PARIS - Chemunex SA has become the seventh biotechnology company to be listed on France's Nouveau Marché. The issue of 20 percent of its equity was completed last week, netting it about FFr60 million.

The Paris-based company, which manufactures germ detection systems, has been listed on Easdaq since March 1997, when it raised FFr41 million.

This time Chemunex issued 6.3 million shares at a fixed price of FFr15, of which 4.6 million were new shares and the rest existing shares held by venture capital companies that wanted to reduce their holdings.

Chemunex's largest shareholder is the British firm Mercury Asset Management, which has 14 percent. Two other institutions, including Paris-based SED Ventures, have 12 percent to 14 percent holdings. The company's staff owns 6 percent of the equity.

Chemunex was founded in 1985 and as a start-up was backed mainly by British venture capitalists. That was the reason its initial public offering was made on Easdaq, according to Chairman Louis Froissac.

The company's sales are soaring, with revenues for the fiscal year ending June 30, 1998, forecast to be 79 percent higher, at FFr32.3 million, than the FFr18 million recorded in fiscal 1997.

The acceleration in its sales growth is due largely to its flagship product, Chemscan, which was launched about 18 months ago. Chemscan is a germ detection system that can detect a single microorganism in any filterable sample within a few hours. The method traditionally used by the pharmaceutical industry, which dates back to Louis Pasteur, takes five days to two weeks, or more.

A number of big pharmaceutical companies, such as Rhône-Poulenc Rorer, of Collegeville, Pa., Glaxo Wellcome plc, of London, and Hoechst AG, of Frankfurt, Germany, already have acquired the Chemscan system, which costs US$50,000.

Froissac told BioWorld International that after purchasing the first unit, the largest companies could be expected to acquire 15 to 20 altogether, since they would want one for each of their production facilities. He added that Chemscan is based on a unique technology and has no competition.

Chemunex remains in a loss-making phase and expects to report a net loss of FFr25.5 million for fiscal 1998, virtually unchanged from the year before (FFr25.8 million). Given the sharp growth in its revenues, however, that represents a substantial drop in the rate of loss, to 78.9 percent of turnover this year from 143 percent in fiscal 1997.

R&D Spending Levels Off

The losses reflect the company's relatively high research and development outlays of FFr28 million to FFr30 million a year.

“This spending is to support existing products as well as to develop new products that will reach the market in three or four years' time,“ explained Froissac.

But R&D spending has leveled off and the company's total expenditure has been flat for the past three quarters. Moreover, Chemunex expects to maintain its current rate of sales growth for the next two to three years, so it anticipates a move into profit in two years' time, which is to say in the year ended June 30, 2001.

According to the banks Nomura and Meexhaert-Rousselle, which managed the Nouveau Marché issue, Chemunex's balance sheet will show it has equity capital of FFr155 million as of June 30, 1998, up from FFr110.7 million the year before. It has a debt/equity ratio of 65.5 percent, down from 79.8 percent a year earlier. *

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