Class Law, the combative legal firm, is stepping up the pressure on British Biotech, saying it will begin legal proceedings against the company by the end of this month.
The solicitors say they have the backing of a number of institutional investors to launch an action alleging the pioneering biotech company issued misleading information to the stock market in the Nineties.
It has given investors until the end of this week to join a claim for damages, which could run into tens of millions of pounds – but British Biotech is considering ways to get Class Law to "put up or shut up" after years of false starts to a legal claim the company insists is without foundation.
British Biotech was floated on a tide of optimism that its novel drug technology would yield a lucrative treatment for cancer, and at one stage the company was worth £2bn. But the product, marimastat, failed its clinical trials. The company is now valued at just £30m.
The clinical research director, Andrew Millar, was sacked after claiming early trial results from marimastat were discouraging, and Class Law claims the company issued misleading statements about the likelihood of the treatment reaching the market.
Stephen Alexander, partner at Class Law, said several institutions had signed up to the claim for damages caused by the débâcle. "We are closing the books on 17 January. The train is leaving; investors either get on or they don't. We will then be in a position to present the particulars of the claim and try to start negotiations with the company."
British Biotech sources pointed out that last summer Class Law said it would ask for the disclosure of internal documents, but no such legal request has ever been made.