LONDON ¿ The London Stock Exchange (LSE) has found British Biotech plc in breach of its listing rules because the company misled investors about the prospects for getting approval of Zacutex in the treatment of acute pancreatitis, and of allowing certain directors and employees to deal in the shares at a time when it was in possession of unpublished, price-sensitive information.

The LSE said following the submission of the Marketing Authorisation Application (MAA) in February 1997, the company, based in Oxford, should have made public the assessment reports of the European Medicines Evaluation Agency (EMEA) and the resulting decision by British Biotech to amend its application to a more restricted indication.

Not only did the company fail to say that major clinical objections had been raised in the assessment received on May 7, 1997 and on May 8. British Biotech also continued to release optimistic news on Zacutex with the simultaneous announcement on May 12 of Phase III results, and of the appointment of staff in preparation for the commercial launch of the drug.

The LSE said the disclosures ¿reinforced the market¿s expectation that regulatory approval would be forthcoming.¿

On June 24, 1997, the company received a further report from the EMEA, which repeated and supplemented the objections raised in May, and said Zacutex was unapprovable on the basis of the submitted data. This was not made public and on July 9, 1997, Sept. 23, 1997, and Nov. 25, 1997, British Biotech made further announcements on the progress of the application and plans for the commercial launch.

British Biotech said it does not agree with the findings of the LSE, but will not exercise its right to contest them because it wants to concentrate it resources on rebuilding the business.

Katie Arber, head of corporate communications at British Biotech, told BioWorld International, ¿The company holds the view that the directors at the time did not believe that their expectations of getting it [Zacutex] registered were reduced. However, the inquiry has been going on for over a year, and we think it is more important to move the business forward than to contest the LSE¿s findings.¿

Arber also pointed out that, although directors dealt in shares at the time, there was no suggestion of any insider dealing. ¿During the period no one sold any shares, there were some small purchases and some share options were granted,¿ she said.

In a statement, the chairman of British Biotech, Christopher Hampson, said the company was committed to timely reporting to shareholders in a fair and balanced manner. ¿Every biotech company faces, and will continue to face, difficult judgements in reporting drug-development related issues,¿ Hampson said.

The U.K. Bioindustry Association is drawing up a code of practice to give companies guidance on meeting obligations under the LSE¿s listing rules. The LSE has censured British Biotech, but there is no further penalty and the inquiry is now closed.

In February 1998, British Biotech withdrew the Zacutex application, pending the outcome of a U.S. Phase III study. It dropped the compound in March 1999, when this trial showed no statistically significant reduction in mortality in treated patients.