BRITISH Biotech's £143 million sterling rights issue was under a cloud last night as its shares tumbled immediately after the deadline passed for shareholders to accept the offer the biggest cash call in the biotechnology sector.
Having held steady for much of the day, shares in British Biotech came under pressure immediately after the rights issue closed at 2 p.m., hitting a low of £19.25 sterling before ending down 67p at £19.63.
Results of the rights issue will be announced today but analysts said the sharp price decline indicated a poor outcome even though shares had been hovering above the £20.50 issue price before the offer closed.
Whatever the level of the acceptances of the rights offer, British Biotech will raise its funds as the offer is fully underwritten.
But doubts over the issue (which offers one new share for every eight held) has dented the high flying image of the biotechnology sector, analysts said.
British Biotech, Europe's leading biotechnology firm, was foremost among the glamour stocks of the sector.
It has promising an anti cancer drug Marimastat in the pipeline, the most advanced example of a new type of drug which does not kill a tumour but instead blocks its growth.
Analysts have predicted that peak sales of Marimastat could reach nearly £4.6 billion in 2012. However, for now it is still making losses, £25.2 million in the year to April 30th.
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