Only one British biotechnology company is listed on the LondonStock Exchange, British Bio-technology Group plc of Oxford. Andit managed the feat only after three to four months ofnegotiations, during which the exchange "agreed that thecriteria for listing weren't appropriate for biotechnologycompanies," said Keith McCullagh, British Bio-tech's chiefexecutive officer.

Those discussions led to new, relaxed guidelines that shouldmake it much easier for biopharmaceutical companies to gainaccess to public monies. "They were keen to allow us to list andencourage others to follow, but they wanted some protection onthe quality of the offerings," McCullagh told BioWorld.

Although these new criteria apply to emerging pharmaceuticalcompanies, they do not exclude other biotechnology companies,such as those that are developing products for agriculture,McCullagh said.

The biggest stumbling block in the London Stock Exchange'sstringent listing criteria was the requirement that anycompany seeking to be listed had to show a five-year profitrecord. This criterion alone is enough to disqualify mostbiotechnology companies. Since those companies need themonies garnered from public sources to last through the sevento 10 years it takes to actually realize a profit, the situation hadbecome a Catch-22.

The major shift in the listing rules -- which may take effect bylate spring or summer -- is to allow companies that don't haveany product sales to seek a listing. There are some caveats,though: The company must be at least 3 years old, and it musthave at least two drugs in clinical trials. The company mustfurther prove its worth by evidence of patents -- eithergranted or in process -- and collaborative R&D agreements with"organizations of high standing and repute." And it must provethat it has at least two years of operating capital following thepublic offering.

"All of these are more onerous than would be required for aflotation on NASDAQ in the U.S., but are nevertheless awelcome first attempt by the London Stock Exchange toencourage companies in the biotechnology/emergingpharmaceutical area to seek a listing," McCullagh told BioWorld.

Xenova Group plc is one British biotechnology company thathasn't sought the public markets, but has reaped significantmonies from private placements of international breadth.

"We would generally welcome the new guidelines," said LouisNisbet, Xenova's chief executive officer, "but there are someelements we would ask them to reconsider." For one, the factthat the guidelines would require companies to have twoproducts in clinicals doesn't accommodate companies that havea significant pipeline -- more than one solid lead product -- butare still not in trials, although they might be imminent.

"They may need to raise money through financing to be able toundertake those trials," Nisbet told BioWorld. As well, heexpressed some concern that companies "may develop theirbusinesses to fit the guidelines."

Overall, Nisbet said that "the London market is important,especially for U.K. companies. ... The stock exchange made atremendous move, especially when you consider its historicallydeliberate and careful way of handling itself."

-- Jennifer Van Brunt Senior Editor

(c) 1997 American Health Consultants. All rights reserved.

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