LONDON - Cash burn at British Biotech plc rose by a massive £19 million last year to £51 million, according to financial results for the fiscal year ended April 30, 1998. The Oxford, U.K., company recorded a loss of £44.9 million after taxes, up from £28.9 million the previous year.
This left Chairman John Raisman to admit, “The 1997-1998 financial year was a disappointing one for the company and its shareholders.“
To make matters worse, the unauthorized unblinding of two of the company's clinical trials may mean the money spent on them has been wasted. Discussions are ongoing with the FDA and the European Medicines Evaluation Agency (EMEA) to clarify the regulatory implications of the unblinding.
British Biotech said in May 1998 it had implemented a plan to reduce expenditures and focus resources; this should bring cash burn down to £40 million per year. This leaves the company, which had £132.8 million in cash at year end, with enough funding for three years.
Whatever progress the company made during the year has been overshadowed by two events.
In January the EMEA refused to give approval for Zacutex, a treatment for acute pancreatitis, on the basis of the European Phase III trial. Instead, the agency indicated approval would depend on positive results in the 1,500-patient U.S. Phase III trial, which has mortality as its endpoint. The U.S. study is not due to complete recruitment until the end of 1998. Meanwhile, British Biotech had begun to invest in a European infrastructure to market Zacutex.
Even more damaging, in April British Biotech fired its head of clinical research, Andrew Millar, for breach of contract. His actions included the unauthorized unblinding of two clinical trials.
Millar subsequently went public with a number of allegations against the company, which were rebutted May 19 in a circular to shareholders in which CEO Keith McCullagh said he would resign in September. The company also outlined moves to cut costs and, in a change of strategy, said it would seek a U.S. partner for marimastat, its oral anticancer treatment.
Despite these moves, the bad publicity initiated by Millar's dismissal has continued. This has included McCullagh and Millar being called to give evidence to a parliamentary Science and Technology Committee investigation into how British Biotech's problems are affecting the U.K. biotechnology sector in general.
British Biotech's share price was unchanged, at £0.325, July 16, when the financial results were announced. Before Millar was dismissed, on March 29, the price was £0.59; a year earlier it was £2.90.
Raisman ruefully noted these two events “diverted attention from the advances the company has made in R&D during the year.“ However, it remains unsaid whether the unblinding would have come to light if Millar had not been dismissed. And if the FDA and EMEA will not accept the clinical trial data, this will severely undermine whatever progress the company has made.
Marimastat, Zacutex Trials May Be In Jeopardy
British Biotech has only two compounds in patient trials, Zacutex and marimastat. It anticipates getting approvals for marimastat in a wide range of cancers, and currently has 11 pivotal trials involving 2,500 patients in progress. Four of these - in pancreatic cancer as a monotherapy, in pancreatic cancer as a combination treatment, in glioblastoma and in small cell lung cancer - have completed recruitment. British Biotech said it will have a “full picture“ of the breadth of marimastat's potential by 2001.
The majority of the trials use patient mortality as their primary endpoint, so it is not clear when they will be completed. The first results, from the monotherapy study in pancreatic cancer, are expected during 1999. It is unfortunate that this, one of the most exacting cancers to treat, is the focus of one of the two trials unblinded by Millar.
Results of the 1,500-patient U.S. Phase III Zacutex trial are expected during the first quarter of 1999. But although the FDA promised in April 1998 that Zacutex would qualify for expedited review if the data were positive, this was before the agency was informed that this trial had also been unblinded.
British Biotech now is seeking a partner for marimastat in the U.S. and said exploratory discussions are continuing. It also may seek a marketing alliance for Zacutex in the U.S., but said it still believes that in Europe it will get optimal return on investment by going it alone. *