Pharmagene sets mid-point valuation for IPO at £140m

Pharmagene, the British biotechnology firm which tests human tissue to speed up drug development for its clients, has set the share price range for its initial public offering at 240 to 320p per share, valuing the company at £140m at midpoint.

Pharmagene, the British biotechnology firm which tests human tissue to speed up drug development for its clients, has set the share price range for its initial public offering at 240 to 320p per share, valuing the company at £140m at midpoint.

The specialist firm, based near Cambridge, plans to issue around 14.3 million new shares plus an over-allotment of up to 2.1 million shares, setting the midpoint value of the share offering at £40m.

It plans to use the funds to restructure its sales and marketing operations, and to open an office in the United States.

Speaking yesterday of its intention to lead the field in functional genomics services, a spokesman acknowledged that the company was enviably poised to take advantage of data from the Human Genome Project, following the draft sequencing last month of the human genome.

He added: "Pharmagene isn't a genomic company per se, but it will benefit downstream from the project."

Two doctors, Gordon Baxter and Robert Coleman, founded the company in 1996 to focus on the pre-clinical use of human tissue, introducing it at the earliest stages of drug development to increase the likelihood of success. It has already raised £15m from investors including 3i, Kleinwort Benson and Delta Partners, and although it is still making losses, its revenues last year were £1.26m, the bulk of them from its Phase ZERO testing service.

The company has customers including SmithKline Beecham and Pfizer, and last month signed agreements with four further pharmaceutical companies to conduct experiments in human gene expression, in vitro pharmacology and drug metabolism. Shares are due to start official trading on the London Stock Exchange on 31 July, after investor roadshows, bookbuilding and the announcement of the offer price on 24 July. UBS Warburg is advising on the issue.