Oxford Molecular lining up for sale to US rival

Oxford Molecular Group, the struggling biotechnology tiddler specialising in pharmaceutical outsourcing, is in talks over its sale to Pharmacopeia, a US rival.

Oxford Molecular Group, the struggling biotechnology tiddler specialising in pharmaceutical outsourcing, is in talks over its sale to Pharmacopeia, a US rival.

Shares in Oxford rose 5p to 33.5p yesterday, valuing the group at £29.8m.

It is understood that other US companies are also interested in the business, although the talks with Pharmacopeia are the most advanced.

The bid marks another setback for the UK life sciences sector, where many companies have been forced to succumb to takeovers as their high rate of cash burn threatens to make them go bust.

Oxford's losses hit £11m last year, as net borrowings touched £520,000.

The group's troubles have centred on its software business, which specialises in computer aided drug design. To raise cash Oxford has agreed to sell its discovery solutions business, which tests research equipment, to Millennium Pharmaceuticals of the US for £35m. Shareholders are due to vote on the deal next week.

The group has also had to resort to a £500,000 bridging loan and a further loan of £3m, while also issuing warrants.

In February it issued a statement saying it would consider offers for the company as "one strategic alternative".

Pharmacopeia is based in New Jersey, but has operations in Leeds and Cambridge.