The standing of Germany's Neuer Markt as an international biotechnology exchange has suffered a potentially fatal blow, as one of its few life sciences successes, the Danish therapeutic antibody development firm Genmab A/S, has signaled its plans to delist and consolidate its presence on the Copenhagen Stock Exchange.

Copenhagen, Denmark-based Genmab, which raised DKK1.56 billion (US$206 million) from its October 2000 IPO, was the first firm to seek a dual listing on the two markets.

"When we did the IPO in 2000, there was an anticipation that the Neuer Markt was going to be this great pan-European technology market," Genmab's vice president for investor relations and public relations, Rachel Gravesen, told BioWorld International. "That was the rationale behind doing it. But it didn't happen."

Danish and U.S. investors hold a substantial majority of the company's stock, equivalent to almost 50 percent and 32 percent, respectively, of its total equity. The remainder is held by investors throughout Europe. Since going public, about 95 percent of Genmab trading activity has taken place in Copenhagen. "People have chosen to be where the liquidity is," Gravesen said.

Genmab kicked off the delisting process last week by submitting an application to Deutsche Boerse AG in Frankfurt to delist its Co-Ownership Interests from the regulated market of the Frankfurt Stock Exchange and for trading to be ended on the Neuer Markt. A decision is expected within a month. Shareholders have the option of exchanging their stock for shares that will be traded in Copenhagen.

Although Deutsche Boerse could theoretically refuse the application, Gravesen said, it never has done so.

The move will yield annual cash savings of approximately DKK1 million. The company has no immediate plans to seek a secondary listing elsewhere. "That doesn't mean we won't consider it in the future," Gravesen said.

Steve Cox, a London-based biotechnology analyst at Commerzbank AG in Frankfurt, said the move has a significance that extends beyond the biotechnology sector. "In terms of the Neuer Markt, yes, it's a blow. Genmab was one of the stars of the whole thing," he said. "Since its flotation, it's outperformed the Neuer Markt by 30 percent."

Genmab was one of the last biotechnology companies to float in Frankfurt, riding the crest of a wave of enthusiasm for biotechnology among German investors during the late 1990s. Those stocks are now down by an average of about 90 percent, Cox said, and they will take a long time to recover. "Confidence in the Neuer Markt is shot to high hell," he said.

At one point, it looked as if it could develop into a de facto pan-European biotechnology exchange, providing the liquidity levels that only a single large market can bring and ending the fragmentation that has characterized the development of Europe's biotechnology industry. Easdaq previously sought to fill this role but failed to live up to its early promise. The list of alternatives is now dwindling.

"One of the few viable options for European biotech companies is going to be the London exchange," Cox said. "There is a base of companies in the UK that is not going to shrivel up and die." Investor experience is another key factor.

UK investors have 10 years of experience of dealing in biotechnology stocks. In Germany, it's more like five. "It's an educational process," Cox said. "Investors have to be educated on how to invest in these companies."