ML marketing deal abandoned

ML Laboratories, one of the UK's fledgling biotech companies, has failed to reach a crucial marketing deal for its Icodial kidney dialysis treatment. The German healthcare group Fresenius, currently in the midst of a US acquisition which will make it the largest player in the peritoneal dialysis market, announced yesterday that it was ending its existing tie-up with ML after it had been unable to agree terms on a master agreement by the 31 March deadline. Two other healthcare firms are already thought to have rebuffed the British group in its attempts to forge marketing links.

ML's shares fell 13p to 428p after yesterday's news and are now well below the all-time high of 472p at the end of January when co-founder Kevin Leech sold part of his stake for pounds 37.5m.

The break-down of talks comes nearly 21 months after ML announced it had formed a partnership deal with Fresenius in June 1994. The original intention had been for Fresenius to handle marketing of Icodial, one of ML's most promising products, in the UK, the rest of Europe and the US, including the establishment of joint venture companies here and in Germany.

But ML yesterday played down the impact of the failure of the initial talks. In a statement, the group said ML and Fresenius "are well advanced in discussions regarding alternative forms of collaboration and are seeking to reach an agreement relating to the peritoneal dialysis market in both Europe and the USA within the next few months with a view to launching Icodial in Europe later this year". A spokesman emphasised that talks were continuing.

The latest blow to hopes of reaching a deal on Icodial follow several years in which ML is said to have attempted to find a partner to market the treatment. The market leaders in peritoneal dialysis, US giant Baxter International and Gambro of Sweden, are already thought to have turned it down. In the case of Gambro, it is thought ML was asking for better terms than the Swedish company was able to offer.

Icodial, which is already being used in the UK, could potentially take half the market for dialysis, currently worth around pounds 800m a year. But it has been eclipsed by recent news that ML has reached deals with Medeva for its dry powder inhaler device and with Glaxo Wellcome for slow release drug delivery technology.