British Biotech made a decisive break from its troubled past yesterday by selling off the bulk of its early stage drug discovery operation, including its research facility in Oxford and two-fifths of its staff.
The Nasdaq-listed US firm OSI Pharmaceuticals is to pay £8.7m in cash for the assets and the right to screen British Biotech's library of chemical compounds.
OSI, known as a diabetes and cancer specialist, will take possession of the state-of-the-art laboratories, saving British Biotech, which is run by the chief executive Elliott Goldstein, £1.4m a year in rent. Fifty-nine of the company's 143 employees will transfer to the US group. OSI said it will close its Birmingham research plant, relocating 85 employees to Oxford, where it will be able to see drug development projects through to the end of Phase II clinical trials. The deal boosts British Biotech's cash reserves to more than £7m and will reduce overheads by £6m a year.
Tony Weir, British Biotech's finance director, said the company now had cash to last until 2005. It also has greater flexibility to concentrate on developing the four drugs already in trials, including leukaemia and lung cancer treatments, and its plans to buy in a number of additional products. Mr Weir said: "It means that if three products came in through the door tomorrow, we would now be able to go for all three."
Giles Campion, the director of research and development, is to leave the company when the deal is completed next month.
British Biotech has given up trying to find any drugs of its own after the repeated disappointment of Marimastat, once feted as a wonder-drug for the treatment of cancer but which failed all its clinical trials.
The company has said it is in talks with several potential partners for its remaining antibiotics research unit. British Biotech shares, which have collapsed from 270p in 1997, were up a penny at 19p.