Small drugs firms make big strides


SMALLER British drug companies are suddenly looking like exciting investments. Sentiment has been helped by a wave of corporate activity, most recently Rhone Poulenc's contested bid for Fisons. Also stimulating interest is a realisation that real progress is being made by some smaller companies.

Two I particularly like are ML Laboratories at 242p and Chiroscience at 237p. Their shares have moved up strongly, in Chiroscience's case on the back of an analyst's visit, but there should be plenty of exciting news from both companies over the next 18 months and beyond to sustain interest.

ML Laboratories is best known for its dialysis solution for patients suffering from kidney failure. But among the other strings to its bow are a therapy for Aids which could also have applications in cancer treatment, and an inhaler for asthma treatment.

One unexpected side-effect of the Fisons bid battle has been to highlight the value of such inhalers, which, in asthma drugs, are an integral part of the product. Licences are awarded by the regulatory authorities not just for a drug but for the specific inhaler used in delivery. This is a highly technical instrument required to deliver exactly the right amount of the drug, in microscopic quantities, to the lungs of a person possibly suffering a severe asthma attack. Since the main drugs are now off-patent and older inhalers are being phased out, new delivery systems assume critical importance.

One of the main planks of Fisons' bid defence is its multi-dose, breath- activated dry-powder inhaler, which is on target for a licence application in 1997.

ML Laboratories has a similar inhaler, but it is probably two years ahead of Fisons, because it has already filed a licence application.

On the Aids front, ML has announced encouraging results from trials for a product using its polymer-based dialysis solution to coat cells produced in the lymphatic glands and protect them from attack by HIV, the virus that causes Aids. This should enable patients to rebuild their immune systems.

Similarly, the company has under development a use of the solution to deliver anti-cancer drugs accurately to some sufferers. Early results suggest that use of the solution reduces the amount of toxin used in chemotherapy by a factor of 2,000 with a consequent reduction in side-effects.

Meanwhile, ML has exchanged contracts on a joint venture with Fresenius of Germany to market its dialysis solution to kidney patients. Fresenius is No 2 in this growing market, and the collaboration should be highly profitable to the group.

Like ML Laboratories, but in a very different way, Chiroscience, capitalised at pounds 159m, has developed a technique for creating effective new drugs rapidly without having to reinvent the wheel. It takes drugs that have come off- patent and reformulates them to work better with fewer side-effects.

The star prospect for the immediate future is a compound called Levo- bupivacaine, which is an extremely powerful and effective painkiller. Its drawback in its original formulation as bupivacaine was that it had adverse side-effects for patients with heart problems, severely limiting the size of the market.

Chiroscience's own version is in advanced trials, and a marketing partner has been signed up. Its name is to be announced shortly. Once it is in production, peak sales could reach $350m (pounds 226m), with Chiroscience receiving chunky access and milestone payments plus a stream of royalties.

The highly technical nature of their products makes it difficult for a lay investor to assess the true value of such companies as Chiroscience and ML Laboratories. But my hunch is that they are about to have their day in the sun.

Investors who like a more dramatic combination of risk and reward could look at Oxford Molecular Group, capitalised at some pounds 67m at 132p. The shares have jumped on news that the group has appointed heavyweight Cazenove as its new stockbroker, reinforcing expectations that the next year or two could see the group making significant profits.

Deputy chairman Dr Tony Marchington describes the group's core specialisation as "understanding the action of binding of small molecules to proteins" and the use of powerful computer techniques to advance that understanding.

It is not an easy-to-understand business but there is no question that Oxford has considerable intellectual firepower and is operating at the leading edge of the process ending with new drug discoveries.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map