However, the City took the news in its stride and after falling in early trade Biotech's shares, which have fluctuated wildly in recent months on prospects for an anti-cancer drug, recovered to close 2p higher at 203.5p.
"The asthma drug was not a top priority programme for us," said James Noble, Biotech's finance director.
Analysts concurred. "British Biotech had not intended to develop lexipafant itself for asthma, and as the market leader in asthma treatment, Glaxo felt it was important to evaluate the drug," said Mark Brewer of Biotech's brokers, ABN Amro Hoare Govett.
Instead, analysts took comfort from confident statements about two other drugs Biotech is developing. Acute pancreatitis drug Lexipafant could be submitted for approval in early 1997 and be on sale a year later, while the US Food and Drug Administration has approved the start of late-stage trials of Marimastat, Biotech's potential blockbuster drug, in four additional cancers.
More information should be available in November when results of late- stage trials of Lexipafant will be published. ABN Amro Hoare Govett predicts peak turnover of pounds 300m a year for the drug. Raw data on Marimastat, including analysis of its effectiveness in stomach, colo-rectal, ovarian and pancreatic cancer, will be presented to the European Society of Medical Oncology in Vienna the same month.
The Oxford-based group, which is seen as a bellwether for Britain's biotech industry, reported losses of pounds 8.0m in the three months to July compared with pounds 7m a year ago.
The company ended the first quarter with cash reserves of pounds 200m. Biotech expects spending in the year to April will rise to around pounds 40m as it moves drugs towards the market, builds laboratories and consolidates operations.
British Biotech was one of many biotech companies to go to the market for cash this year. A controversial rights issue in July raised pounds 143m but coincided with a bout of nerves and profit-taking among investors.
Earlier this year British Biotech presented clinical trial results on Marimastat that sent the company's share price soaring to 350p and provided the base for the subsequent rights issue. However, the shares later slumped on news that medical researchers had found that cancer patients on the drug fared little better than those on no treatment.
British Biotech hit the headlines again last month with plans to introduce a more generous bonus and share option scheme to attract top international executives. Under the proposals, the company can award as many shares as it likes to an individual every year as long as it does not issue more than 10 per cent of its share capital over 10 years for all employee share schemes.
One beneficiary of the plan, which was approved by shareholders yesterday at their annual meeting, is Pam Kirby, formerly with Sweden's Astra, who was appointed to establish British Biotech in Continental Europe.Reuse content