British Biotech, the one-time star of the UK biotech industry, has failed in its latest attempt to pull off a big takeover.
It called off talks with the German biotech company MorphoSys after shareholders and analysts argued it had picked the wrong potential partner.
Elliot Goldstein, the Canadian chief executive brought in four years ago to turn British Biotech's fortunes around, said he would continue hunting for a new deal to make use of the company's £47m cash pile.
There is no prospect of any of British Biotech's remaining in-house drugs reaching the market before the cash runs out.
Mr Goldstein said the British Biotech board called off merger talks on Tuesday. "This is the sort of thing that happens all the time, just normally it happens behind closed doors. We had to announce it because the talks had leaked out but, having laid down a certain number of objectives for creating shareholder value, yesterday we came to the conclusion that it wasn't going to meet them."
Mr Goldstein was at pains to say the deal did not fall down as a result of disagreements over management structure. Previous merger talks with cancer specialists including Antisoma and Xenova are widely believed to have failed after disagreements over Mr Goldstein's own future role. He said the merger with MorphoSys would have given him an ongoing role with the company, and that the management structure had been agreed early in the talks.
British Biotech shares have halved since the company admitted talks early last month, and were down 0.1p to 2.55p yesterday. The deal was roundly criticised because it would not satisfy British Biotech's perceived urgent need for cash-generating products. MorphoSys has the technology to start drug development work, but no products in human trials.
Observers said the technology and the early stage products it had generated had not impressed the British Biotech team doing due diligence work.
Mr Goldstein said the breakdown of exclusive talks with MorphoSys freed him up to talk to other potential partners, but analysts were sceptical he could agree a deal.