BioWorld International Correspondent
LONDON - ProStrakan Group plc is going ahead with its initial public offering after slashing the proposed valuation by £100 million (US$180.2 million), and cutting the amount of new money raised by 20 percent, from £50 million to £40 million.
Shares in the Galashiels, UK-based company are due to begin trading on the main market in London June 16.
About 40 million new shares were placed at £1 per share, for a valuation of £180 million. When it announced the IPO plans almost four weeks ago, the company put the expected market capitalization at £270 to £290 million.
ProStrakan embarked on the IPO process as its peers, Renovo Ltd., of Manchester, UK, and EpiTan Ltd., of Melbourne, Australia, pulled London listings, and Speedel Pharma AG, of Basel, Switzerland, backed off an IPO on the Swiss Stock Exchange, citing challenging market conditions.
Wilson Totten, CEO, argued that those companies were not precedents for ProStrakan, because it has a de-risked business model. However, adviser Morgan Stanley Securities Ltd. was forced to cut the valuation several times to whip up demand. After deciding to go forward at the lower valuation, Totten acknowledged the equity market is "very difficult" but added, "we are delighted that investors have recognized ProStrakan's differentiation and qualities."
The largest private investor in the company, Warburg Pincus, struck a sanguine pose, saying in a statement, "We have always regarded the IPO as a landmark on the journey, not the destination, and will be continuing our support post the IPO as ProStrakan executes its business plan."
ProStrakan will use proceeds to broaden its geographical scope and scale and build the market for its 17 existing products. It also will further develop its pipeline, and seek acquisitions. In the past year the company has completed a 50-50 merger with ProSkelia SA, of Paris, a spinout from the bone disease group of Aventis SA, and made a string of smaller acquisitions.
ProStrakan has a 130-person sales force, which delivered turnover of £27 million in 2004, but is not profitable.