Xenetic Biosciences (LON:XEN) will seek a listing in the US following the establishment of its drug development operations in Massachusetts, according to chief executive Scott Maguire.

He told Proactive Investors the AIM-listed group planned a dual quote “at some point”, noting the “huge” value gap that currently exists between the biotechnology sector here and in the US, where it is far better understood and more widely followed.

The firm said it would be creating a new drug development centre in Boston – a world centre for biotech activity. 

“When I present at conferences in the US, they think our market cap is five to ten times higher than it actually is and they are quite shocked that it’s US$35 million and not US$250/350 million,” said Maguire.

In fact the Xenetic boss said he was in the States only last week working on laying the foundations for a US listing.

Earlier, the group, which is  developing a cancer drug and vaccines, formally announced its decision to establish its development operations in one of the world’s preeminent biotechnology hubs.

It followed a March 2011 visit to Britain by a delegation from industry and academia led by state governor Deval Patrick.

FTSE 100 listed Shire is probably the most high profile drug developer to make the switch.

“Shire was a UK based biotech company focused on orphan drugs. They opened up a Boston drug development centre in the late ’90s, dual listed, and now they are a US$30 billion dollar company,” said Maguire.

He said there had been two obvious US destinations for Xenetic to choose – Boston or San Francisco. Boston was better placed, logistically and “timewise” for the firm’s links to India and Russia, where it has collaborations, Maguire added.

“The incentives being offered by Boston for us to move there were vastly superior to anything anybody else could offer,” he added.

Heading up the firm’s efforts at the development centre in Boston as VP drug development will be specialist, Dr Henry Hoppe.

He played a part in launching a number of key drugs at world leader Genzyme and his years as a leading consultant will be hugely valuable as Xenetic rolls out clinical programmes in the US and Europe, Maguire said.

“We’d never find a person like that in Europe to be quite frank,” the Xenetic CEO told Proactive.

The company plans to hire up to six employees in Boston before the end of the year, but grow that quite rapidly to work on the data and drug candidates coming out of the Russian collaboration.

Under its partnership with Russian state-owned nanotechnology group, Xenetic now has 12 products under development in the country.

One of those is OncoHist, which has received Orphan and Rare disease designation in the US and Europe, and is a potential breakthrough cancer treatment.

This drug will be the first to be moved to Western clinical trials, along with another candidate – ErepoXen.

Maguire said OncoHist was currently in phase I/II in-patient trials in Russia, and some work was needed on its manufacture before it could go to clinical trials in the US, expected in the middle of this year.

In today’s update, the company noted that its other most progressed candidate, ErepoXen, for anaemia treatment, remained on track to begin Western clinical trials in the first half of 2013.

This drug, which is being developed in parternship with the Serum Institute of India, has already demonstrated in phase I and II(a) clinical trials that it has the potential to be a long-acting version with a likely dosing profile of once per month.

After today’s announcement, City Broker Singer said in a note to clients that the move to Boston marked a significant shift in Xenetic’s drug development strategy.

Analyst Shawn Manning said that the firm had posted positive results earlier this month and that his own own valuation of the company of 17 pence represented a 150 pct increase to the current share price.

That was based on a risk-adjusted sum of the parts analysis of the firm’s key pipeline assets and forecast cash.

“Over the next 18 months we expect promising news flow to support a steady increase in share price.”

As at the end of 2011, the firm was well-funded with £11 million in the bank.