Biotech merger wave gathers up KS Bio

UK biopharmaceutical company KS Biomedix has confirmed that it is in negotiations that may lead to a merger and add to the mini-wave of consolidation sweeping over the UK industry.

The company, which combines cancer drug discovery and development with a contract biologics manufacturing system (KS Avicenna), confirmed that talks were ongoing in a statement released yesterday.

The company's shares rose on speculative activity ahead of its confirmation, but dropped back after it emerged that the proposed deal was for a price per share below KS Biomedix' prevailing level of 17.75 pence. By the close of trading, the shares had dropped by a penny to 14 pence, but recouped this decline in early trading today.

There has been increasing M&A activity on both sides of the Atlantic in the last few weeks, with British Biotech hooking up with Vernalis and Celltech buying Oxford Glycosciences in the UK, and Biogen announcing a proposed merger with IDEC Pharmaceuticals in the US. Meanwhile, two deals have been struck between US and European firms - Chiron/PowderJect and Cell Therapeutics/Novuspharma.

This trend for consolidation follows a difficult 2002 for the European biotechnology sector. After a decade of 30-40 per cent year-on-year growth in revenues and 10-20 per cent increases in employee numbers, the sector stalled in 2002, with revenues falling 2 per cent to €12.9 billion and employee numbers declining 6 per cent to 82,100, according to Ernst & Young.