Biotech guru sees more British firms going to U.S.
Tue Dec 12, 2006 7:05 AM ET
By Ben Hirschler
LONDON, Dec 12 (Reuters) - Chronic under-funding of Britain's biotechnology sector will result in more companies being snapped up by rich U.S. drugmakers, the head of venture capital group Merlin Biosciences said on Tuesday.
Chris Evans predicted those likely to end up under U.S. control would include six or seven young companies backed by Merlin, including Ark Therapeutics Group Plc , Vectura Group Plc , ReNeuron Group Plc and Plethora Solutions Holding Plc .
"It's almost certain that all these will end up in the States," he told a biotech conference in London.
"Sadly, British companies are disappearing one after another from my own portfolio into the U.S."
The colourful entrepreneur, who was caught up earlier this year in a police inquiry into whether Tony Blair's Labour Party gave state honours in return for loans, said Britain lacked the long-term investment climate needed to nurture biotech.
"We've opened ourselves up for U.S. buyers wandering in to pick up our best companies with their cheque books," he said.
Notable British-based biotech companies acquired by larger U.S. groups include Amersham, sold to General Electric Co's healthcare division; PowderJect, sold to Chiron, now part of Novartis AG ; and PowderMed, sold to Pfizer Inc .
International companies based in Europe were also eager to swallow small British biotechs with under-appreciated assets and technology.
Only last week, GlaxoSmithKline Plc snapped up privately owned Domantis for 230 million pounds ($451 million) while AstraZeneca Plc earlier this year bought former sector leader Cambridge Antibody Technology.
Evans said private financing rounds for early-stage biotech firms were too small and valuations at the time of initial public offering (IPO) inadequate, resulting in similar companies in Britain trading at big discounts to U.S. peers.
The average proceeds from an IPO last year in Europe were just $40 million, down from $80 million in 2000.
Lack of public equity backing for biotech also meant British biotech firms remained reliant on venture capitalists for too long, resulting in a stock overhang which depressed valuations.
"We're obsessed in this country with locking venture capitalists in. It's a complete Catch-22," Evans said.
"We're like polonium -- we're the last people you want."
Oxford Biomed stock quotes
Oxford Biomed stock charts
Follow this thread
