Evans takes ReNeuron private and stalks OGS

Merlin BioSciences, the biotech venture capital group chaired by Sir Christopher Evans, has bought back a little stem cell research company it floated at the top of the biotech boom in 2000 in a move that analysts said demonstrated hidden value in the biotech sector.

The news that cash-strapped ReNeuron is being taken private came on the same day Sir Christopher confirmed he planned to bid for another biotech group, Oxford GlycoSciences.

Both moves were being trumpeted as evidence that biotech specialists see value in life sciences technology that the public markets do not. Shares in OGS and ReNeuron are trading at less than the value of their cash reserves and Merlin believes there is scope for "technology value arbitrage" in both cases.

ReNeuron is the first of the wave of biotech floats from 2000 – the year the mapping of the human genome sent life sciences shares into orbit – to be taken back into private hands. Stock market investors deserted the high-risk sector as the bear market has worsened.

And OGS, which has put itself up for sale, has so far only attracted bids valued at below its cash balance. Sir Christopher confirmed yesterday that he has teamed up with Avlar Ventures, controlled by another biotech entrepreneur, Alan Goodman, to bid for OGS and distribute its most interesting scientific assets among their private investee companies.

Sir Christopher and Mr Goodman said they were conducting due diligence on OGS and are expected to launch their bid at a 10 per cent premium to Celltech's existing hostile offer of £101m. Celltech extended the deadline for accepting its offer by two weeks, having won over just 3.9 per cent of OGS shareholders so far. It already owns almost 11 per cent of OGS.

Sir Christopher insisted that OGS has valuable assets, including libraries of human proteins, and scientific expertise, particularly in cancer, that were being overlooked by the public markets.

ReNeuron has seen its shares collapse from a placing price of 195p in November 2000 to just 3.5p last month. Merlin, which did not sell any of its stake at the AIM flotation and still controls 52 per cent, is paying 10p a share, valuing ReNeuron at £3.6m.

The company has technology for harvesting and growing stem cells from the brains of embryos, in the hope that these cells can be used to regenerate the damaged brains of Alzheimer's disease sufferers.