A biotechnology company that received millions of pounds in funding from the Welsh government has become the latest business to fall out of London’s junior stock market after entering administration.

Reneuron, which was once valued at more than £500 million, said it was not in the best interests of shareholders to seek out a “highly dilutive” fundraising, given the limited cash available and the terms offered by potential investors. It said there was no longer a realistic prospect that it could raise enough money to exit administration with sufficient working capital to restore the trading of its shares on Aim.

Shares in Reneuron, which stood above 300p in 2019, have been suspended for more than six months and will be cancelled from the first opening bell next week.

The company’s administrators have said they will “continue discussions” with creditors to determine the solvency of the business. Reneuron said that there were a number of options available, including “continuation as a private company”.

Reneuron, which was founded in the late 1990s and was listed on the stock market in 2005, secured approval to start clinical trials of its stem-cell therapy in 2009. The programme gradually moved into phase two trials, before it was disrupted by the pandemic.

In the six months to the end of September last year, the business made only £157,000 in revenue but registered £3.5 million in operating expenses, most of which was directed towards research and development. Overall it reported a £2.8 million loss.

It received a £5 million equity investment from the Welsh government’s Life Sciences Investment Fund in 2013. Welsh ministers also announced a £7.8 million grant package to support the company’s relocation from Guildford, Surrey, to Pencoed in south Wales to establish a cell manufacturing and development facility.

• Is there still a role for Aim? London’s junior market needs a lift

A number of British biotechnology companies have argued that it has become too difficult to raise capital on Aim and that they would be better off as private companies. Several have quit Aim this year, including Destiny Pharma, C4X Discovery and Redx Pharma.

Destiny Pharma, which was chaired by Sir Nigel Rudd, the City veteran, fell into administration this month despite delisting from the stock market. Other companies have moved to the United States, including SpectralMD, a developer of artificial intelligence algorithms and optical technology. It moved its listing to the Nasdaq stock exchange last year after merging with Rosecliff.