Xenova's US deal heads new biotech boom

Xenova, a biotechnology group which joined the stock market at 215p a share last month, saw the price jump another 25p to 295p yesterday after announcing a tie-up with Bristol-Myers Squibb, the US pharmaceuticals giant. The deal came as two other biotech hopefuls, Cambridge Antibody Technology and the Bioscience Innovation Centre, confirmed their intention to float on the main market.

With another, BioFocus, waiting in the wings to launch on Ofex, the growing queue of fledgling companies ready to come to market suggests the sector has overcome last year's problems when several companies either pulled or delayed their floats.

Xenova said the deal with Bristol-Myers involved screening its "library" of more than 25,000 microbes and 6,000 plant extracts against disease processes thrown up by the US group's genetic research. The aim will be to isolate a molecule or molecules which can inhibit the target process, thereby checking the disease.

Xenova will also supply its expertise in so-called "infomatics", which involves using a database to identify the chemical which results from the screening process or determine whether it is a new one in order to aid its reproduction in the laboratory.

As well as providing the drug target technology, Bristol-Myers will undertake the development and marketing of any product which emerges from the collaboration. Xenova will do the screening, identify any chemicals which result and supply the chemical to Bristol-Myers, which will cover research costs and make undisclosed milestone and royalty payments.

Xenova's technology is based on the discovery of drugs derived from naturally occurring micro-organisms, such as those found in fungi and bacteria, and from plants and plant extracts. Its most advanced drug candidate under development is an anti-cancer treatment which is still three years away from the market. But Louis Nisbet, chief executive, pointed out that Taxol, one of Bristol-Myers' main anti-cancer drugs, was originally derived from a plant.

Separately, Cambridge Antibody Technology said it planned to seek a full listing in March at a price which analysts expect will value the company at between pounds 85m and pounds 95m. It is thought to be looking to raise pounds 30m in an institutional placing, having pulled in pounds 16.6m from investors since the company was founded in 1990.

The Bioscience Innovation Centre, which is raising pounds 6m in its placing and offer, is also based in Cambridge. It aims to offer start-up biotech groups the infrastructure to run their business, including providing laboratories and management skills.