British Biotech signs US antibiotics partner

British Biotech unveiled the long-awaited partner for its antibiotics programme yesterday, but disappointed the market by passing up a deal with a global pharmaceuticals giant in favour of a small, private US company.

The fallen star of the UK biotech sector had promised a tie-up to help develop a potentially exciting new class of antibiotics able to treat infections resistant to the current generation of drugs. Its most advanced product is due to start human trials in October.

The deal, with San Francisco-based GeneSoft, brings British Biotech a $5m (£3.3m) cash payment. The companies will split development costs and profits from any products developed. Elliot Goldstein, British Biotech's chief executive, said: "We talked to several big companies but they all wanted to take the commercialisation rights and just give us milestone payments and royalties. The GeneSoft deal is far more profitable."

GeneSoft has links with the US government and there was speculation yesterday the deal could give British Biotech a shot at producing drugs for use in counter-bioterrorism.

British Biotech shares, which have lost three-quarters of their value in a year, nudged 0.25p higher to 6p. But Richard Parkes at ING Financial Markets said: "We had been hoping for a deal with a major player. If the compounds were as interesting as British Biotech has been making out, we would have expected someone like GlaxoSmithKline to have snapped them up."