All gone wrong at Renovo

It was as, Renovo Group says, a "very surprising result". As we reported last December, Renovo had “a big bet on one drug – Juvista which is used to minimise scarring after surgery”. In trials the skin was cut and treated either ends of the incision with the drug and a placebo. Phase II trials involving 100 people went well, but the all-important phase III trials involving 400 patients did not: there was too much variation in the healing process to establish Juvista's efficacy.

Unsurprisingly, that bombshell in March knocked the shares hard and led to an immediate restructuring. All 100 plus staff may be made redundant as the company becomes a cash shell. Rights to other drugs seem to have limited value apart from Juvidex, which reduces redness after operations to reduce the effects of sunburn, skin waxing, laser peels and dermabrasion (skin smoothing to remove tattoos, moles and fine wrinkles). The latest profits include a final payment from co-investor Shire, made in 2007.

So what went wrong at Renovo? The answer is that it went for the big hit and missed. Juvidex may be sold to a cosmetics company within perhaps 18 months.

Broker Panmure Gordon values the various parts of Renovo at £42m or 22p a share.

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