Antisoma value slashed in half after failure of new cancer drug

One of the most advanced drugs to have been developed by a UK biotech has spectacularly failed its clinical trials, sending shares in the company that owns it down 50 per cent and raising questions over the viability of the entire industry.

Antisoma's pill was no more effective against ovarian cancer than a placebo, the company said yesterday, and the product is to be abandoned after 15 years of work costing an estimated £20m. The unequivocal judgement came as a disappointment to those who had hoped a successful outcome would give a boost to investor interest in the fragile biotech sector. It is also a blow to those who bought into a placing and open offer of Antisoma shares at 40p last November. Yesterday, they fell 24.5p to 20p.

More than 420 women in 17 countries took part in the trials and, although the data will be presented at cancer conferences in an attempt to assist understanding of the disease, there is no chance of it being tried in other cancers. Glyn Edwards, the chief executive, said: "It is a definitive result and there is no future for this drug in any of its indications."

The product, codenamed R1549 but previously known as pemtumomab, has had a chequered history. It was originally licensed to Abbott Laboratories, the US pharmaceuticals giant, but Abbott tried to renegotiate terms in 2002 after equivocal data from Phase II trials. It was taken up by Roche when the Swiss giant did its wide-ranging licensing deal with Antisoma in 2002.

Roche said the disappointment would not affect its relationship with Antisoma, which has, in effect, been annexed as a research and development laboratory for the Swiss group. It is funding earlier-stage trials of a breast cancer drug and has options over other products developed by Antisoma. Mr Edwards said Antisoma has more than two years of cash left, and this would most likely be augmented by milestone payments from Roche, but analysts said there was more pressure on him to buy in an extra product to bolster the pipeline of new drug.

The company raised £15.2m last year, which it said at the time would fund the existing pipeline. One investor who bought in at the placing - and sold out yesterday - said he had been buying "an option" on the success of R1549.

The failure of the product prompted handwringing across the UK biotech sector, whose failure to produce blockbuster drugs is often contrasted with the United States. Yesterday, Roche revealed that another of its partners, Genentech of San Francisco, had successfully completed trials of Tarceva for lung cancer.

Rare successes include Humira, a rheumatoid arthritis drug discovered using know-how at Cambridge Antibody Technology, but which is now the subject of a bitter dispute over royalties between CAT and Abbott, which developed it.

David Oxlade, the chief executive of Xenova, whose brain cancer drug Tariquidar was all but abandoned last year, said that the heavy focus investors had been putting on Antisoma's long-awaited trials results highlighted just how thin the UK industry's pipeline is. "The industry is 10-15 years behind the US. It is easier to obtain larger sums of money in the US than in Europe, so their companies have more money to build the depth and breadth of portfolio that allows you to survive the inevitable disappointments."

Andy Smith, the fund manager of the 3i Biosciences investment trust, worries that the biotech sector's modest recent bounce means it is nearer the top of the cycle of investor sentiment than the bottom.