One of the UK's oldest biotechnology companies looked likely to be sold or broken up last night after saying it had abandoned work on its most advanced new drug.
Xenova, which was formed in 1987 and floated in 1996, has halted trials of Tariquidar, a novel treatment to counter drug resistance in lung cancer which the company had hoped was barely two years from launch.
The company was already running out of money and now accepts shareholders are unlikely to back a new fundraising, at least in the short-term. David Oxlade, chief executive, said the company would slash costs and try to sell the rights to some of its remaining products.
He said: "Markets today are not focused on the long-term, so now drugs that we would have licensed to a partner maybe in two or three years time we will now look to partner in the nearer term."
The group's remaining drugs include potential treatments for cocaine and nicotine addiction, as well as several cancer drugs. Mr Oxlade also insisted Tariquidar "is not dead". Safety monitors told the company to stop trials of the drug in lung cancer, but it is still being trialled on breast cancer sufferers and Xenova hopes the data from the abandoned trials will show it is safe in at least some proportion of lung cancer sufferers.
"We know that the drug is having an effect. You would expect to see higher toxicity because that is a side effect of the chemotherapy drugs Tariquidar helps to work," Mr Oxlade said. "What we don't know yet is whether there is a sub-set of patients who might have responded quite positively."
Xenova shares halved to 9.75p, valuing the company at just £17m. It plans to make big cuts to its 105-strong workforce in Slough and Cambridge in order to bring its cash burn down from £12m a year currently to something more like £8m. The group is also reviewing its drug research and development programmes and may suspend work on some drugs.
Investors and analysts last night predicted the company would find it difficult to raise cash from any source.
One said: "It's toast. They have been raising money from shareholders at ever decreasing share prices, so those who have backed them before will be fed up. Potential licensees will see their financial position and are going to put in low-ball offers for their drugs or are going to ask them to come back in a few months when their cash is even lower or the company is with receivers.
"The company must now be a prime candidate for consolidation in the sector."
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