US biotech group Verseon to list on Alternative Investment Market

A Californian biotech company that uses computer algorithms to discover medicines will complete a £300m stock market listing in London on Thursday, marking a reversal in the recent flow of European drug developers crossing the Atlantic to raise money.

Verseon will begin trading on the Alternative Investment Market with backing from UK investors including Neil Woodford, the Oxford-based equity manager whose Patient Capital fund last month raised £800m in its own London flotation.

Based in the San Francisco Bay area, Verseon is aiming to use computer-designed molecules as a shortcut through the notoriously long and expensive process of developing new drugs.

Its decision to list on Aim is a coup for the junior London market after a succession of European life science companies turned to New York's booming Nasdaq biotech market for funding over the past two years.

Verseon has raised £65.8m through the placement of 32.6m shares at 202p each. The new stock amounts to about a fifth of total shares, giving the company a market capitalisation of £302.5m.

Adityo Prakash, chief executive and co-founder, said that the company had been attracted by the long-term outlook of UK institutional investors such as Mr Woodford.

"We're not ruling out a US listing in future but we're not in a rush to get on the quarterly reporting treadmill that comes with Nasdaq," he said.

Mr Prakash is a mathematician and physicist by training and he said that these disciplines could help reduce the average $2.6bn cost and decade-long time span of bringing a new drug to market.

"We use computers to design cars and aircraft and buildings, yet in medicines we still use trial and error," he said. "We are coming from outside the [pharmaceuticals] industry to look at the problem in a new way."

He said that breakthroughs in biology had allowed a clearer understanding of the processes behind diseases. This had opened the way for computer modelling to replace much of the early-stage laboratory work involved in finding molecules that work as medicines, he added.

"Once you know how to intervene in the disease it becomes a physics problem. How do you get a drug to bind to the target like a lock and key?"

Verseon has three early-stage drug programmes under way, targeting cancer, blood clots and diabetes-related eye diseases. Mr Prakash said that the company, founded in 2002, would use the $100m raised in London to advance these further before potentially seeking partnership deals with larger companies.

Mr Woodford's backing for Verseon reinforces his status as one of the UK's biggest investors in biotech dating back to his days as head of UK equities for Invesco. He has continued his backing for the sector since starting his own company, Woodford Investment Management, which in turn launched Woodford Patient Capital Trust last month.

On Wednesday, Mr Woodford's trust announced that it was taking part in a $90m private fundraising by Kymab, a Cambridge-based biotech company, alongside investors including the Wellcome Trust and the Bill & Melinda Gates Foundation.

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