If many U.K. investors won't pony up enough money to allow well-capitalized drug development, Cyclacel isn't going to go hat-in-hand trying to explain why it needs more. Instead, the company has chosen to go to international investors with a better understanding of the capital intensity of drug development, raising £34 million ($46.9 million) last week in a pre-IPO round that gave the cancer company an estimated post-money value of just over $90 million.

"In drug discovery terms, $50 million is probably about the right size for a series C round," CEO Spiro Rombotis told Ebb & Flow. "So although the size is big for Europe, I am most excited about being in the competitive range of U.S. companies."

The move avoided European investors' preference to drip feed biotech companies. Rombotis said he concluded that an international offering "would sell more across experienced seasoned U.S. investors, who have seen other teams and similar enterprise models, so their bets would be less on the company model and more on the management team and technology."

The funding puts Cyclacel in the lead for the largest U.K. venture round since 1994, displacing drug discovery play Oxagen, which raised $44.2 million last December. Third is bone and skin diseases company Strakan Group, which last month raised $43.9 million. Among European venture deals since 1994, Cyclacel is second behind Spanish cancer play PharmaMar, which raised $173.3 million last July.

Invesco Private Capital, which led the Cyclacel placement, put up more than twice as much as the next biggest investor, Bank Invest. Cyclacel now has 18 institutional shareholders and several individual investors, and no one shareholder holds more than a 20% stake.

Rombotis said the funding should give Cyclacel the means to move several compounds far enough in development to make the company an attractive IPO candidate. "I would like to see Cyclacel produce three drugs in the clinic - one in Phase II and two in Phase I - from its own portfolio, and investors would like to see us come to that point before considering a float," he said. Cyclacel has its CYC202 oral CDK2 inhibitor in Phase I to treat cancer. The company plans to move a second molecule into Phase I in 12 months, with a third entering the clinic in 18 months.

One wild card is Cyclacel's Polgen discovery and development unit, which is working on cancer genes associated with mitosis and meiosis. Polgen has more than 100 validated genomic targets that regulate cancer cell division, according to Rombotis, who suggested the unit has yet to be accounted for as a further value driver for Cyclacel. "The next 12 months will be critical to see how Polgen plays out," he said.

Affymetrix undertow

Life science supplier stocks were dragged down for the second time this year by a company-specific event. The flash point this time was Affymetrix's after-market announcement on Monday that it expects revenues to fall short of analyst expectations due to lower than anticipated orders for its GeneChip product line and a continued decline in the market for spotted array instrumentation (see BioCentury Extra, Monday June 11 & Tuesday June 12).