Chief executive of Axis Genetics Mr Iain Cubitt said his company could not raise the £10m funds it needed to keep going as investors were scared off by the adverse publicity surrounding genetically-modified (GM) food. Axis makes vaccines in GM plants.

"Some investors were still wary of getting close to GM plants," Mr Cubitt said.

Axis Genetics has laid off half of its 50 workers, while accountancy firm Ernst & Young continue the search for a new group of investors.

Start-up difficulties

The problem faced by Axis is one not just faced by biotechnology companies, but by many start-up companies in the UK, Dr Malcolm Vanderberg, an independent consultant to the biotechnology industry, said.

"In general the biotechnology industry finds it very hard to raise funds in the United Kingdom, as do a lot of companies who need venture capital," he said.

"They are trying to sell the investor a dream, that they can create something out of nothing and anything that dents that dream has to be bad news," Dr Vanderberg added.

He said that Axis problems were compounded by the "scare of GM food and that would have put some of the investors off because it was something that was going to dent the dream."

The cost of developing an idea from conception to the market place is estimated to be around £300m and many start- up companies underestimate the cost.