BioProgress, a UK company specialising in the manufacture of non-gelatin capsules, looks set to become only the second UK biopharmaceutical company to brave the equity markets this year with a transfer of its listing Nasdaq's OTC Bulletin Board to London's Alternative Investment market.

The company is aiming to raise £2 million (€2.8 million), and perhaps even double that amount, in a move which would give it a market capitalisation of around £13 million. The shares are due to start trading on May 16.

BioProgress made an AIM listing a priority for 2003, as a result of increased scrutiny of corporate governance in the USA and the extra costs this causes for listed firms.

BioProgress said it was able to generate interest in the Initial Public Offering because it not only has a promising technology, but also a number of established customers in place. These include Bristol-Myers Squibb, pharmacy operator Boots and Peter Black.

BioProgress is primarily focused on commercialising its proprietary XGel Film Systems, which it claims are the world's first range of animal-free encapsulation processes. Different versions of the XGel system can encapsulate liquids, coat tablets and deliver powders, and the firm recently unveiled a new technology, called Septum, that can deliver two non-compatible ingredients in the same capsule shell.

"The industry is keen to replace animal-derived materials including gelatin, which is derived from animal rendering, and BioProgress is well positioned to provide a cost-effective alternative," said chief executive Graham Hind.