BioWorld International Correspondent

LONDON - ProStrakan plc announced Europe's largest potential initial public offering of the year to date, even as market conditions forced three of its peers to pull flotation plans.

The Galashiels, UK-based company aims to raise £50 million (US$94.5 million) on the main market in London, giving it a market capitalization of £270 million to £290 million.

Wilson Totten, CEO, told BioWorld International, "We have not scaled back, and are raising £50 million on the basis of how much it will cost to run the business to 2007-2009."

He added, "We are floating now because we believe we can. We have a very different business model from companies that are struggling [with their IPOs} and are a much lower-risk proposition."

ProStrakan had turnover of £27 million in 2004, up from £7.3 million in 2003, delivered by a 130-employee-strong European sales and marketing operation. It has a portfolio of 17 marketed niche products assembled through corporate acquisitions and in-licensing.

The company has a discovery and development portfolio with five products in Phase II and one in Phase I, based on its expertise in bone biology and hormone-related disorders. All that is derived from ProSkelia, a spinout from Aventis SA's bone diseases group, which merged with Strakan in June 2004.

"We happen to have a very interesting early stage pipeline, but we are not asking people to invest in that," Totten said.

Instead, the money raised will be used to keep revenues going up through acquiring more products and increasing the geographical range across Europe.

ProStrakan will continue to fund its R&D operations in Romanville, France, at the same level as now. "The running costs for discovery are stable. This is our long-term future, but we are not expanding it at present because we are not profitable and we have to make choices on where we spend money," Totten said.

ProStrakan raised £22 million in a private funding in November, saying it would give it the flexibility to file for an IPO at the time of its choice. As it announced the intention to list, EpiTan Ltd., of Melbourne, Australia, and Renovo Ltd., of Manchester, UK, dropped plans to list in London, while Speedel Pharma AG, of Basel, Switzerland, backed off a listing on the Swiss Stock Exchange.

Adding to the murk in Europe's public markets, earlier in May Galapagos Genomics NV, of Mechelen, Belgium, was forced to peg its IPO price per share back to €7, having initially estimated it at €8 to €10, while Arpida AG, of Muenchenstein, Switzerland, is trading below its flotation price of CHF18 (US$14.64) per share, after going ahead with an IPO at the bottom of the expected price range.