The UK biotechnology sector has suffered a setback following the news that Scotland’s Ardana Biosciences has gone into voluntary administration.

Ardana, which specialised on reproductive health, had been seeking a buyer or merger partner to fund drug development since February. Indeed, the Edinburgh-based firm said that it has been in “a number of licensing discussions for individual development products”, however the board has concluded that “these potential transactions could not be completed within the time available before exhaustion of the company's cash resources”.

In May Ardana announced a preliminary evaluation of its testosterone cream which is in a Phase III study in hypogonadal men and claimed there was “considerable interest” in the product “both as an important part of the rationale for potential M&A and as a licensing opportunity in its own right”. A number of potential licensing partners had requested an update on the study but it appears that actually signing a deal was some way down the line.

As a result, the board of Ardana said that it has taken advice and, “with great regret, no longer believes that the company is in a position to continue its operations." Last Friday, it requested that trading in its shares be suspended and David Duggins and Tom Burton of Ernst & Young were appointed as administrators.

Ardana added that the administrators “will take such measures as they believe appropriate” including continuing to seek a buyer for the company and its assets.

The firm is the latest in the UK biotechnology sector to fall foul of the current economic climate and credit crunch which has seen the equity markets struggle and banks take a hardline when it comes to giving out loans.