UK biotechnology company, Vernalis, says it is planning to raise £30.3 million pounds through an open offer and placing. Although the news took investors by surprise, the company’s share price rose by a not insignificant 6% during morning trading on the London Stock Exchange on the announcement.

The company will be placing 43.25 million new shares – representing just under 28% of its existing share capital) – at £0.70 per share, in a bid to raise net proceeds of some £27.6 million. Those holding 18 company shares will be able to buy five of the new shares.

The firm is planning to use the proceeds to strengthen its financial position ahead of an anticipated $40 million dollar milestone when the migraine treatment, frovatriptan, wins clearance in the short-term prevention of menstrually-related migraine, which it hopes to receive in the first half of 2007. In addition, Vernalis says it will use the monies to set up a commercial business in North America, having reacquired the rights to the product in this region from Elan last year [[30/03/04a]], [[16/07/04d]]. The company is also hoping to use the funds to progress its existing product portfolio, and give it flexibility in partnership agreements, as well as acquiring additional products or programmes in the areas of central nervous system disorders and oncology.

Simon Sturge, Vernalis’ chief executive officer, commented: “We are extremely pleased with the very strong support we have received, both from existing shareholders and from new shareholders. This fundraising will enhance our financial position and we look forward to utilising these additional funds to build a more robust business.”