When the Scottish economic development agency injected about $ 9 million into the biotechnology company Cyclacel last October, the country’s enterprise minister explained that “there could not be a more important company for Scotland’s future.” But only two months later, this flag-bearer for Scottish biotechnology said it would move its headquarters to Short Hills, N.J., and merge with a publicly traded American company.Cyclacel executives say there was no slight intended to Scotland. “The issue was one of access to the capital markets of the United States,” Spiro Rombotis, Cyclacel’s chief executive, said in a recent interview. Only American investors, he said, could supply the tens of millions of dollars needed to carry the company’s cancer drugs through clinical trials.

Cyclacel is not alone among European biotechnology companies that consider their science second to none, while conceding the superiority of American financial markets. From European countries including Denmark, France and Germany — and from Australia and New Zealand, too — a number of biotechnology companies have come to America, in name at least, for greater access to the world’s largest investment pool for life sciences. Some also say the United States is a more lucrative market for the drugs they are developing.

The migration trend suggests that money, not molecules, could become the United States main competitive advantage in biotechnology, a field that is potentially one of the 21st century’s premier global industries. Most of the migrating companies are setting up only small corporate and business offices in the United States, while leaving their scientists back in their home countries. Cyclacel’s 65 researchers, for example, remain in Dundee, Scotland, and Cambridge, England, where they have strong ties to local academic communities. Salaries for scientists are not lower in Britain, Mr. Rombotis said, but the company’s research is subsidized by the Scottish government.

The United States has long been the biotechnology world’s leader and remains so. But when it comes to spinning science into start-ups, other countries have caught up. Europe now has 1,613 biotech companies, more than the 1,415 in the United States, according to Ernst & Young. A decade ago, Europe had only 584 such companies, compared with 1,308 in the United States. The European companies, though, are typically smaller than their American counterparts — 45 employees on average, compared with 96 here, according to Critical I, a British consulting firm. More crucially, they often lack the capital to get beyond the early stages of research and development. Last year, biotechnology companies raised only $3.3 billion in Europe, compared with $16 billion in the United States, according to BioCentury, an industry newsletter.

American companies on average also spend 3 times as much on R.& D. and have access to 10 times as much debt financing as their European counterparts, according to a Critical I report released in May by EuropaBio, a trade group based in Brussels. Compared with Europe, it is also much easier for public companies in the United States to raise additional money, through secondary stock offerings or private placements. Thus the wave of immigrant companies, like the BioVex Group, which was founded near Oxford, England, but moved its headquarters to Cambridge, Mass., last year because it had begun clinical trials of its cancer treatment in the United States and also wanted better access to capital. Although its scientists remain in Britain, BioVex recently used its American base to file for an initial public stock offering on Nasdaq.

Some of the foreign companies intent on a Nasdaq listing have sidestepped an I.P.O. by doing a reverse merger with an American company that has already gone public — in some cases a biotechnology company that has foundered. That is what Cyclacel did. It agreed last December to be nominally acquired by Xcyte Therapies of Seattle, although Cyclacel is now the name of the company and the entity in charge. Cyclacel then took advantage of its adopted Nasdaq listing by raising an additional $45 million in April through a private placement of stock and warrants.

Similarly IDM, a French drug developer, completed a reverse merger last August to acquire the Nasdaq listing of Epimmune. IDM is now based in Irvine, Calif., although its research operation and most of its employees remain in France. Likewise the German company Micromet now has a Nasdaq listing and a base of operations in Carlsbad, Calif., after reverse-merging in May with CancerVax. Most of its operations are still back in the home country.

In May, a company started by venture capitalists in Denmark to develop a drug for osteoporosis went public through a reverse merger with an American shell company, Castle & Morgan Holdings. It then raised $10 million in a private placement, mainly from American investors. Originally called Nordic Bone, the drug company is now based in San Francisco and has a more cosmopolitan name, Osteologix.
(Por Andrew Pollack, The N.Y. Times, 12/07/2006)