Renovo’s cash pile draws interest

THE suitor stalking North West biotech firm Renovo is more likely to be another small pharma company than one of the sector giants, analysts believe.

Shares in the Manchester company rose sharply yesterday on news that the anti-scarring pioneer had received an “unsolicited approach.”

Although some believe drugs giant Shire, which has a licensing deal with Renovo for one of its products, Juvista, could be the potential bidder, others feel the company’s cash reserves make it attractive to smaller players.

At the end of 2008 University of Manchester spin-out Renovo had cash and deposits of £74m  – more than its £60m market value.

Andy Smith of Axa Framlington said: “There are lots of companies worldwide without much money. I expect it is a company of a similar size or smaller and wants to do a thinly-veiled fundraising by getting hold of their cash.”

Paul Cuddon of KBC Peel Hunt said an offer from Shire was not likely now because it won’t have to pay for the development of Juvista until after US trials in 2011.

Robin Davison at Edison Investment Research said Shire was the “obvious candidate”, but if it is not, the suitor will be another party seeking Renovo’s cash.

A major funding shortfall is putting one in five of Europe’s small biopharma firms companies at risk by the end of the year, according to report from the European Biopharmaceutical Enterprises.

Renovo was founded in 2000 by current chief executive Professor Mark Ferguson and his partner Dr Sharon O’Kane. It floated in 2006.