Euro Biotechs Seeks US Listing

Ben Hirschler / Reuters 6nov00

European biotechnology firms are lining up to list in the U.S. in a bid to win a re-rating for their stock and secure acquisition currency ahead of an expected round of industry consolidation.

Cambridge Antibody Technology Plc and Oxford GlycoSciences Plc, this year's stars of the UK biotech sector, will detail their plans to list on Nasdaq in the coming weeks, industry sources said on Monday.

CAT, whose shares have risen more than sixfold this year, is set to give a timetable for its listing when it reports results on November 27, with a move to the U.S. high-tech market expected next month or early in 2001.

The listing will put the company firmly among its global peers, in the form of rival antibody specialists Medarex Inc and Abgenix Inc.

OGS, a leader in the field of proteomics—or the role of proteins in disease—is slightly behind CAT but is still heading for Nasdaq in the first months of the new year, having announced its intention to list in September.

Both companies stress the potential for a rerating of their shares as they are judged against U.S. counterparts.

But industry experts argue the primary driver behind such U.S. listings is ensuring that European biotech paper is acceptable for U.S. deals.

"One of the key reasons for considering a U.S. listing is to have an attractive acquisition currency in place when and if strategic opportunities arise," said Doug McCutcheon, a European healthcare banker with UBS Warburg.

"As the universe of European biotech companies matures, they will begin to think more and more about M&A and it's logical that the U.S. will be a key area to look, given the number of companies there and the importance of that market."

With respective market values of 1.5 billion pounds ($2.18 billion) and 1.0 billion pounds, CAT and OGS are big enough to be serious players in a wave of takeovers which many analysts see coming as firms seek critical mass to make their voices heard.

STRUGGLING MINNOWS

A rash of biotech flotations this year has left the sector's minnows struggling to win attention from analysts and investors — and the situation is likely to get worse.

SG Cowen estimates there are over 1,300 biotechnology companies in the U.S. and 1,200 in Europe—the vast majority still unlisted but all harbouring ambitions for an eventual IPO.

Peter Allen, finance director at Britain's Celltech Group Plc, which inherited a listing on the New York Stock Exchange when it bought Medeva in 1999, said a U.S. listing was not a pre-requisite for winning U.S. investor interest.

"There is a view that if you have a listing in the U.S. it gives you a proximity to U.S. shareholders. But I'm not convinced about that because virtually all the big U.S. investment banks have high quality analysts in Europe," he told Reuters.

"The big consideration for me was the (acquisition) currency issue."

Other European biotechs on their way to the U.S. include Switzerland's Geneva Proteomics Inc, which recently raised $122 million and plans its initial public offering on Nasdaq in 2001, and APBiotech, a supplier of gene research equipment being spun off by Nycomed Amersham Plc, which will float on Nasdaq in December or early 2001.

They will be joining such well known European names as Serono SA, Europe's largest biotech, which listed on the NYSE in July, and acquisitive Dutch biotech Qiagen NV, which is listed in Nasdaq.

Significantly, two of Europe's highest-profile biotech IPOs were launched with dual listings earlier this year when both Iceland's deCODE Genetics Inc and Germany's Lion Bioscience AG opted for simultaneous Nasdaq and European floats.

"It is very much in the front of companies' minds when they consider an IPO whereas a year or so ago they wouldn't have thought of listing on Nasdaq," said Erica Whittaker, biotech analyst at Merrill Lynch.

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