pounds 2bn British Biotech looks set to join Footsie

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The Independent Online
British Biotech, the fledgling pharmaceutical group, could be on course to enter the FT-SE 100 index after the shares leapt on positive findings from the latest trials of its Marimastat anti-cancer drug.

The 285p rise in the price to pounds 33.15 puts a pounds 1.9bn valuation on the group, slightly above two current blue chip stocks, Hays and Williams Holdings, and just behind Schroders and Dixons, two other FT-SE 100 constituents.

The company needs to reach the 90th position in the index, currently occupied by Lucas Industries, to qualify for inclusion. But brokers yesterday suggested after the latest test results that the shares could be worth up to pounds 50, which would give British Biotech a market value of around pounds 2.9bn.

The next steering committee meeting to decide the new composition of the index is to be held on 12 June. Entry by British Biotech would almost certainly be the first time a group that has never made a profit has got into the index, although it might face competition from telecommunications groups such as Orange and Telewest, neither of which are making money but are still valued at between pounds 3bn and pounds 1.7bn.

Shares in British Biotech soared to pounds 37.88 at one stage on the back of the Marimastat results, but failed to match the near-50 per cent one-day rise seen when the earlier phase II research was released in November. The rest of the sector, which has been dragged up on the coat-tails of British Biotech, also failed to respond yesterday. Cantab, one of the biggest risers of this year, was unchanged, while Chiroscience was down 15p at 505p and Scotia Holdings also fell 15p to 765p.

Nonetheless, analysts were encouraged by the latest findings on Marimastat. Mark Brewer at Hoare Govett said they reaffirmed everything in the results of November. In particular, the correlation of the fall in blood markers for cancer, or antigens, with the better survival rates in pancreatic and ovarian cancer was "an acceptable clinical end-point for the Food & Drug Administration [of the US] and other regulatory bodies." This was demonstration of the proof of principle demanded by the FDA.

Peter Lewis, British Biotech's research and development director, said: "We now have initial evidence of a clinical response to Marimastat in pancreatic and ovarian cancer. Most importantly the effect of Marimastat on cancer antigens correlates both with slower progression of disease and survival in pancreatic and ovarian cancer. Marimastat can now be progressed to definitive trials." The current phase II trials covered 232 patients out of total recruitment of 365 in the cancer antigen trials. As well as supporting the earlier results, the latest tests indicated that a dose of 10 milligrams twice a day was the most effective across four tumour types: colorectal, ovarian, pancreatic and prostatic cancers.

The phase II studies will now continue as will parallel tests looking at the effectiveness of Marimastat on malignant skin cancer, secondary bone cancer and stomach cancer.

But attention will now switch to the definitive phase III trials of Marimastat, which will cover 300 patients in an international study. The drug will be compared against Eli Lilly's gemcitabine and the generic 5FU, two current cytotoxic treatments for cancer.

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