Ark gains on hopes for cancer drug

Ark Therapeutics, the gene therapy group, gave the beleaguered UK biotech industry a shot in the arm yesterday when it said that the third phase trial of its brain cancer treatment, Cerepro, has shown good initial results and that it now expects to be able to market the drug by next year.

The company's shares rocketed on the news closing the day up 69 per cent at 80.25p. Ark had earlier said that the topline results of the tests showed that patients using the treatment were on average surviving 42 days longer than people not using Cerepro.

The results come from tests on 183 patients with the company expected to give details of another 53 cases early next year, after which it will apply to European regulators for a licence to sell the drug.

Ibraheem Mahmood, an analyst at Investec, said that while yesterday's news was encouraging, the real tonic for the group is that the positive tests validate Ark's gene based technology and that should lead to interest from some of the pharmaceutical giants. "While the news is certainly good, it is really only a by-product," he said. "Cerepro will be worth between about $500m and $1bn, but it is the first time that the technology has been shown to work and that makes it appealing to buyers."

The news will also be welcomed by the wider UK biotech market, which has a poor record of converting potential drugs in trial into commercial successes. In recent weeks two other groups, Alizyme and Oxford Biomedica, have disclosed pivotal phase three failures, which sent the share price of both companies crashing.

However, the news on Cerepro was not greeted with universal praise. KBC analyst Paul Cuddon pointed out that Cerepro will need to compete against existing medicines. "In order for the trial to be considered a success, and for the company to claim they have a blockbuster, it has to show that it is better than what is already out there, and these trials do not show that," he said. "Ark needed to show that Cerepro is more effective than Temador [another brain cancer treatment] and they have not done that. I still have major concerns."

Mr Mahmood countered that Temador, which had annual sales of $861m last year, has side effects akin to the symptoms suffered by AIDS sufferers, giving patients a poor quality of life.