BTG's shares dive as regulators halt trials on Varisolve

American regulators halted trials of BTG's revolutionary varicose veins treatment yesterday, sending the technology group's shares plunging nearly 60 per cent.

The Food & Drug Administration, which has taken a sceptical view of BTG's claims to safely destroy varicose veins with an injectable foam, said that pilot studies must stop after it reviewed data from the first 40 patients.

The company said it was still waiting to hear the reasons for the suspension, but was ready to conduct additional tests or submit other data to try to reverse the decision. It looked impossible yesterday that the product, called Varisolve, could be launched in the United States by 2006 as planned.

BTG's shares, which had more than tripled this year, mainly on hopes for Varisolve, slumped back 226p to 154p, wiping £240m from the company's market value. Last month, BTG's house broker, Credit Suisse First Boston, argued this single product represented three-quarters of the company's value.

Varisolve is a foam injected into varicose veins that dissolves them without surgery. It was developed by Juan Cabrera, a surgeon in southern Spain who has successfully treated thousands of women. BTG has repeatedly hailed Varisolve as a breakthrough treatment for the painful condition and one that can be carried out over a lunchtime.

Safety concerns surround the size and effects of bubbles of gas that get into the bloodstream and the small incidence of deep vein thrombosis shown in the European trials.

The company was optimistic that the FDA could be swayed and that the separate approval process in Europe would not be affected, although this won't be clear until the regulator's explanatory letter later this month. Varisolve is expected on the European market by 2005.

The active ingredient, polidocanol, is already approved for use in Europe in a way that it is not in the US. Erling Refsum, a biotechnology analyst at Nomura, said: "It's not good news, but the product is just delayed ... BTG is just as in the dark as everyone else is."

BTG was formed out of the National Research Development Corporation and sold by the British Government in 1992. It finds, develops and commercialises technologies in medicine and electronics and has a portfolio of more than 300 new technologies.

Ed Steele, an analyst at HSBC, said: "They have made a rod for their own back. They were floated as a diversified business, but they spent as much on Varisolve last year as on all their other products together, and they have allowed this one product to dominate."