City invests faith in a cure for the future

Cancer treatment: British Biotech's tumour drug is still on trial, but a stock-market valuation of pounds 1.9bn shows optimism
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Shares in British Biotech, the leading member of the UK's biotechnology industry, soared yesterday as the company announced the successful completion of the latest trials on a drug which could prove a major breakthrough in the treatment of cancer.

At one stage the price jumped by pounds 7.58 to pounds 37.88, more than seven times the value shares were at just over a year ago, but settled back to close at pounds 33.15, valuing the company at around pounds 1.9bn. Although it has no products on the market and has never made a profit, British Biotech could now be on course to enter the FT-SE 100 index, the select group of Britain's biggest companies.

The stock-market euphoria came after the trial results backed up early findings released in November about the company's Marimastat drug. Successful completion of these so-called phase II trials is seen as a major milestone in the City on the way to the drug's eventual route to a cancer market valued at pounds 7bn a year on one estimate. If Marimastat captured just 10 per cent of the five million patients diagnosed worldwide with cancer, it could potentially be making profits of pounds 700m by the next century, but the drug must pass stiff clinical and regulatory hurdles before reaching that stage.

Pharmaceutical analysts yesterday factored in an increased chance of the drug clearing those obstacles. Mark Brewer at Hoare Govett said he had cut the discount rate applied to the potential revenues from Marimastat from 35 to 25 per cent on the basis of yesterday's news.

The latest test results, covering 232 patients who have used the oral drug for at least 28 days, showed that it had a clear effect on antigens or "markers" in the blood which indicate the presence of cancer. In a study of 48 sufferers from pancreatic cancer, 14 showed signs of having the growth in their tumours interrupted by use of the drug. Those who responded to the treatment survived more than 200 days, compared to around 125 days for those who were poor responders.

The findings will now be sent to the powerful United States regulatory agency, the Food & Drug Administration, but the success of these results means that British Biotech is now ready to begin the first definitive trials before attempting to gain approval for Marimastat from the authorities.

James Noble, finance director, said: "What we showed definitively in November was the increase in antigens was much less on the drug than off the drug, but the problem was that all the doses did the same thing."

The latest results, however, show that there is a different response at different doses, he said, while if those tested are divided between those who did and did not respond, then those who respond live longer and not so many of their tumours grow, at least in cases of pancreatic and ovarian cancer.

The trial also appears to show that Marimastat is as effective at lower doses, although the side effects identified earlier - sore shoulders and hands - have not been reduced.

The November findings sparked off a boom in other biotechnology shares, with some having doubled in value. Yesterday, however, trading in such shares was subdued, with many share prices falling. But British Biotech's shares, according to one analyst, could now be worth pounds 44.

The company is already valued at the same level as some of Britain's leading companies, such as Dixons, the electrical retailer, and Williams Holdings, the Yale locks to Cuprinol preservatives group.