Drug specialist doubles value

October 28, 2005

A team of Oxford University chemists looks set to pocket millions from a spin-off company that has doubled its value to £58 million in under a year.

VASTox plc was started two years ago when six scientists from Oxford's chemistry department invested a total of £100,000 in the firm, which develops drugs to treat rare diseases.

Last October, it was floated on the London Stock Exchange and valued at Pounds 30 million.

But now that the company has recorded a fivefold increase in its annual sales, traders have estimated VASTox to be worth at least £58 million.

Stephen Davies, its founder and chairman, said he and his colleagues had no intention of ditching academe to live off their riches.

Professor Davies is one of Britain's most successful entrepreneurs, having sold his other spin-off, Oxford Asymmetry, for £316 million in 2000.

He said: "I have more money than I need to survive with the lifestyle I lead. But I, and my colleagues at VASTox, don't want to swap academe for business, however much money we make.

"I love chemistry and supervising PhD students. I love doing my full-time academic job. The business is a way to fund my research group and to employ PhD chemistry students.

"For me, molecular architecture is hugely fascinating - a hobby as well as a job. I'm a very lucky man."

Professor Davies has allowed himself one luxury to celebrate the spin-off's success: a top-of-the-range red Jaguar XKR worth £75,000.

The company achieved success by reducing the cost of testing drugs in techniques using zebrafish embryos and fruit fly maggots, which it says are far cheaper, less controversial and just as effective as other animals used to test products.

VASTox also identifies rare diseases, such as Duchenne muscular dystrophy, and develops drugs to treat them.

Professor Davies said the rest of the market was reluctant to look into drugs for diseases that affected so few people.

The firm, which has 23 staff, of whom 17 are research scientists, reported a turnover of £201,000 in its six-month interim results published this month. The figure, five times the amount the firm reported a year ago, has stunned others in its field because of the current economic downturn in the pharmaceutical sector.

Professor Davies said: "A lot of companies would have been patting themselves on the back if they had broken even at our stage.

"The secret to our spin-off is an exceptionally good idea and the right management team."

There are 431 university spin-off companies in the UK, but only a quarter of them are considered to be profitable, according to Library House, the data and research company.

About two thirds of spin-offs are set up by academics and professors aged under 40 years. Many companies remain small, rarely growing beyond the founding academic and one or two helpers.


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