Celltech rises on encouraging test results

BY MAGNUS GRIMOND

Clinical trials for three promising new medical compounds are continuing to go well for Celltech, the biotechnology company, which floated at 250p nearly 18 months ago.

The encouraging progress, combined with news that interim losses have been cut by £300,000 to £4.1m, was well received by the stock market, which marked up Celltech's shares by 2.5p to 307p yesterday.

Peter Fellner, chief executive, said: "The trials are very much on track and there have been no unpleasant surprises as some others in the sector have had." The second phase of studies to determine whether the compounds actually work is now under way, he said.

None of the expected side-effects have shown up in a new oral treatment for mild and moderate asthma, code-named CDP 840, which could be submitted for licensing in 1998. The potential for the drug, being developed with Merck, should be clearer by the end of this year, Mr Fellner said. The market is huge, with $6bn being spent on existing products like Ventolin and Tilade last year.

But, if tests go well, Celltech's first approvals are likely to be for a drug being developed with Bayer to combat inflammatory bowel disorders, called CDP 571, and an anti-leukaemia compound that American Home Products is backing, entitled CDP 771. Mr Fellner said filings could come as early as 1997.

Celltech differentiates itself from other recent biotechnology offerings by its higher levels of external income. Turnover from its business making antibodies for groups like Roche and Johnson & Johnson rose from £6.5m to £7.2m in the six months to March. With interest income - £900,000 in the half-year, down from £1m before - that is meant to fund half the research and development budget, with the rest coming from big drug company partners. Mr Fellner was pleased with the fall in half-year losses, despite having raised R&D spending by £1m to £8.8m last year.