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Physiomics Reports First Financials after December IPO on London s Alternative Market

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Physiomics, a UK-based provider of biosimulation software and services, last week reported its first interim results as a publicly traded firm.

The company went public in December, opting for a listing on London’s Alternative Investment Market, or AIM.

AIM is viewed as a “junior” market that was started by the London Stock Exchange a decade ago to appeal to small companies. The exchange has no minimum market capitalization requirement, a minimal set of reporting requirements, and does not require shareholder approval to make acquisitions. In a sense, it sits somewhere between VC funding and a listing on the main exchange.

John Savin, CEO of Physiomics, told BioInform that “to private investors and certain types of investment funds, [AIM] has all the tax advantages of making a private equity investment, but yet it is a traded, listed exchange.”

In addition to the £750,000 ($1.4 million) before expenses that it was able to raise through its IPO on AIM on Dec. 20, the listing will provide Physiomics with “higher visibility” that should help it attract a broader set of customers and partners, Savin said.

In its first earnings report, for the six-month period ended Dec. 31, 2004, Physiomics posted revenues of £96,000 ($179,000), compared to £30,000 for the same period of 2003. The company said that the majority of its revenues came from its collaboration with Bayer [BioInform 09-20-04].

Physiomics reported a net loss of £236,000 for the six-month period, compared to a loss of £15,000 in the comparable period of 2003. Net assets as of Dec. 31 were £540,000.

Savin said that the company is investing the proceeds from the IPO in R&D as well as sales and marketing efforts. The company has hired a business development consulting firm to help fill out its customer list in the US, Europe, and Asia. In addition, the firm has hired several new scientists, including Maciej Swat, a simulation scientist from the Institute for Theoretical Biology at Berlin’s Humboldt University, and Andrew Finney, a software engineer and co-developer of the Systems Biology Markup Language.

Physiomics has also recently been granted European Patent 0937286, which covers its SystemCell simulation technology. The corresponding US Patent, No. 6,446,055, was assigned to the company in 2002.

The company is the first computational biology firm to go public since the boom of 2000, and Savin acknowledged that history hasn’t been kind to Physiomics’ predecessors in the public markets. However, he noted, these companies proved that it may be possible to raise too much money in an IPO.

“One of the difficulties of bioinformatics companies that have listed in the past is that they raised very large amounts of money. That’s absolutely wonderful, and I would love to raise large amounts of money in one sense. However, I think sometimes the business model to make use of that money sensibly has just not been there,” he said.

Savin noted that even some privately held firms, such as Physiome Sciences, may have been victims of their own success in raising cash.

“If [bioinformatics companies] kept themselves lean and mean and very focused on a services business, it could work, but if you have a lot of money it’s very difficult to get a very high return on capital.”

— BT

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