LONDON - Pharmagene plc, of Royston, Hertfordshire, said it plans to float on the London Stock Exchange to raise between #30 million (US$44.4 million) and #50 million (US$75.8 million).

CEO Alistair Riddell told BioWorld International, "The biotech market is very volatile, but we think it has settled a bit, and is now more realistic on valuations. The feedback we have been getting is good."

Pharmagene specializes in providing human tissue testing services for drug discovery and development. Its Phase ZERO service can validate molecular targets, test concepts and characterize chemical entities by measuring effects on a wide range of human tissue samples. The company also has a database, Pharmabase, which can provide quantitative information on human gene expression in a variety of normal and diseased tissues, to determine genes of pharmaceutical relevance.

In August it will launch a new targets database. "Initially this will contain 600 gene targets of pharmaceutical relevance, which shows where genes are expressed across a range of tissues, and the associated clinical data," Riddell said.

Some of the money will be used to establish a new therapeutics arm, which will use Pharmagene's human tissue testing technology to identify new indications for stalled or failed drugs. "We are looking for compounds where we can determine a new indication, and where there is a hole in the patent filing that means we can secure rights," he said.

"For example, it's a mad idea, but an asthma compound that failed in Phase II could turn out to target the same receptor that stops women ovulating and therefore be a good contraceptive."

Riddell says there are many compounds that could be rescued in this way. To date Pharmagene has identified five and filed patents on three. "Our strategy is to go to the company that owns the product, show them how they could switch indications, and agree to a joint development program, or alternatively if we raise enough money [in the flotation] we will license the compound and develop it in the new indication ourselves."

Pharmagene is in discussions with one of the companies that owns a product for which it has filed for an alternative use.

Pharmagene announced new customers and extensions of existing contracts for its Phase ZERO testing services. It now has 16 customers, including SmithKline Beecham plc, Janssen Pharmaceutica NV and Cubist Pharmaceuticals.

To date Pharmagene, which was set up in 1996, has raised #15 million in private financings. As a services company it has three years of trading history.

"We decided to list now because we believe that a further injection of capital will allow us to make significant progress," Riddell said. "The best way to raise more money at the moment is to go public."

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