A CAMBRIDGE-based company that is pioneering a hair cloning treatment for baldness will today announce plans to join London’s Alternative Investment Market in a deal valuing the business at £45 million.

Intercytex, which is also developing a treatment for wrinkles, is raising £15 million through the sale of 13.8 million new shares at 108p. The company is also placing a further £4 million worth of shares at the issue price with existing venture capital backers.

Dealings in the shares, which have already been placed by Piper Jaffray, the US investment bank, will begin on February 1.

Intercytex’s path to AIM has not been easy. Bankers pulled plans to raise £15 million last summer, in a deal that would have capitalised the company at £20 million to £30 million, after the biotech sector lost favour with City institutions. The company instead raised additional funds from its main backers, including Avlar, Merlin Biosciences and 3i.

Proceeds from the flotation will go towards funding new tests on the company’s baldness cure, ICX-TRC. The treatment, which is about to enter mid-stage clinical tests on patients, involves removing special cells from the base of the hair follicle — the cup-shaped “factory” from where individual hairs grow — and replicating them in large quantities in the laboratory.

Tens of thousands of cells are then transplanted back into the scalp, where they divide to create new follicles, which go on to generate new hair growth.

Nick Higgins, the chief executive, said that the fundraising would see the company through to at least 2008, when a version of ICX-TRC could be close to regulatory approval: “This is an elegant and sophisticated science — it’s not back-of-an-airline-magazine stuff.”

The potential market for hair-loss treatments is vast. Analysts estimate that American men spend at least $1.5 billion (£840 million) a year on lotions and potions to prevent thinning on top. But despite their best efforts, one in two men is likely to suffer premature hair loss by the age of 50 and 70 per cent of men are likely to be bald by the time they reach their 70th birthday.

Intercytex’s most promising product is a medicine for leg ulcers, known only by the codename ICX-PRO. The gel contains special cells that re-teach the body how to heal itself. Analysts believe that the treatment, which is scheduled for launch in the US in early 2008, could generate sales of up to $400 million a year.

• Hopes of a revival in the fledgeling biotech sector were bolstered yesterday when XCounter raised a better than expected £16 million as part of its own AIM flotation. Shares in the company will also start trading on February 1. XCounter makes digital X-ray machines capable of generating high quality images in 3-D.

  Centuries-old search for the magic remedy

  AMONG research laboratory swots it is known as aesthetic medicine. To the rest of us it is “slaphead science” — the search for a cure for man’s oldest affliction, the follicularly challenged pate.

  By the time a man reaches 50, he has a one in two chance of suffering dramatic hair loss. One in five women also experience some form of hair loss.

  Analysts speculate that the market for a cure for baldness could be worth as much as £1 billion a year in Britain and many times that worldwide.

  A scalp hair grows from one of about 100,000 follicles. As people age their follicles shrink until the hair is too fine and short to show. However, neither the follicles nor the hairs die, prompting the search for a medicine to encourage longer, thicker hair.

  Researchers know little about the causes of baldness. The Victorians blamed everything from excessive masturbation, wearing a hat or growing a beard. Scientists at the University of Bonn recently found a genetic link between mothers who produce high levels of testosterone and premature baldness in their sons.

  In the 1600s doctors were extolling the healing properties of cow saliva. By the late 1980s cosmetic surgeons were taking healthy follicles from the back of the head and “pricking” them into the top of the scalp.

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