ML Laboratories directors net pounds 6m in options bonanza

MAGNUS GRIMOND

Two directors in ML Laboratories, the fledgling pharmaceutical company, have made a pounds 6.2m gain on the sale of options less than two weeks after Kevin Leech, chairman and co-founder, cashed in shares worth pounds 55m it emerged yesterday.

The sales bring to at least pounds 68m the total withdrawn by directors of biotechnology groups since their shares soared in the wake of British Biotech's announcement in Novemer of promising results for its Marimastat anti-cancer drug.

Stuart Sim, ML's deputy chief executive, netted pounds 4.04m from the exercise of options at 41p and their immediate sale at 445p. Professor Donald Davies, another director, picked up pounds 2.22m from the exercise of 750,000 options at 0.2p and the disposal of 500,000 of the resulting shares at 445p. Last month, Mr Leech garnered pounds 55m from a share placing to coincide with a placing by the company to raise pounds 25m at 400p.

The ML option bonanza is the biggest yet in a recent spate which has netted at least pounds 13m for the directors of loss-making biotechnology groups. Two executives of British Biotech made pounds 3.2m in December, when four directors Celltech also netted pounds 3.5m.

ML's shares have been given an additional spur by the revelation at the end of last month that a clinical study of a new Aids treatment conducted on four patients with late stages of the disease was progressing well.

From a price of 356p in November, the shares soared to a peak of 472p after January's news, although they slid 18p to 436p yesterday, apparently on disappointment that the group had yet to tie up a marketing deal for its anti-asthma inhaler.

At a briefing for City analysts yesterday, the company defended both the decision to cash in options and the Aids study. Mr Sim pointed to the 46-fold increase in the company's share price since it originally floated on the third market in 1987. "Let's not ask why it happens, lets just accept that it has happened. There are a lot of private shareholders and institutions who will be very pleased with that."

Professor Davies admitted that the Aids study, after which one of the patients died, was "far too small too small to discuss any efficacy of the treatment." But he said the treatment had been "well tolerated" in the patients, two of whom remain well seven months later. So-called "viral load" tests in the laboratory, involving the measurement of the amount of the virus remaining in the blood, compared well with AZT, the main anti-Aids drug manufactured by Glaxo Wellcome.

The ML treatment involves dissolving dextrin sulphate in the company's patented Icodial solution, developed as a method of kidney dialysis. Professor Davies said they had enough evidence to go forward to the next stage, a study involving 20 to 30 late-stage patients.

There was good news yesterday for Bespak, the aerosol manufacturer that has had to take a pounds 18.6m write-down after a royalty deal with ML for its inhaler failed to deliver income. ML said a new arrangement, near conclusion, will mitigate some of the onerous royalties payable by Bespak.