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Biotech / Medical : Small Cap Foreign Biotech

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To: RWReeves who started this subject	8/13/2001 11:33:58 AM
From: nigel bates	Read Replies (1) of 363

By Ben Hirschler, European Pharmaceuticals Correspondent LONDON (Reuters) - Biotechnology company Xenova Group (LSE: XEN.L - news) is finalising a licensing deal for its leading cancer drug and could announce a partnership alongside first-half results on Tuesday, according to industry observers. Xenova hopes an agreement will revive a flagging share price which has more than halved since its poorly received merger with Cantab Pharmaceuticals (LSE: CTB.L - news) in February. The Slough-based firm -- which axed a quarter of its staff in a cost-cutting drive in June -- is expected to receive upfront and milestone payments plus a royalty on eventual sales under the arrangement. Chief Executive David Oxlade told Reuters in June he had selected an unnamed drugmaker as frontrunner to partner XR 9576 and expected to conclude a deal during the third quarter. ING Barings believes XR 9576 -- if approved by regulators -- could achieve peak annual sales of 600 million pounds some years after its launch in 2005, of which around 15 percent would go to Xenova in royalties. The drug is seen as a potential breakthrough in fighting multidrug resistance in cancer. But it must first get through pivotal Phase III clinical trials which are due to start next year. XR 9576 is designed to tackle the most common form of multidrug resistance resulting from overproduction in the cancer cell membrane of P-glycoprotein, which pumps the cancer drug out of the cell. XR 9576 inhibits this protein. SALE OF NON-CANCER ASSETS Xenova currently has eight products in clinical trials but cash reserves of less than 25 million pounds. As a result, it is looking to deals and disposals to help fund its activities. In addition to the XR 9576 agreement, it has also embarked on a strategic review which analysts believe could lead to the sale of a number of non-cancer projects, including infectious diseases and addiction programmes inherited from Cantab. This could include rights to the world's first anticocaine addiction vaccine, TA-CD, which works by blocking the normal "high" generated by the drug. Xenova won a green light from the U.S. Food and Drug Administration last month to restart clinical trials on the product. Xenova also has warrants outstanding which could provide the company with extra cash -- but only if the shares gain substantially. The warrants, which could bring in 10 million pounds, are exercisable at 85 pence through the end of October. Xenova shares were last unchanged on the day at 39-1/2 pence...

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