of Britain's top biotechnology companies, is looking to sell its ChiroTech chemistry division in a move that could generate pounds 80m.

Chiroscience has already received strong interest from potential buyers after putting ChiroTech on the market a few weeks ago. The profitable subsidiary made up 64 per cent of Chiroscience's revenue in the first half of 1997.

The sale of ChiroTech would be the second big sell-off in the growing UK biotechnology industry after Celltech's sale of its "biologics" contract drug-making unit to Alusuisse-Lonza Holdings for pounds 42m in 1996.

"I think it would be a good move," said Nick Woolf, analyst with BA Robertson Stephens & Company. "ChiroTech operates independently and is profitable, and is a very different business from what they are trying to achieve [in drug development]."

Chiroscience, a Cambridge-based company which was founded by biotech entrepreneur Chris Evans, will use the proceeds to offset its spending rate of about pounds 2m a month, lessening the need for fund-raising efforts such as the pounds 40m rights offering it held in 1996. ChiroTech could be sold to a financial buyer, who may then spin it off, or to another drug company that wanted to expand into "chiral" chemistry, a growing field in drug research.

A Chiroscience spokeswoman would only confirm that the company is "looking at ways of realising shareholder value" from ChiroTech. She said options may include selling it or floating it.

ChiroTech has grown rapidly, generating pounds 5.9m in sales in the six months to August 1997 from pounds 3.9m a year earlier. Operating profit surged to pounds 2.3m in the first half of 1997 from pounds 200,000 a year earlier, reducing Chiroscience's growing operating loss, which was pounds 15.8m at the half year. It focuses on compiling "libraries" of molecules used to discover new drugs. It makes refined "chiral" base chemicals that other drug-makers may use for clinical trial programmes to test new drugs.