Sir, It is excellent news for the UK biotech and medtech sectors that the London Stock Exchange remains the main European capital market for initial public offerings (“Biotech cash flows to London”, 6 January).
A couple of years ago commentators had predicted the demise of the old business model whereby the early investors could exit profitably. This allowed biotechs to raise substantial capital on the back of a technology that still required years of clinical development and had little proof that approvable products would emerge at the end.
Subsequently, Phase 2 clinical data for a reasonable portfolio of products became the mantra by which biotechs were judged. However, this is difficult and expensive to achieve for a privately financed start-up company, causing the industry to seize up.
It is encouraging and important that public money is again available for the biotechs, allowing a return to the old model. It encourages the early investors who see a potential exit route and it fosters the development of better medical treatments.
However, it is notable that one of the largest UK transactions in 2004 for a medical technology company start-up was the sale of Meridica, a drug delivery company, to Pfizer, which raised $125 million. This is more than any of the IPOs.
