Heading in the right direction

They have an agony aunt at Intercytex. This is not her official title, she is in fact investor relations manager, but Katharine Harris spends a great deal of her time answering letters from bald men.

"Hundreds of them," she says. "We get emails from men saying how their life is a misery and they would do anything to get their hair back."

The folk at Intercytex, which floated on the London AIM market last week, are resigned to the jokes, the awful puns of the "hair today (Tuesday, 07 February), gone tomorrow (Wednesday, 08 February)" variety, but they are very serious about what they do.

They don't plead for an end to the silliness, they know that's a vain hope, but there is a lot more to this company than all the wigging.

As well as offering bald people a chance of new hair growth, and in a quite revolutionary way, they are also involved in replacement skin, wound-healing, and anti-wrinkle and acne-scar treatment.

The company was founded in 1999 by Paul Kemp, who had spent more than a decade in the US working for a company in the same sector.

He had come up with Apligraf, a wound-healing product which is now on the market, but he had ideas to take things a step further, and he wanted to come back to the UK.

He had also kept in touch with Nick Higgins - they had been at university together - who had gone on to become chief business officer with Cambridge vaccine company Acambis. Nick joined the board of Paul's new company, Intercytex, as a non-exec, but today (Tuesday, 07 February) he is ceo, heading a company which could make a lot of people very rich, and hairy.

Intercytex science is all about cells, getting them to multiply and deal with the problems of wounds that won't heal, wrinkles, scars and hair-loss.

The cells for the wounds and wrinkles are cultured from the foreskins of newborn babies - just one or two a year, which otherwise would have gone straight into hospital incinerators. They are the only bit of a baby's skin that can be harvested, but their properties are perfect for the job.

For the hair-loss, the company "harvests" a particular part of hairs which grow on the back of the male neck, and which are unaffected by testosterone induced hair-loss, the main reason men go bald.

"You may have noticed that however bald men go, they never lose that hair at the back," explains Mr Higgins (full head of hair).

These special hair cells are then implanted on the bald head, and, unlike other such treatments, they will proliferate. Amazing.

Certainly, those behind Intercytex's £27m of venture capital thought so, among them Johnson & Johnson (they of the baby powder), Alan Goodman's Avlar BioVentures in Cambridge, Sir Chris Evans' Merlin BioSciences, 3i, Scottish Equity, and VC funds in the Far East.

All the manufacturing is carried out in Manchester, but the commercial end of the business is based at St John's Innovation Centre in Cambridge, where Mr Higgins is based.

Trading on AIM began on Wednesday, opening at 108p per share, and overnight lifting the value of the company from £45m to £60m, with £15m raised.

The company does not yet have a product on the market, but the lead contender is the wound healing cell cultures which kick-start new skin growth on festering sores such as leg ulcers. The product is in advanced clinical trials and is likely to reach the market, in the US, by 2008, 2009 in Europe.

"Skin is the Holy Grail," Mr Higgins says, "for the surgeon to be able to reach into the fridge and just take it out, rather than have to take a graft from the patient."

The new skin grown from the baby foreskin cells does the trick, and there is no problem with rejection because the cells involved are "immune silent" and don't need a genetic match.

"It's incredibly elegant science," says Mr Higgins, "skin-in-a-dish, we will be trying it on people later this year."

The hair-loss treatment has passed the first phase of clinical trials, on real heads, and goes into Phase II later this year, but it will be 2010 before the treatment is generally available, a very long time to wait for some of Aunty Katharine's correspondents.

This also means at least four years before the big money starts rolling in. At the moment, just half a per cent of balding males in the US are trying to get their hair back via hair transplants, which translates to a market worth $800m a year. Given that current treatments are way behind what Intercytex is developing, it's no wonder there has been no shortage of VCs keen to invest, and last week's flotation saw the share price rise to 123p.

"This is the big one," says Mr Higgins. "Some people say why bother with grannies with their sore legs, but if we were just into aesthetics I am not sure people would take us seriously."

The wrinkle and scar treatment, which involves injecting cell cultures into the face, and which does not have the same transitory nature as botox, is also expected to be worth hundreds of millions of dollars, with the wider getting-rid-of-wrinkles business already a $4 billion market, now split between women and men.

"It's going gang busters, aesthetic medicine in the US," Mr Higgins says. "It's socially acceptable these days."

But surely that was the whole point, all along, to be socially more acceptable?

Yet you get the feeling that Paul Kemp and Nick Higgins might not be there if they didn't have the ulcer treatment and skin grafts in their product portfolio. The VC's might like the other aspects of the company, but in Cambridge biotech is a serious business. Image is important, with or without hair.