LONDON - Shares in Cantab Pharmaceuticals plc fell by two-thirds last week on news that TH-GW for the treatment of genital warts had failed in the first of two Phase II trials.

Cantab partner SmithKline Beecham (SB), which has funded all development, said it would drop the product. The share price closed down # 1.56 at 76.5 pence when the news was disclosed last Wednesday.

Andy Burrows, vice president of investor and media relations at Cantab, told BioWorld International, "It is very disappointing. There are heads being scratched here by our science team and at SB. We gave it a high chance of success because it showed good immunogenicity in Phase IIa.

"There is still an agreement in place with SB but they won't be investing any more in the product."

The trial was to evaluate efficacy in preventing recurrence of genital warts in patients in whom existing therapies have failed. At six months there was no significant difference in recurrence rate between those who received TH-GW and those in the control group.

"The data are extremely well matched and unambiguous," Burrows said.

A second Phase II trial, looking at the occurrence of new warts in people who are infected with the virus, but have not had an outbreak of warts, is due to report soon. However, Burrows said such a vaccine was too small a commercial opportunity to be worth further development, no matter what the results.

The company has six other products in clinical trials and said it expects strong news flow during the coming year.

The share price apart, Burrows said there would be a financial impact on the company, with the loss of the product and the milestone payments delaying Cantab's profitability beyond the expected 2004. SB was completely funding the development and doing the work, so there are no head-count implications.

The fall in the share price also leaves Cantab, based in Cambridge, England, as a potential takeover target. "We have not got a 'for sale' sign on the door, but we have said previously there should be consolidation in the sector to spread risk," Burrows said. "But on our current cap, we are more likely to be acquired that to be an acquirer."

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