The Investment Column: The benefits of Celltech

THE PAST 12 months have not been kind to Celltech, one of the UK's longest established biotech companies. A year ago its shares halved after its septic-shock treatment failed clinical trials. At the beginning of this year it lost its research and development director and then the British Biotech affair turned City sentiment even further away from the sector.

The result is that Celltech's shares have been bumping along at the 300p mark for most of the past 12 months. But yesterday's results was the most positive news output from the company for some time and the shares bounced 6p to 377.5p.

Of its six drugs in clinical trials, its treatment for acute myeloid leukaemia has achieved promising results in US trials undertaken by American Home Products. Celltech now expects the its lead drug to be filed with US regulators in the first half of 1999 if the trials go to plan.

The figures also look promising. First-half profits came in pounds 2.5m in the six months to March compared to losses of pounds 6m in the same period last year though this year's numbers were boosted by more than pounds 5m from disposals. Even so, the group has pounds 40m of cash and its licensing income is stronger than expected up to pounds 5.7m from pounds 2m. The company now believes it will make a small but sustainable profit in 1999-2000.

The biotech sector may not be flavour of the month in the City but by most yardsticks Celltech shares look good value. The company is not over- reliant on just one or two drugs with six in clinical trials and two at the pre-clinical stage. And it has other revenue streams such as its patents from which it collects royalty payments. It may lack the explosive potential of some rivals but then the downside is also more limited. Attractive.