Charity pulls TB funds
Sunday 02 June 1996
Robert Howells, the medical trust's programme director, confirmed at the weekend that Wellcome demanded all its money back when scientists at University College, London, who were also directors of the company, revealed that they intended to use the project commercially.
"We went into it quite unwittingly," said Dr Howells. "The legal advice we got was that if we had gone ahead we would have been in breach of our charitable status. This is the only grant this has happened with in the time I've been at the trust."
The revelation comes two weeks after the Independent on Sunday revealed that Stanford Rook's former managing director, Wilson Carswell, resigned from the board and gave up pounds 500,000 of share options because he did not believe the company's research supported claims in its prospectus.
Stanford's shares have dropped 55p to 478p since the report. Chairman Eric Boyle made a statement to the stock market, saying: "The prospectus exceeded the requirements expected of companies joining AIM and was signed off by all directors of the company."
Dr Carswell's resignation was not included in the prospectus, however, and corporate financiers and the Stock Exchange have expressed surprise. "That's perhaps something they should have disclosed, if not in the prospectus then at least firstly to us," one Exchange source said.
The three-year Wellcome grant, requested by UCL researcher Graham Rook, was made in October 1992, two months before he and his colleague, John Stanford, set up their company. It was supposed to pay for a research training fellowship in tropical medicine.
Shortly after the research began the following summer, Stanford Rook realised that under the terms of the grant, any commercialisation would require written approval from Wellcome. When the trust subsequently pulled out, it was repaid in full by the university.
The company now says the grant was entirely between UCL and the trust. But it admits that it reimbursed the university for money already spent.
The project, in Durban, South Africa, has continued with Stanford Rook funding, and has reached Phase III trial state. The company is counting on it to prove to regulators that its TB drug - known as M. vaccae or SRL 172 - will perform as claimed in its prospectus.
Corporate financiers say the lack of disclosure highlights a weakness in the old Rule 4.2 matched bargain market - on which Stanford Rook was first quoted in March, 1995 - and the new Alternative Investment Market, to which it moved last July.
To cut costs, it is the responsibility of nominated advisers to certify whether quotation rules are followed, omitting the constant shuttle of documents between the exchange and brokers that takes place on a full listing.
Exchange sources said any complaints it receives will be investigated.
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