GM salmon company eyes AIM flotation to avoid US regulations

A US company which has developed a genetically-modified salmon capable of extra-fast growth is weighing up a flotation on the Alternative Investment Market in the new year.

Aqua Bounty Technologies, based in Massachusetts, is exploring fundraising opportunities in the UK in a move that is set to challenge City attitudes to controversial GM science.

A decision to list in London would also underscore AIM's gathering ability to attract US firms put off a domestic listing by the onerous Sarbanes-Oxley regulations.

Aqua Bounty's GM salmon are capable of growing to adult size in a quarter of the time of a normal fish, and the company is hopeful that its latest scientific work will persuade US food regulators that the fish is safe to farm and to eat.

Its first products, though, are protein-based foods for shrimp which can improve their growth rates and resistance to disease.

Elliot Entis, chief executive, said that Aqua Bounty products could reduce the need for antibiotics to be used in fish farming, cutting potential risks to human health. "People focus on the GM salmon, we are well aware of that, but we are a broad product company in aquaculture, and we have health-related products which help shrimp and fin-fish to survive disease."

The company would be able to trumpet early sales growth from shrimp products in Mexico if it decided to sell shares to the City. The company is currently loss-making, since research and development costs significantly outweigh those revenues. The valuation put on the company at float would depend crucially on fund managers' view of the long-term potential for GM fish.

Aqua Bounty's GM salmon and other fish are bred on fish farms in Canada with an anti-freeze gene which tricks them into producing growth hormone all year round, rather than just in the summer months when they normally grow. This could bring them to market size four or six times quicker, perhaps in less than a year. The company is working on ways of ensuring the fish are sterile, in order to eliminate the risk that escaped fish might contaminate non-GM salmon stocks.

Periodic publicity for Aqua Bounty's work always sparks controversy, with environmental and food campaigners arguing that the risks of commercialisation may be too high. However, GM crops are already widely used in the US, and do not prompt the "frankenfoods" arguments seen in many other countries, including the UK.

Aqua Bounty has been working on plans for a possible fundraising with Code Securities, the niche investment bank specialising in life sciences industries. However, it has not engaged Code formally, nor decided whether to proceed with a flotation.

A decision is expected early in the new year, Mr Entis said. "As with any company like ours, raising money is always of interest to us. We have been funded on a private venture capital basis up to now, and that has sustained us, but we now have some product income."

The tighter regulatory regime in the US since the collapses of Enron and WorldCom, and the introduction of the Sarbanes-Oxley legislation in particular, has dramatically increased the costs of listing for small and mid-sized firms, and the London Stock Exchange has been actively promoting the light-touch regulation of AIM in New York.