British Biotech Faces Fight for Survival Amid Damning Allegations

Strategic Insights -

British Biotech, one of the country's leading independent drug developers, is under intense scrutiny following allegations that trial results of one of its major products were suspicious. The company's chief executive, Keith McCullagh, has sold shares after being informed of problems with one of the company's cancer treatments but before notifying other investors. The damaging accusations have sent the company's stock market value plummeting from £1.9 billion to £370 million in just 18 months.

Key Takeaways:

  • British Biotech faces claims it did not admit quickly enough that the results of some drug trials had failed to meet expectations.
  • The company's chief executive, Keith McCullagh, is accused of selling shares after being informed of problems with the cancer treatment batimastat, but before notifying other investors.
  • The company's stock market value has crashed from £1.9 billion to £370 million in 18 months.
  • British Biotech is defending itself against allegations that it had knowledge of queries raised by European regulators over its pancreatitis drug, Zacutex, months before informing shareholders.
  • The company's Marimastat treatment for pancreatic cancer has been given a 60% chance of success, but faces high competition from other cancer treatments.
  • British Biotech has a statement in the works to refute the allegations, which will be scrutinized by lawyers and accountants to ensure probity.
  • The biotechnology sector is heavily overcrowded, with over 2,000 biotech groups in the US alone.
  • Many biotechnology companies have yet to make a profit, and investors have lost confidence after revelations that promising drugs have failed in later phases of testing.

Statistics:

  • British Biotech's stock market value has crashed from £1.9 billion to £370 million in 18 months (a 48% decrease).
  • Over 2,000 biotech groups exist in the US.
  • More than 1,000 different cancer treatments are currently under development worldwide.
  • Estimated sales of biotech companies' drugs could total £140 billion by 2005, assuming all forecasts come true.
  • 90% of biotech companies' drugs will fail or be delayed (according to estimates).

Sources:

  • The article cites an unnamed source at British Biotech.
  • The article also references the British Biotech annual report and a Stock Exchange inquiry.
  • Addisnional research by Nick Pandya
  • The article also mentions a Chiroscience deal with Zeneca, another pharmaceutical company.
  • The article references the University of Cambridge and the Cambridge Centre for Clinical Neuroscience for facts on human genetic material and cancer treatments.