Vanguard to raise pounds 47m for research

Vanguard Medica, the biotech company backed by some of the most famous names in drug discovery, announced it is raising funds worth almost half its market capitalisation for future research. The company is raising pounds 47.9m through a placing and open offer and warrants issue. The shares yesterday closed down 12.5p to 432.5p.

Robert Mansfield, Vanguard's chief executive, said the company, with pounds 33m cash in the bank, needed the money to attract partners for newer projects. "We need to be able to reassure big pharmaceutical companies that we have adequate resources." He said the money would be sufficient for three years' R&D. Vanguard's lead product is an anti-migraine drug, due to be submitted for approval next year, but it is working in other areas, including asthma and psoriasis.

Analysts said that the fund-raising was timely, coming ahead of a likely boom in biotech new issues next year which could drain funds from the market. The fund-raising is being backed by NM Rothschild's Biotechnology Investment Trust, which is investing pounds 6m. In a complex and novel financing, for every 11 shares held, Vanguard investors will buy a unit for 12.15p, comprising three ordinary shares priced at 4.05p and two warrants exercisable at 500p by 11 December 1998.

Vanguard's directors include Sir David Jack, who as head of research at Glaxo was responsible for ulcer treatment Zantac, once the world's biggest selling drug and Sir John Vane, the Nobel prize winner who was formerly head of research and development at Wellcome.