LONDON ¿ The future of the Rothschild Bioscience Unit (RBU), the international investment advisory team, is uncertain, following a decision by its owners, Rothschild Asset Management (RAM), to withdraw from U.K. biotechnology.
The move comes in the wake of the collapse of merger discussions between International Biotechnology Trust plc (IBT) and Biotechnology Investments Ltd. (BIL), both of which are managed by RAM.
Following RAM¿s decision to withdraw, BIL has said it is in ¿detailed negotiations¿ with a new fund manager, while IBT said it is ¿considering proposals from a number of potential fund managers.¿
These two U.K.-listed funds have approximately US$400 million under management in more than 100 companies worldwide. When the merger talks began in June 1998, BIL¿s net assets stood at US$313 million, down from US$395 million in May 1997. At the beginning of this week, the value of BIL¿s net assets was US$291.6 million. IBT¿s assets stood at #42 million (US$67.8 million) as of Aug. 31, 1998, down from #80 million a year earlier.
The logic behind the merger was that a larger investment trust would have more liquid shares. But despite the lengthy negotiations, IBT and BIL were unable to agree on what their respective shares of a new company would be.
Jock Green-Armytage, chairman of IBT, said, ¿Rothschild Asset Management, owner of RBU, International Biotech nology Trust¿s existing manager, indicated to the board of IBT that, in the context of a strategic review of their activities, they would be minded to withdraw from the business of bioscience management in the U.K., as soon as would be convenient to their existing clients. As a result of this indication, and of the publicity surrounding the merger discussions, IBT has received proposals from third parties seeking to be appointed as investment manager.¿
RBU is headed by Jeremy Curnock-Cook, one of the more prominent figures on the U.K. biotechnology investment scene. It seems likely that Curnock-Cook and his team will be parting company with Rothschild. Green-Armytage said IBT intended for whomever it appointed as the new fund manager to employ senior members of the RBU in order to ensure continuity of management. BIL, which represents the majority of RBU¿s existing business, has indicated that it will have new advisors.
BIL, which is currently based offshore, also said it plans to reconstruct itself as a U.K. investment trust, and is considering other proposals ¿with the object of enhancing shareholder value.¿
IBT¿s investments include Angiotech Pharmaceuticals Inc., Biocompatibles International plc, Cell Therapeutics Inc. and Corvas International Inc.
BIL¿s investments include Trega Biosciences Inc., Agouron Pharmaceuticals Inc., SangStat Inc., COR Thera peutics Inc. and Oxford GlycoSciences plc.