BioWorld International Correspondent

LONDON - There was more bad news last week for biotechnology companies waiting for the capital markets to reopen when Royalty Pharma AG canceled its initial public offering on the Swiss Stock Exchange in Zurich.

The drug investment company, based in Schaffhausen, Switzerland, but managed from New York, issued a statement saying, "Royalty Pharma is of the opinion that current capital market conditions do not offer an ideal environment for a successful public listing."

A number of European biotechnology companies are waiting to list, but Royalty Pharma's postponement reinforces the fact that the IPO market remains closed. In May, Ark Therapeutics Group plc, of London, pulled its IPO, despite a high degree of interest during the roadshow, citing "unusually adverse market conditions." Then, earlier this month, YM BioSciences Inc., of Mississauga, Ontario, came away with just C$15 million from a target of C$40 million, when it floated simultaneously on the Alternative Investment Market in London and the Toronto Stock Exchange.

For Royalty Pharma, which specializes in buying drug royalties, this is the second time it has pulled an IPO: In November 2000 it postponed a listing on Germany's Neuer Markt.

UBS Warburg was the global coordinator for the Swiss listing in which it was intended to issue up to 4.1 million shares at 40 Swiss francs to 45 Swiss francs per share.

Royalty Pharma said it would use the proceeds to acquire more royalty interests. It has interests in nine marketed drugs, including Rituxan, Neupogen, ReoPro, Zenapax and Retavase, and earned $15.8 million on revenues of $36 million last year.

In its latest deal in April, Royalty Pharma paid Ligand Pharmaceuticals Inc., of San Diego, $3 million for 0.125 percent of future sales of three of Ligand's compounds that are in Phase III. That followed a $6 million payment in March for 0.25 percent of the rights to the same compounds, which are selective estrogen receptor modulators. Royalty Pharma has options to increase its rights to 0.875 percent of net sales for up to a further $8 million in 2002, $12.5 million in 2003 and $26.5 million in the first half of 2004.