The decision has clearly impacted BBIOY's price:
British Biotech Shrs Dive As Analysts Cut
Valuations
By Erik Portanger
LONDON (Dow Jones)--Shares in British Biotech PLC (BBIOY) dived
Thursday, as analysts dramatically cut their valuations on the stock amid
doubts over one of the company's key development drugs.
Around 1015 GMT, shares in the U.K. biotech company are down 39.5
pence, or 30%, to 93.5 pence, having earlier traded as low as 89 pence.
Market watchers said there is little hope the stock will recover in the
short-to-medium term, with some even predicting a fall to 50 pence.
The sell-off came after British Biotech said European regulators had
requested more extensive clinical data on its Zacutex drug for acute
pancreatitis. The company has begun a second Phase III trial involving
1,500 patients to meet the requirements of the European Medicines
Evaluation Agency, but this won't be completed until the first quarter of
1999.
'Obviously the data from the first trial wasn't convincing enough,' said Peter
Laing, an analyst at Societe Generale. 'It's a very long wait now before
there's any more news. I think sentiment is going to stay negative now for
quite a while.'
As the U.K.'s largest biotech company, with a market capitalization of more
than GBP600 million at current prices, British Biotech has a lot to live up to.
It doesn't make any money and probably won't for several years, so its
shares are highly sensitive to news about the drugs it is developing.
Societe Generale's Laing said the delayed launch of Zacutex shouldn't affect
projected earnings too significantly, as long as it eventually receives
approval.
However, he said the news raises questions about British Biotech's
management and the likely success of its other key drugs.
'To have gone ahead with a (regulatory) filing that is inadequate is pretty
unprofessional,' he said.
The analyst believes some investors might have to reassess their bullish
expectations for British Biotech's anti-cancer drug, Marimastat, which is
currently in late stage trials.
'I think Marimastat will find a use in cancer treatment but it will disappoint,'
Laing said. 'To meet all the expectations that everyone has, it would have to
cure cancer and do the dishes while you wait.'
Ian Smith, an analyst at Lehman Brothers, said it is now less likely that
Zacutex will be approved, especially in the larger U.S. market. He also
believes negative sentiment and a lack of news will see the stock remain
lackluster for most of this year.
'There isn't going to be any news for 12 months and that's a long time to be
hanging in limbo,' he said.
It also isn't the first time that British Biotech has disappointed.
Last October, the company halted development of its oral anti-inflammatory
drug BB-2983 because of unexpected side-effects. It had been developing
the drug in collaboration with Glaxo Wellcome PLC, but this relationship
collapsed due to the failure.
British Biotech insists the problems with Zacutex are of a different kind.
Katie Arber, a company spokeswoman, said in an interview with Dow
Jones Newswires that regulators aren't satisfied with the company's trial
data showing Zacutex helps reduce organ failure in people with pancreatitis.
She said they want proof the drug stops people dying from the disease.
'They want statistically significant information on death rates,' she said.
British Biotech PLC is a pharmaceutical research and development
company which is developing cancer treatments and therapies to treat
inflammatory, vascular and viral diseases. It listed in July 1992. The
company's most promising drug in development is Marimastat, an injectable
drug intended to reduce cancer tumors or slow their growth.
Headquarters: Watlington Road, Oxford, OX4 5LY.
Significant developments: In February 1998, British Biotech said it won't
submit Zacutex, the registered trademark for acute pancreatitis treatment
lexipafant, for European approval until the first quarter of 1999. The
company will apply to market the drug in the U.S. in the first half of 1999.
In October 1997, British Biotech said it had scrapped a collaboration with
Glaxo Wellcome over development of BB-2983, an anti-inflammatory
drug, because of adverse side-effects. In November 1996, British Biotech
said Marimastat passed Phase-II testing. The drug entered Phase-III testing
- the final trial stage for Europe and north America - in June 1996.
All figures are in sterling
6 mos 6 mos 12 mos 12 mos
ended ended ended ended
10/31/97 10/31/96 4/30/97 4/30/96
Pretax Loss (19.9 mln) (16.1 mln) (28.5 mln) (25.1 mln)
Sales 266,000 782,000 10.9 mln 8.46 mln
EPS (3.0 p) (2.6 p) (4.5 p) (4.9 p)
Figures in parentheses indicate a loss
Currency history (dollar vs sterling)
London 10/31/97 10/31/96 4/30/97 4/30/96
close 1.6771 1.6280 1.6240 1.5040 |
