Microbics tests the water with pounds 10m float

AN AMERICAN biotechnology company whose treatments are used by firms including Body Shop and Yorkshire Water intends to go public on the London Stock Exchange early next year.

Microbics Corporation is based in Carlsbad, California, but intends to raise up to pounds 10m in London because it sees stronger growth potential in Europe than at home. The offer will probably be made in February or March, capitalising the firm at nearly pounds 50m.

"We're hovering around profitability now," said Microbics chief executive, Dr Anthony Martin. "But we project that by 2001 our sales will be pounds 50m and our profits pounds 10m." He intends to do this by "the Gillette principle" - sell the razors cheap and make the profit on the blades.

Dr Martin is undertaking a "beauty contest" of prospective brokers from a shortlist of three. "They have tended to come to me rather than vice- versa," he said.

Microbics' principal product is a detection system which uses bacteria to indicate the presence of toxins in water. The bacteria emit light naturally, but the presence of toxic chemicals kills them. Microbics grows the bacteria in fermenters, freeze-dries them and then stores measured amounts in plastic vials. These are the "razor blades", as each vial can only be used once.

The presence of dangerous chemicals can be detected by adding a sample of water and measuring the level of light emitted. Among existing users of this technology are Yorkshire Water, which uses it to check its own output, and Body Shop, which uses it as an animal-free alternative to standard cosmetics toxicity tests.

The systems are mains-powered and bulky. But Microbics is working on hand-held versions, which could be used by the National Rivers Authority, the armed forces and consumers worried about water quality. The likely price tag is around pounds 1,000. "A lot of organisations want a sort of water 'breathalyser'," said Dr Martin.

So far, Microbics has sold 2,000 of its mains-powered systems worldwide. Earlier this year it tied up a global deal with German manufacturer Siemens, which will begin marketing the testing systems under its name.

The flotation aims to fund the project building the hand-held systems, and to bring the manufacturing process into Europe. The market for water- testing systems in Britain alone is huge, says Dr Martin: there are more than 11,000 organisations that have to test drinking water, industrial waste and sewage for toxicity. At pounds 25,000 per system, there may be a potential market of pounds 5.7bn; but even capturing a few per cent of that, and selling the vials of bacteria at pounds 15,000 per year per system, would bring in millions of pounds annually.